There are a few financial milestones in life that stand out. Purchasing a car, throwing a wedding, and buying a home are among the biggest. But how can you know when it is the right time to pursue homeownership?
It’s different for everyone, but a solid first step is to understand the benefits. Knowing what to expect and how owning differs from renting is critical in making the right decision. If you’re trying to figure out what’s best for you, you’re in the right place. Here are five benefits to expect with homeownership.
1. Locked in Finances
The rental market is hardly predictable. Cities grow in popularity and cause rent prices to skyrocket. Management changes, and rent prices or amenities fees increase. These fluctuations can make renting hard to plan around financially. However, when you own a home, you know that your mortgage is unlikely to change drastically.
During the home-buying process, you’re completing a lot of financial steps. One of them is getting an interest rate from your mortgage lender. That rate is the amount you’ll spend to borrow the money necessary to purchase the home. You then pay back interest throughout the loan’s life. Your original rate will stay the same unless you refinance your home or opt for an adjustable rate.
Of course, there are other costs to consider with homeownership outside of your mortgage interest rate. Property taxes, home insurance rates, and maintenance can vary year-over-year, for example. So, it’s important to be informed and take proactive steps like getting a quote for home insurance before deciding what’s best. But knowing that you won’t have to move in a year because of a rent increase is surely a benefit.
2. Customized to Your Liking
In a rental, you can spend time and energy making the space your own. Adding artwork and buying furniture that perfectly fits each room adds your personal touch. That’s the extent of your customization options in most rental properties. When your lease ends, you pack it up and move along. And you usually spend some time patching nail holes to try to get your deposit back.
However, when you buy, you can make long-lasting changes. You can paint the walls or knock them down. You can redecorate every year if you like. It’s your space to change as you please. There’s a world of possibilities and the opportunity to tweak your space until it’s perfect. Then, as your needs change, you can do it all again.
Of course, bigger changes are costly and require significant planning. Factor those into your household budget and long-term goals. Then, you can ensure everything is exactly to your liking for years to come.
3. Build Equity
The debate about renting versus buying a home brings the pros and cons of each option to the surface. Flexibility, finances, and fun tend to rise to the top of the conversation. However, homeowners often decide to buy because of one key factor: Equity.
In short, equity is the amount of the home that you own. It’s the sum of the down payment and principal portions of your monthly mortgage payments. So, if you buy a house for $300,000 with a $50,000 down payment, you owe $250,000 on your loan. With each mortgage payment you make, you’re reducing the amount owed and, in turn, increasing your equity.
While you own the home, you continue to build equity. Then, when you sell your home, you make money on the sale and take advantage of that equity. That can then be applied to a future property or pocketed as profit. This return is one of the biggest benefits of homeownership that renting can’t compete with.
4. More Space
Rental units are often in the most populated parts of cities. Apartment complexes are a dime a dozen in certain pockets with more popping up all the time. And that’s definitely a pro for renting. However, to be in the middle of the action, you’re often sacrificing space. When you buy a home, you’re often able to get more square footage.
Single-family homes often have bonus rooms like basements or garages that increase the usable space. You may have an attic for storage and a spare room for odds and ends. Even a dedicated laundry room offers a unique opportunity for space that many rentals don’t provide.
With the extra room, you can live in your home for a longer time. As you grow and need more space for your family or new hobbies, you fill out the home. Plus, you don’t have to move until you’re in need of something different, which could be years from now. That stability is extremely appealing to potential homeowners.
5. Increased Privacy
Apartments are typically smaller living spaces surrounded by dozens or hundreds of other units. You’re close to your neighbors at all times of the day, even sharing walls. Translation: Your privacy is limited. In a house, though, you can take advantage of increased privacy.
Of course, every home won’t offer complete privacy. But you can take steps to make it feel more private by installing a privacy fence or investing in privacy glass. You can do renovations small and large to create a place that feels much less open than rentals offer.
With your privacy protected, you’re ready to take advantage of the perks. Host a party that your neighbors can’t snoop on because you’re in the comfort of your home. Tan in the backyard without being surrounded by balconies or nosy neighbors. While there’s upkeep for maintaining privacy, it’s well worth the effort to keep your home life to yourself.
Home Sweet Home
There’s something to be said about owning a home. You’re in the driver’s seat making all the decisions for its look and feel. You’re tasked with maintaining it so everything stays in working order. Naturally, that’s a lot of work. But when you’re hanging out with loved ones in a space you created and own, it’s all more than worth it.
