Building equity in your home is one of the smartest investments you can make. If you put time and money into your home, you'll enjoy significant returns on your investment. As a homeowner, you can improve your net worth, customize your living space, and save money.
Raise Your Net Worth
The median net worth among American homeowners is about $77,000. 75% of that net worth is the equity that owners have accrued. With that equity at nearly $50,000, the average homeowner could cash out on his or her home's equity and make major purchases.
What is net worth?
Your net worth is a dollar value assigned to the total of your assets minus debts. Anything you own, from appliances to cars, counts toward your net worth.
- Household Appliances
- Home Equity
The equity in your home also counts toward your net worth, even if you haven't finished paying off your home loan. Renters can help improve a home's equity, but only the property owner will reap the benefits. Should you decide to buy a house, love it and take care of it and your equity will grow. Once you've paid off your mortgage, your net worth will raise again with the total value of your house.
Take Control of Your Home
As a renter, you are bound by the rules of the property owner. You will be paying off the owner's mortgage and helping with property taxes. You will live with the constrictions of the homeowner's association and the property owner's wishes. When you buy a home, the property is yours. You can choose how to landscape, improve, and maintain your home.
Freedom of Maintenance
You don't have to wait for the property owner to make repairs. You know the priority ranking of issues in your home and can address them accordingly - without the approval of anyone else. You'll also be able to choose your repair company
Homeowners are in complete control of home improvement. You can choose when and what to renovate, rebuild, or redecorate. You'll be able to:
- Make additions to your home
- Repaint the interior and exterior
- Decorate walls and floors
Get Tax Deductions
When you own a home, you can deduct from your taxable income:
- Interest on your mortgage
- Property tax
You can also catch a break on your capital gains if you decide to sell. Ordinarily, the IRS will take a chunk of your profits from selling your home. If you're a single home seller, you can hang on to the first $250,000 of profit from your home. If you're married, you and your spouse can keep the first $500,000.
Save Money in the Long Run
It only takes 6 years for a homeowner's payment to move below that of a renter. If you take advantage of tax incentives, it only takes 3 years. Rent payments increase based on inflation and property value at an average rate of 5% per year. A fixed rate mortgage offers consistent payment amounts for the life of your loan. Renters don't get tax incentives and suffer regular monthly payment increases. Homeowners enjoy lower payments even toward the beginning of their mortgages. As a bonus, mortgages are amortized. Amortized loans have a fixed payment schedule over a predetermined period of time. Borrowers will pay the most interest during the first years of their loans, then quickly work down the principal.
Own a Home!
Once you pay off your mortgage, your house and property are yours! You can take pride in having succeeded in one of the greatest endeavors of a lifetime. You'll also have a tangible, valuable asset that you can use in case of emergency. Buy instead of rent if you're looking to capitalize on your investment and seek a sense of achievement.