Why it Makes Sense to Own Your Own Home
The American Dream of home ownership is alive and well. Recent reports show that the US home ownership rate has recovered from recent lows and is headed in the right direction. The reasons to own are personal for each buyer, but there are many similarities. Here are a few financial reasons why you should own your own home.
- Homeownership is a form of forced savings– Paying your mortgage each month allows you to build equity in your home that you can tap into in the future for renovations, to pay off high-interest credit card debt, or even send a child to college. As a renter, you guarantee that your landlord is the person with that equity.
- Homeownership provides tax savings– One way to save on taxes is to own your own home. You may be able to deduct your mortgage interest, property taxes, and profits from selling your home, but make sure to always check with your accountant or bookkeeper first to find out which tax benefits apply to you in your area.
- Homeownership allows you to lock in your monthly housing cost– When you purchase your home with a fixed-rate mortgage, you lock in your monthly housing cost for the next 5, 15, or 30 years. Interest rates have remained around 4% all year, marking some of the lowest rates in history. The value of your home will continue to rise with inflation, but your monthly costs will not.
- Buying a home is cheaper than renting– According to the latest report from Trulia, it is now 4% less expensive to buy a home of your own than to rent in the US. That number varies throughout the country but widely ranges from 6% cheaper in San Jose, CA to 57% cheaper in Detroit, MI.
- No other investment lets you live inside of it– You can choose to invest your money in gold or the stock market, but you will still need somewhere to live. In a home that you own, you can wake up every morning knowing that your investment is gaining worth while providing you a place to live.
Before you sign another lease agreement, perhaps you should sit with a real estate professional to better understand all your available options.