In June, we celebrate National Homeownership Month by promoting the benefits of being a homeowner and recommitting to creating opportunities for future homeowners. Achieving homeownership is a journey full of ups and downs, especially in recent years. Peoples Bank encourages you to use this list to reignite your excitement about being or becoming a homeowner.
1. Build up savings through the equity in your home
One of the most prevalent benefits of homeownership is the appreciation of your home over time, and we’re not just talking about the appreciation you will feel for no longer having a landlord. It’s true that housing markets move in cycles, however, houses will almost always appreciate in value to some degree over time. On a national level, homebuyers who purchased a home 10 years ago have gained an average of $225,000 in equity if their home sold for the average price1.
Increased equity in your home also comes in the form of “sweat-equity”. This refers to the work you put into your home to make improvements or renovations. Switching up that old shag carpet for some shiny hardwood floors can make all the difference when it comes to appraisal.
All this equity you’re building just by owning a home and making your monthly mortgage payments turns into long-term savings. There are several ways you can tap into your home’s equity down the road, but studies show that many Americans use their home equity as retirement savings and who doesn’t want to ensure their future retired life is as comfy as possible?
2. Increased tax benefits
In addition to equity, being a homeowner also comes with multiple tax benefits. All interest paid on a mortgage is tax-deductible. You may also get property tax deductions depending on your jurisdiction. Homeowners may also be exempt from up to $250,000 after selling a property due to an exemption in the capital gains tax2. Please consult your tax advisor for confirmation of tax benefits.
3. Freedom to make the home your own
When renting a home or apartment, landlords often prohibit tenants from making any permanent or lasting changes to the property. If you’ve always wanted a custom mural painted on your wall or a built-in obstacle course for your cats, becoming a homeowner is the way to go.
4. Predictable payments make for easy budgeting
While making the leap to buy a home may sound scary and expensive, it may help you with budgeting and saving in the long run. With a fixed-rate mortgage, your monthly payment will be the same every month, no matter if the market goes up or down. When renting, you are constantly faced with the uncertainty of your landlord raising your rent on you year after year. As a homeowner, you will know exactly how much you need to budget for housing each month and while the payment may seem large at first, it might help to remember that in the years to come, your salary is likely to increase but your mortgage payment never will, unless you decide to change your mortgage terms or refinance.
5. Maybe your new neighbor has a pool
Anything is possible!
If you’re ready to start the process of becoming a homeowner, the best first step is to get preapproved for a home loan. Peoples Bank offers a quick and stress free application process through our Express Mortgage platform. Fill out our application here and one of our expert lenders will be in touch with you to walk you through everything you need to know.
1 National Association of Realtors https://www.nar.realtor/promoting-home-ownership#:~:text=An%20obvious%20financial%20benefit%20of,and%20other%20preferential%20tax%20treatment.
2 https://www.fortunebuilders.com/benefits-of-homeownership/
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