Learn the major financial benefits of homeownership. Plus—4 tax saving tips for savvy buyers.
Since the mortgage crisis, whether it’s better to own or rent your home has been a controversial topic. Some people have sworn off homeownership forever and others have decided that there’s never been a better time to buy multiple properties. No matter your opinion, you should understand the 5 major financial benefits that homeowners receive so you can evaluate if becoming one is right for you.
Benefit #1: Paying a Low Mortgage Rate
Undoubtedly, one of the best reasons to make the leap into homeownership right now is that borrowing money is cheap. Interest rates are at historic lows, below 4% for a 30-year, fixed-rate mortgage and below 3.25% for a 15-year term.
Here’s an example using the current interest rates: The principal and interest you’d pay for a fixed-rate mortgage of $150,000 costs about $700 a month over 30 years, or $1,000 a month for 15 years. Ten years ago these same mortgages would have cost $1,000 for the 30-year option and close to $1,300 for a 15-year loan because the interest rates were higher.
Over the long run, low interest rates can make owning a home much cheaper than renting, in many parts of the country. Of course you have to factor in additional expenses—such as property tax, insurance, maintenance, a down payment, and closing costs—when considering whether you can truly afford to own a home.
Benefit #2: Paying Low Home Prices
The second financial benefit to buying a home in our current economy is that real estate prices are depressed. In other words, real estate is still a bargain in most areas of the country.
If you have a home to sell, that’s not particularly comforting. But if you’re a first-time home buyer, you have a great opportunity to get into the real estate game at prices you might never see again. As home prices eventually trend back up, the appreciation allows homeowners to build wealth.
