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The Advantages of Homeownership

When most people hear about LaPlante Real Estate they think of rentals and property management. But what you may not know is that we’re also a traditional, real estate brokerage. We have a number of agents who not only can help investors buy and sell rental property, but can help people find their next forever home.

June is National Homeowners Month so we decided to share some advantages of homeownership!

  • It’s a good long-term investment:
    Homes can lose value, but it is rare. The Federal Reserve Bank of St. Louis reports that the average price of homes sold in the United States increased by 28% in 10 years starting in 2009 and 10% from 2014 to 2019. Within the same decade, the housing market added $11.3 trillion in value. Even with COVID-19 driving the marketplace, those increases have continued to rise, at least in the short-term. When you purchase a home, you are investing in an asset for yourself.
  • Low interest rates:
    Rarely do we see interest rates as we have seen in the past couple of years. Rates are beginning to vary depending on credit score and where you buy, but with the lowest rates at or near 6%, the time may never be better to buy.  
  • Build your credit:
    Since the length of a mortgage is typically 30 years, having a mortgage on your credit history is a fantastic way to improve the average length of your credit. Every month you pay your mortgage on time is another step forward towards better credit history! 
  • Build equity:
    Equity is the difference between what you can sell the home for and what you owe. Equity grows as the mortgage balance goes down. Over time, more of what is paid each month goes to the balance on the loan rather than the interest, building more equity. If the value of your house is also increasing, the amount of equity you have will increase also.
  • Federal tax benefits:
    Did you know that mortgage interest is deductible on the first $750,000 of the purchase price of the home? The same goes on the interest on home equity loans, property taxes up to $10,000 if married ($5,000 if married filing separately) and some closing costs at purchase time. Many homeowners love taking advantage of the tax deduction of the monthly interest paid on their house from their tax returns. During the first 5 to 10 years of the initial mortgage, the bulk of your payment is almost all interest.  This means that at the end of the year, you are looking at a nice deduction! 

    However, the increase in the standard deduction to $24,800 for married couples ($12.400 if single) makes it a little tougher to itemize those interest deductions. Calculating all these numbers prior to purchase will help show what tax benefits you can gain. 
  • Freedom to make changes:
    Have you ever wanted to paint a room an unusual color, plant an outdoor oasis or even add to your home?  As a homeowner, you can do just that! A huge benefit of owning a home is the ability and freedom to make changes that meet your individual tastes. 
  • Home office:
    The popularity of working from home may not vanish after the pandemic fades, which means more of us will need a home office. The right setup makes a difference in comfort and productivity.  
  • Stable monthly payments:
    A fixed-rate mortgage is defined as the same monthly amount for principal and interest until the mortgage is paid in full. The stable monthly payments that come with owning a home come with great peace of mind, making it easier to create a predictable budget every month. Rents tend to increase at annual lease renewals. Fluctuating property taxes or homeowner’s insurance can change monthly payments, but that doesn’t happen as often as rent increases. 
  • Stability:
    People tend to stay longer in a home they buy because buying, selling, and moving are complex. While it may feel impossible to know where you will be in a few years, you are committed to that property for a while if you have purchased a home.
  • Cheaper than renting over time:
    The average rental is around $1,000 for a 3-bedroom 1 bathroom home.  If a purchaser buys a home for $100,000, they have the opportunity for a mortgage of around $900 a month. This is based on credit score, down payment, and any additional upfront costs to purchasing a home. 

Buying is not going to be for everyone, and we recognize that. There are all sorts of reasons why renting makes more sense, now or indefinitely. Weighing the pros and cons can help you decide when to take the plunge. Becoming a homeowner has its advantages.



mike-mocek

Mike Mocek

Brokerage Managing Director

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