The Many Benefits of Homeownership

When you rent a home or an apartment, you may feel like you're throwing money down the drain each month with nothing to show for it. But when you own your own home, that monthly mortgage payment translates into equity—an investment in your future. In addition to building equity, there are many other benefits of homeownership.

Building Equity

As we just mentioned, one of the major benefits of homeownership is building equity. With each mortgage payment, you're slowly but surely paying off the loan and building up ownership stake in your home. And as your equity grows, so does your net worth.

For example, let's say you buy a $250,000 home with a 20% down payment and a 30-year fixed-rate mortgage at 4%. After 30 years, you'll have paid off the mortgage completely and will own your home outright. And if the home appreciates at a rate of 3% per year—a conservative estimate given that the average rate of return on investment for housing is closer to 6%—you'll have nearly doubled your money, thanks to the growth in equity. Not bad!

Tax Advantages

Another big benefit of homeownership is the tax advantages that come along with it. When you itemize your taxes as a homeowner, you can deduct items like mortgage interest and property taxes from your taxable income. This can add up to some serious savings at tax time. 

According to TaxACT, a family earning $60,000 per year and claiming the standard deduction would save about $1,350 in taxes by owning their own home instead of renting. And if that family took out a $250,000 loan with a 4% interest rate and owned a home valued at $300,000 (assuming an annual property tax bill of $3,000), they would save even more—to the tune of about $4,050 per year in taxes. That's some serious coin!

The Sense of Pride That Comes With Homeownership

Finally, there's the intangible benefit of pride that comes with owning your own home. Unlike when you're renting, when you're a homeowner you can paint the walls any color you want and put up photos without having to worry about what your landlord will think. You can also plant a garden, build a deck or patio, or make any other improvements you want without having to get permission first. In short, owning a home gives you complete control over your living situation—and that can be very empowering. 

As you can see, there are many benefits to homeownership beyond simply having a place to call your own. If you're on the fence about whether or not buying a home is right for you, consider all of these factors before making your decision. Owning a home is an investment in yourself and your future—one that can pay off handsomely both financially and emotionally.