Despite the ups and downs of the past year, the housing market has remained strong, particularly in Arkansas. The demand for homes has outpaced supply, pushing the median value of homes up along with prices. Low interest rates have also encouraged this healthy market, allowing buyers to really take advantage this year. There are many benefits of owning your own home, but the top three will save you money, improve your credit, and award you more control over your life.
Owning Your Home Saves You Money
The clearest reason to own your own home is that it will save you money in the long run. When you buy a home, your mortgage rate is often locked into a long-term contract to be paid in monthly installments for either a 15 or 30-year term. If you’ve chosen a fixed-rate mortgage, that monthly payment never goes up, despite inflation. Insurance and taxes could change, but the payment you make toward your own home every month will not. This means as you pay down the loan over time, you’ll be paying less and less relative to the rising cost of homes.
Your home is also an appreciating asset. It will likely gain 3 to 5% in value each year you own it. If you stay in your home for five years, the house will have increased enough in value to cover any costs you’ve incurred in purchasing the home. From this point, you’ll only increase your profits when you do choose to sell.
Owning your own home means you keep the money you would have paid to a landlord if you were renting your home. Even as you spend money to upgrade items like appliances, roofing, siding or even remodeling, you’re adding to the value of the home.
Owning Your Own Home Builds Credit
Even though home loans aren’t the main source to build credit, paying back your mortgage in a timely manner builds and sustains your positive credit history. Additionally, as you pay down your mortgage you build up equity in your home. This equity is an asset that can be borrowed against in the form of a line of credit because lenders view it as fairly strong collateral for the loan. While lines of credit should be used judiciously, the financial flexibility they provide a homeowner is strong.
Building credit isn’t the only benefit. In order to encourage homeownership, the IRS provides many tax benefits in the form of both deductions and credits. Your real estate taxes and mortgage interest are tax deductible. When you rent, your landlord uses some of the rental income to pay interest and taxes. They get tax breaks on those payments, but you, as the renter, do not. Being a homeowner allows you to take full advantage of these tax breaks.
Another outside benefit to homeownership is through auto insurance. Many insurance providers view homeownership as a sign of stability which is reflected in lower auto insurance rates. Many insurance providers will provide a further discount if you bundle both your home and your auto policies, increasing your savings, all because of homeownership.
Owning Your Own Home Puts You In Control
There are benefits outside of financial ones to owning your own home. When you own your home, you’re in charge. You don’t have to worry about paying a landlord or having to move if the landlord decides to change the rental situation. You can update and remodel your home as you see fit. Owning your own home gives owners greater peace of mind based on a more secure living situation. Homeowners also generally enjoy better health and experience less crime than those in rentals.
Another interesting facet of owning a home is homeowners are more likely to be active in civic participation such as local government, clubs, boards and as volunteers for non-profit and religious groups. These benefits extend to your family as well. Generally, children who grow up with parents who are homeowners are more likely to do better in school. Speaking of children, your home will also build wealth for them. Homeownership increases wealth in general.
If you think you’re ready to buy a home, or perhaps find a new one, visit First Security Mortgage to get started. With mortgage specialists in over 75 locations across Arkansas, we’ll help you buy your home with competitive rates and the best financing options available, so you can take advantage of the many benefits of owning your own home.