You've likely arrived on this page because you are wondering about the benefits of becoming a homeowner. Maybe you are renting a home and don’t know if it’s better for you to buy or rent your home. Or perhaps you’re still living at home, want to get a place of your own, and are trying to choose between renting and buying.
Well, you’ve come to the right place.
I’m going to share all of the benefits of becoming a homeowner and not just the financial benefits. I’ll also share the personal and social advantages that come with owning your own home.
So, without further ado….
In the interests of transparency, being a homeowner is not automatically good for your wallet. A person's personal circumstances, the state of the housing market, and the cost of rentals all factor into whether it is better to buy or rent a home.
We’re not here to debate the pros and cons of buying a home; we’re here to look at the benefits of being a homeowner. So, assuming you are in a position where buying is better than renting, these are the benefits you can expect.
If you are buying your home and intend to stay in it for an extended period, then you can be reasonably sure your money is safe. Yes, the housing market may go up and down over the years, and no, there is no 100% guarantee that you will not lose your investment.
As far as investments go, there are not many out there that are as secure and as reliable as investing in property.
Yes, there are alternative investments, which are safe and might provide you with an excellent return, however. In order to take advantage of them, you need the cash up-front to sink into the investment. If you are “cash poor,” you are usually out of luck.
Homes are mostly bought with mortgages and as such the bank is effectively lending you the money with which to invest.
This is what makes home buying the safest, most accessible investment for the majority of Americans.
Once you have taken the leap and bought your home, you will soon begin building equity. Inexperienced homeowners often assume that as soon as their house price starts to rise, so too does their profit.
Seeing positive equity in your property is not the same as being in profit.
Let me explain.
Imagine you buy your home, and it has cost you $350,000, and for the sake of this example we’ll pretend you don’t have a mortgage, you paid cash.
One year later it is valued at $360,000, so you have already made a $10,000 profit right?
By the time you factor in the costs of buying your home, which could be, in this case approximately $20,000, if you sold your house you would still be $10,000 worse off.
The home is still worth $10,000 more than you started so your equity has still increased by $10,000 see?
For homeowners with a mortgage, equity is your “financial interest” in your property.
Or to put it simply.
How much the house will sell for minus how much you owe on the mortgage. So….
You buy a home for $350,000, have a deposit of $10,000, and your equity is $10,000. As the years pass, the amount, you owe on your mortgage decreases and so your equity increases. Once you have paid off, say $12,500 of your mortgage loan, your total equity would be $22,000 - your original $10,000 plus the $12,500 you no longer owe.
Home equity is the most important financial asset for the majority of Americans. This is why building equity is such a huge benefit of becoming a homeowner.
The majority of people focus on building their credit history in order to obtain a mortgage. After this, many people give their credit score less thought.
Having a mortgage and making regular, on-time payments helps to demonstrate to lenders that you are a reliable and safe bet for loans, credit cards, and lines of credit.
Not only that, but the higher your credit score, the more options you have to choose from, and lenders will offer you better terms.
Becoming a homeowner can boost your credit score. Take advantage of this; keep a close reign on your finances, keep up to date with repayments on all loans, do not apply for too many credit products, and generally behave as you dd in order to obtain your mortgage in the first place.
If you become a homeowner and sign up to a fixed rate mortgage, you will have the same monthly payment for the duration of your loan.
This is one benefit of becoming a homeowner that is often overlooked.
It is a lucky home renter indeed that does not see their monthly rent payments go up year after year. Not only that but, unless you live in an area where rent increases are legally controlled, you might not know from one year to the next how much your monthly outgoings may be.
And talking of rent….
When you are renting a home, there is no end to the payments. Year in, year out, until your final month on this earth, you will be handing over cash to your landlord.
On the other hand.
When you buy your own home, there will come a time when you have paid off your mortgage, and you will find yourself free of your largest monthly outgoing.
A retirement free from major monthly housing payments is a HUGE benefit of becoming a homeowner.
And there’s more good news. The benefits of becoming a homeowner are not restricted to the financial side of life.
While our first thoughts tend to go to the impact on our wallets, there are many more benefits to becoming a homeowner. In fact, some people will buy their home when it is a more expensive option than renting, because of the other advantages of becoming a homeowner.
If you have ever been unfortunate enough to have the kind of landlord that inspects their property at every possible opportunity, you will know how it feels to have a home which doesn’t feel like home.
Then there is the fact that a landlord can, in the case of an emergency, enter your home without your permission. You could come home one day and find your landlord in the kitchen claiming there was a smell of burning, or your downstairs neighbor thought there might be a leaking pipe.
Becoming a homeowner means you never have to worry about a landlord inspecting your home, or entering it without your permission.
One of the greatest benefits of becoming a homeowner is the stability of owning your own home and being able to stay in the same spot if you so wish.
As time goes on, fewer and fewer renters are able to enjoy the stability of a rent protected home in which they can stay for as long as they like.
Developers are snapping up cheaper rentals, evicting the tenants, renovating the units, and then putting the homes back on the market at much higher rents. Either that or developers buy a rental building, demolish it, and build high-end condos for sale.
Even single-family homes are not immune. Landlords in some property markets can make big money by selling their rental homes. These properties are often snapped up by home flippers who are only interested in evicting the tenants, flipping the house and selling it on as quickly as possible.
By becoming a homeowner, you can enjoy greater stability, which in turn leads to more stable:
Not only that, but you no longer have the stress, inconvenience, and cost of moving from rental to rental.
Rental units and landlords vary, but everyone who rents their home is restricted in some way as to what they can do to make their home their own.
You may be somewhere that allows you to paint the walls any color you like. On the other hand, it may be a condition of tenancy that you may not redecorate and that the landlords or their agent will do any painting.
Taking it a step further, if you rent your home, you will never be able to renovate to your specific taste, remodel the house to suit your changing needs or style, or even landscape the garden if you are lucky enough to have one.
By becoming a homeowner, you get a home you can truly call your own, by making your mark on it.
Yes, I know that some renters can have pets, but many can not, and those that can, are often restricted as to what size, species, or breed of pet they may own.
So, one benefit of buying your own home is that you can have whatever pet you like, assuming you are not breaking any laws or regulations of course.
Rent forever and when your time comes to shuffle off this earth, your family will be left with nothing and may even be forced to move from the rented family home.
Renting a home is sometimes the best option, but there are significant benefits of becoming a homeowner. While for most people the driving force behind their journey to homeownership is financial, there are many other benefits, not only for you but for the family you may not even have.
By buying your own home, not only will you be able to enjoy your rent-free retirement but you’ll be able to leave a stable home for your loved ones, or a sizeable inheritance to help your family build their own future.
If you are on the fence, for me, the benefits of becoming a homeowner far outweigh the negatives.
The above article on The Benefits Of Becoming A Homeowner was written by Geoff Southworth. Geoff is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership.
Geoff has been a real estate investor for the past eight years and has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.