Buying a house is still part of the American Dream. There are several great benefits of buying a house that you should be aware of. While today’s housing market and the significant lack of available credit makes owning a home more difficult, it is not impossible to purchase a home.
With good credit and down payment, you can find a mortgage to purchase a new home. Renting should not be your default option when there are so many great benefits of buying a house.
Four Great Benefits Of Buying A House
Forced Savings
One of the greatest benefits of buying a house is that it forces you into a set savings plan. Every payment that you make on your mortgage builds equity in your home. Far too many Americans do not save enough money in their emergency fund or for their retirement. The savings rates in America were over 5% during the recent recession, but the savings rates in America have since started begun dropping down to under 2% again since the economy has been recovering.
While home values are not rising like they were before 2007, continuing to pay your mortgage over thirty years until your home is paid off will force you to save the value of the home when people are not saving enough outside of their home values.
Building Wealth
Buying a home helps you build wealth. For most Americans, your home’s value is one of the largest portions of your net worth. Like forcing you to save, building wealth through real estate is a one of the best benefits of buying a house.
Despite the recent housing crisis, home prices have historically risen 4% annual since 1960. Having equity in your home also allows you a lot of flexibility as well. Many people take the equity in their home and leverage it into more real estate which continues to help you build wealth.
Saving on Taxes
The mortgage interest rate tax deduction is one of the greatest benefits of owning a home in America. Mortgage interest rate tax deduction is not the only savings that you receive on your taxes when owning a home. There is also generous capital gains exclusion when you sell your house. If you are married and file a joint tax return, you can exclude $500,000 in capital gains from the sale of your primary home.
Sense of Pride and Community
One thing that you receive from owning a home instead of renting is a pride in ownership. There is something special about homeownership. There is a sense of pride that you receive when you own your own home. There is also a sense of community that is one of the benefits of buying a house.
Homeowners more than renters tend to be involved with their neighborhoods, know their neighbors, serve on boards or committees to help the neighborhood, and are involved in what is going on in your community.
Did I miss any of the benefits of buying a house? Do you think I’m off the mark? I’d love to hear your thoughts in the comment section.
I think that being able to do what you want with your house is an important benefit as well.
That’s a great point. When I was a renter, I was petrified about not getting my deposit back. I refused to paint any walls or hardly even hang any pictures. Owning my own house has definitely broadened my wife and my decorating.
I hate the “tax savings” as being a selling point of home ownership. There are no guarantees that you will be able to deduct any of the mortgage interest or real estate taxes on a tax return. If you don’t have a mortgage, there is no interest to deduct, and if you don’t have anything else to itemize you lose the real estate deduction. The same holds true for low-cost properties where only a small mortgage is taken out. Plus, the deduction will disappear as time goes on and less money is being paid to interest. The blanket statement is really misleading particularly at a time when homes can be had at such low prices, with such low interest rates, and when high down payments are required. Not that I’m taking shot at you Hank, as everyone and their mothers says the same thing without realizing that it’s not always the case.
I understand you sentiment, but for the vast majority of homeowners, the mortgage interest deduction is a great benefit of home ownership. While that is not true for 100% of homeowners like those who owe only a small percentage on their mortgage or own their homes outright, it is true for a vast majority of homeowners who have mortgages.
Good list.. but I’m not too sure on the tax savings bit. As Eric pointed out this isn’t guaranteed especially with the standard deduction being almost 12k. The government has put the mortgage interest deduction on the cutting block a few times recently because of our deficit. Other than that.. I agree with the list. The main one being “sense of pride and community” I will be the first to tell you our primary residence purchase was a lifestyle choice and not a financial one.
The mortgage interest deduction is so popular among Americans, I would bet that it is hardly altered by Congress for fear of voter backlash. It is popular to talk about cutting it, but the reality of actually doing it is much different.
I am a huge fan of building up equity and lowering my future expenses. I never know if I will need lower expenses in the future, so I might as well do as much as I can now.
Homeowners are the biggest beneficiaries of government social engineering. Is this a great country or what?
But if homeownership is so great, why does government prohibit the construction and sale of homes that low earners can afford to buy?
Nice post! A lot of people try to discourage home ownership because of the great amount of interest that comes along with it. But there are certainly advantages to it as you pointed out. I own a home and I personally don’t regret it for a minute.
I love forced savings. I am a big spender and having a mortgage makes me give up on those useless craps I spend my money on like alcohol and travels.
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