By Kelly Catlin
It might surprise you to learn that, in 2021, first-time homebuyers put forth an average down payment of just 7%. Repeat buyers, however, put down 17%.
Regardless of your downpayment, there are various loan programs in place, making the American dream of home ownership that much more attainable. And once you’re a homeowner, you’ll reap countless benefits, from tax deductions to greater control over your monthly payments.
Understanding the benefits of homeownership will help you make an informed decision as you look for your dream house, but this article explains everything you need to know.
1. Tax Deduction
Did you know you can deduct the interest you pay on your mortgage? This is one of the best benefits of homeownership and a perk renters don’t benefit from.
If you’re a married couple and file jointly, head of your household, or a single filer, you can deduct your mortgage interest up to $750,000. For married taxpayers that choose to file separately, you can expect to each deduct $375,000.
This makes tax deductions one of the greatest reasons to purchase a house.
2. Greater Control Over Monthly Bills
When renting, there’s nothing to stop your landlord from raising your monthly rent. This could be a few dollars or a few hundred, as New Jersey doesn’t have any laws governing increases in rent.
However, when you purchase a home, you’ll work with your lender to discuss repayment options. Most often, first-time homeowners opt for a 30-year-fixed-rate mortgage. This means you’ll secure an interest rate and can expect to pay the same amount monthly.
Your taxes and homeowners insurance affect your monthly payments, but if they stay relatively consistent, so will your mortgage.
3. Home Equity
Another great reason to purchase a house is the home equity you’ll build each month.
Home equity is the difference between what you owe on your mortgage and what your home is worth. As your home’s value increases and your loan’s principle amount decreases, you’ll have more equity.
You can use your home equity to pay for improvements or upgrades that add to your home’s value, consolidate any high-interest credit card debt, start a business, pay for college, or purchase a second property for vacationing or renting.
As a renter, you’ll never build home equity, making home ownership the ideal choice.
4. Interest Rates
Despite rising interest rates, now is still an excellent time to purchase a home.
When interest rates were historically low, supply and demand set the stage for a chaotic real estate market. Buyers were paying substantially over the asking price, competing for a limited supply of homes.
However, high-interest rates make it easier to purchase a home. They reduce the amount of competition since fewer buyers qualify for mortgages. This means you’re less likely to encounter bidding wars and will find reasonably priced available inventory.
During times of low interest rates, prospective homebuyers were waiving their rights to home inspections, looking to remain competitive. They often purchased homes in need of costly repairs. But higher interest rates allow you to take your time when shopping and to conduct thorough inspections before purchasing a house.
5. Increase Your Credit Score
In the US, the average credit score is 698. There are countless benefits of a high credit score, from lower car insurance rates to lower credit card interest.
Homeownership helps you build credit and can even assist you with landing a lower home interest rate down the road. When rates drop, you can refinance your house and use your increased credit score to grab a lower interest rate. Renters don’t benefit from this advantage and pay the same amount every month regardless of their credit score.
6. No Pet Policies
It’s not uncommon for rentals to have strict pet policies. However, when you purchase a home, you’re free to adopt a family pet (or three!) without worrying about a landlord fining you –or evicting you– for violating the terms and conditions of your lease.
Even if you find a pet-friendly rental, you’ll most likely have to pay a pet deposit, and you run the risk of paying for costly repairs if your landlord claims to have found damage once you move out.
7. Sense of Community
One of the best reasons to purchase a home is the sense of community. In the US, 12-month leases are the most common. This means you could have new neighbors every year.
When you own a home, however, you’re fostering a sense of community while interacting with those in your neighborhood and town. Your children will develop a sense of security and develop permanent friendships without having to worry about their friends moving to a new home, and vice versa.
Benefit from Homeownership Today
There are countless benefits of homeownership, from tax deductions to building your credit score. And best of all, you won’t have to worry about any arbitrary rules imposed by your landlord.
There’s never been a better time to purchase a home. You’ll find less competition and plenty of available properties to choose from and can start to build equity in your home.
If you’re ready to find your dream home, The Erins Team can help. We’re committed to excellence, having earned prestigious awards such as the New Jersey Realtors Circle of Excellence Designation and the Distinguished Sales Award. We also serve on the Sussex County Association of Realtors Board of Directors.
Our dedicated team is waiting to hear from you, so contact us today.