The Benefits of Ownership

Buying a home doesn’t mean all of your problems will go away.  There are plenty of responsibilities that come with home ownership, but the benefits far outweigh those responsibilities.

Owning a home involves a down payment, property taxes, potential home owner’s association fees, and other various expenses that can seem at first to be a burden, but when put into perspective, are all positive aspects of home ownership.

• Down Payment – the downpayment becomes part of your home’s equity, or the amount of money your home is worth above and beyond what you’ll owe on it.  Equity is what you would walk away with if you sold the home.  Traditionally, since homes increase in value on average by 3% – 4% annually, your downpayment is now part of that investment.
• Property Taxes – Did you go to school?  Are you children in school?  Will they be?  Education is just part of what your property taxes pay for, and as I mentioned, contrary to popular belief, purchasing a home is not the most important investment you’ll ever make.
• HOA Fees – The homeowner’s association is responsible for keeping your neighborhood looking good for the purpose of retaining property values.  Nobody likes a run down neighborhood.  There are other benefits that you’ll learn about in their documentation (Covenants, Conditions, and Restrictions.)  Remember, not every neighborhood has one.

The fact that purchasing a home involves large dollar amounts is what typically drives the would-be buyer away.  But let’s face it.  Most of us don’t have $100,000 sitting around in our bank account, and so we remain stuck in a pattern of believing we cannot afford to buy a home.

So what makes buying a home such a financial benefit?

• Tax Deductions – When you finance a home, part of the payment you pay to the bank is interest and part of the payment is equity.  During the first 20 years of a 30 year fixed mortgage, the interest portion is actually disproportionately larger than the principle payment.  Under current tax regulations, you are permitted to deduct the interest payments from your income to lower your tax liability.  Renting does not allow this.
• Appreciation – Real estate, over time, will increase in value by an average of 3-4% annually.  In some cases more, in some cases less.  As your home’s value increases, your equity grows, which equates to you and your family walking down a road towards financial independence and complete freedom from the rat race.
• Equity – Part of your monthly payment goes towards chipping away at the balance of your loan and becomes equity in your home.  Equity is something you can recover when you sell the house, provided the value has increased.  When you rent, you don’t build any equity.
• Buying Power – As the equity in your home grows, so does your ability to borrow that equity to improve your home or invest in additional properties down the line.  While the reason we’re in this economic crisis is because of cash mongering greed, home equity loans are a potential solution to emergencies should they arise.
• Economic Stability – A 30-year fixed loan is just that, fixed.  The payment never changes.  Rent continually shifts from lease term to lease term and over time can increase.  Buying a home ensures your payments will always be the same.
• Freedom to Choose – Owning a home gives you the right to do just about whatever you want to it, from the landscaping to interior decorating, you’ll no longer be bound by the landlord’s rental agreement and you’ll have the freedom to express yourself exactly how you want.  Not only that, but you’ll also have the freedom to rent your home out to someone else.  Renting out your home is a great way to continue to reap all of the benefits above without having to pay for it.  In fact, your renter pays for it and helps move you toward financial freedom.

When you own, you have a voice, and you gain a sense of greater community, as though you matter more to the world.  I have owned my own home since I was 30.  I wish I had purchased sooner because I would be way ahead of the game.  Get on it today!  It’s time for you to buy a home.

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