For a long time, many people considered owning a home to be the ultimate fulfillment of the American Dream, one of the pinnacle financial achievements. However, in recent years many more people are opting to rent rather than own their own home. This has happened for a wide variety of reasons, but the main reason is that young people have too much debt from things like student loans to save up for a home. While it may be tempting to purchase a home due to its large price tag, it actually can be an amazing financial investment. There are many financial perks to owning a home that can actually put you in a fantastic financial situation rather than drown you in debt. So what are the financial benefits of owning a home? Let’s take a look.
One of the main financial benefits of owning a home is its ability to rise in value over the years. There is a limited quantity of land in the world, meaning that supply remains constant. However, the population is always increasing, and the demand for land is always on the rise. Since the supply can’t increase to match the demand, the price of land will rise. Of course, you have to go into debt and pay off interest to purchase a home, which offsets the increase in value. However, as long as you don’t shop too far outside of your budget, you should be able to gradually increase your wealth through your home. Owning a home is a long-term investment that could increase your wealth and provide you with a place to live. As long as you’re smart about the home you’re purchasing and can actually afford it, buying a home could be one of the best investments you make.
Control over Utilities
A very underrated reason to own a home is control over utilities. When you rent an apartment or home, you don’t really have that much control over your utilities and the appliances that use them. For example, your landlord may supply you with outdated appliances that guzzle up a ton of energy, costing you hundreds of dollars every year in extra utility payments. When this happens, you’re usually powerless, as you can do little to change the situation. However, when you own your own home, you have complete control over everything, allowing you to save massively on things like utilities.
Another big benefit to owning a home is the tax deductions that come with it. Many of these tax breaks are designed to help you with offsetting some of the costs of your mortgage, lessening the financial burden you have to deal with. For example, you can get deductions on your mortgage interest, closing costs, and property tax. With these deductions, you could make financially savvy moves such as moving other debt onto your mortgage, then getting deductions from the interest. Moves like these are only possible with deductions from homeownership, marking just another reason why it is financially beneficial to own a home.
A common factor in answering the question “Should I rent or buy a house?” is long-term savings. There is no denying that renting is cheaper in the short-term. Monthly rent payments will likely be much cheaper than a mortgage payment, so renting is the best option if you want to save money for a few years. However, if you compare homeownership to renting across multiple decades, buying a home and renting actually even out. If you rent someplace for $1,000 a month for twenty years, you’ll end up spending $240,000, money that you could’ve used to buy a home. However, when you rent, you don’t actually own anything, meaning you can’t sell the home to get money back. As a result, owning a home can actually save you money in the long-term compared to renting.
Sources: usatoday.com / redfin.com