Thursday, August 08, 2019 / by Lauren McGinnis
First and most importantly, even if you are renting your home... YOU ARE STILL PAYING FOR HOUSING!
Think about it for a second. No matter where you live you have to pay; so if you are going to be paying the equivalent of a mortgage payment, then you should be paying towards owning your home. Sure you could argue that if you are renting you may not have to pay the property taxes or home repairs directly. However when you pay rent to the landlord, they have already added up all costs they may incur on top of the mortgage due and added that amount into your monthly payment. On top of the basic costs of owning a home most landlords also figure in how much they would need to turn a profit!
Second, Housing is the one leveraged investment available to the general population. Owning your home can allow you to increase any appreciation to the value of your home by a leverage factor. What that means is that if you buy a home at $300,000 with a down payment of 20% ($60,000) then when the house appreciates by $30,000 (10%) in value you actually get a 50% increase in equity! That means that by owning your own home you are actually making money on your investment.
Third much like the point above, owning your own home can be viewed as a "forced savings plan". Homeowners build their net worth quicker than renters because of the value not only in their homes put also in the property. This net worth will continue to grow over the years you live in the home. One recent study found that a family who purchased an average priced home in January could build over $40,000 in family wealth over the first 5 years of owning their home.
Fourth, while you wouldn't always think of it owning your home is actually a hedge against inflation. Home values, as well as rent prices, rise and fall with the rate of inflation. When you purchase your home, the value of your home will protect you from that rise and fall of inflation.
The final and most known benefit to owning your home are the substantial tax benefits! Homeowners benefit from a lack of taxation of imputed rent and a mortgage interest deduction.
While it can be scary to own your home, the benefits far out weigh the draw backs!