First-time Homebuyers - The Benefits of Home Ownership

By Fred Turner

Ownership Should you buy your own home instead of rent?

Homeownership is generally a good investment. I say generally, because real estate generally increases, especially over long periods of time. In 1873 there was the stock market crisis, in1929 the Wall Street Crash, in the 1930s the Great Depression, these all affected the housing market. The most recent 2008housing market crash was a unique market dip which is not common and does not happen very often. Here is an example of the recent housing market increase. According to Investopedia, from the fourth quarter of 2014 to the fourth quarter of 2020there was over a 16% increase on overall home values. The median price of a home was $298,900 in 2014 went up to$346,800 in 2020.*

This website below provides a rent vs. buy calculator that can show you which option will be most advantageous for you.www.nerdwallet.com/mortgages/rent-vs-buy-calculator. The results from this rent vs. buy calculator will not include the additional tax benefits and money borrowing opportunities as described below. This websitewww.zillow.com/mortgage-calculator/house-affordability can give you a basic idea of what a comfortable mortgage amount would be based on your current budget. Home ownership provides stability. When you own your own home your housing payment will be predictable. No landlord can raise your rent or decide not to renew your lease when it expires. There are tax benefits to home ownership. Property taxes and mortgage interest are tax deductible and if you are self-employed, you can write off even more with your home such as home office deduction, internet, phone bills, and part of the utilities and other tax benefits are available to you. Consult your accountant for more details and see the links below.

*Jim Probasco, “Homeownership as an Investment,” Investopedia, March 26, 2022, https://www.investopedia.com/articles/mortgages-real-estate/08/home-ownership.asp.https://www.forbes.com/advisor/mortgages/tax-benefits-of-owning-a-home/https://www.nerdwallet.com/article/mortgages/tax-deductions-for-homeownershttps://www.investopedia.com/articles/tax/09/self-employed-tax-deductions.asp

Homeownership can provide additional borrowing opportunities.

You can borrow against the equity on your home. This is called a home equity line of credit or a HELOC. The equity is the amount of 10value your home has increased since it was purchased. Many home equity loans are up to an 80%, rarely a 90% loan-to-value which means of you had$80,000 in equity in your home, you could borrow $64,000 against your equity. Closing costs for this type of home equity loan can range from 2 to5%. See the link below for pros and cons of a HELOC loan. https://money.com/home-equity-line-of-credit-heloc-pros-con rental option so check with your village hall for the regulations. You could also buy a duplex or 2-flat; live in one unit and rent out the other.

Your home can reflect your style.

Another positive benefit of owning your own home is that you can create your own style of home both inside and outside. This can be a bit more limited if you are in a condo or townhome. With a single-family home, the canvas is yours to create your perfect living environment. In my own home, I love the secluded nature that surrounds me daily. We have a family room addition with large windows that overlook our large and secluded backyard. The peaceful sounds of the birds chirping, rabbits, squirls and chipmunks running around the yard and an occasional deer makes me feel so relaxed and in touch with nature and the One who created it.

Your home can have a more controlled environment.

Owning your own home, usually means you will have less intrusive neighbors and a more controlled environment. Often multi-unit apartment buildings can have those neighbors that talk loudly, play loud music, or have wild parties late into the early morning hours. Convenient and safe parking can also be an issue especially if you come home late and all the good parking spots near the front entrance are taken so you have to park in the back of the parking lot where it is dark. One of the most common issues I have seen with new homeowners is that they did not properly plan and research all the possible criteria for their home, neighbors, neighborhood and the community before they made their home purchase, only to find later on that they had buyer’s remorse. This could have been avoided with the proper assessment prior to their first home purchase. In this book I lay out the pre-planning stages necessary to help ensure that you have a happy homeowner experience with no regrets. Beware, if you want to purchase a condo or townhome, you may still have the loud or obnoxious neighbor issue. Plus, if a neighbor above you or adjacent has a water leak issue or a fire, it could affect your home as well.

A home can be your “nest egg.”

Owning our own home can help with your retirement plans.

If you have owned your home for a longer period of time, maybe 20 to 30 years, your home equity has risen substantially. Your return on your investment will be a large amount of money and your return on your investment will be substantial. In your later years when you retire, this will greatly help you when you sell your home.

Homeownership can provide a sense of community.

When you purchase a home in a neighborhood and you plan on staying there for a while, you are building roots in that community. You vote and may even attend village meetings to understand what changes or additions are being proposed that may affect your area.

You can make a positive impact on your neighborhood and community as well as your home investment by taking a direct interest in what is happening in your area and take action.

For example, many residents of our neighborhood and nearby neighborhoods attended a village meeting where a truck stop gas station was being proposed next to our neighborhood. Many residents spoke out, including myself, and voiced their concerns about the diesel exhaust fumes, environmental issues with fuel run-off seeping into the water aquifers and affecting our wells as well as the noise and the added traffic. To my knowledge, the city did not move forward with plan to allow the truck stop to continue with its plan to move next to our neighborhood.

There is a profound feeling of pride when you finally own your own home.

Your very own slice of the American dream is now yours. The canvas is blank, and you can now create your very own masterpiece. You can say, I’m finally home!

This is an excerpt from Fred's book, The Happy Homeowners HANDBOOK For First-time Homebuyers. Available on Amazon.com More details at: HappyHomeownersHub.com