Just because the scariest time of the year has arrived doesn’t mean you have to be afraid to venture into the world of homeownership.
With recent home buying statistics indicating that buying is on the rise here in central Arkansas and the market is in good shape, this seems to be a good time to at least take a quick peak at what experts say are some benefits to owning a home.
First, there are a myriad of financial reasons for buying. According to Forbes.com, homeownership builds wealth over time. “Homeownership can be a very savvy financial move – but only if people buy homes they can actually afford,” these experts say. Therefore, it’s a smart move to compile a budget, determine what percentage of your income is plausible for a home payment, and stick to that budget after you are approved for financing and begin a home search. A reputable real estate agent can help you find homes in your price range.
Forbes.com added that once you own a home, you will build equity each month. This is the amount of money you can sell it for minus what you still owe on it. “Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity,” the Forbes.com article explains.
“The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. Thus, as the months and years go by, your equity grows!” In some cases, real estate agents and/or lenders might recommend that, if you can afford it, you pay extra each month solely on the principal amount. This will in turn help you to pay off your home loan even faster, reduce the amount of interest you will pay over the life of the loan, and build your equity.
According to Businessinsider.com, homeowners can deduct both mortgage and property taxes from annual income taxes. “If you’re a new homeowner, you enjoy even more benefits because most of the money you pay on your mortgage goes to interest.” Keep this in mind when you are getting ready to send your tax documentation to your accountant for filing 2020 taxes.
Can homeownership also make a person feel better about themselves, their families and their world in general? According to a recent article in The Journal of the Center for Real Estate Studies, educational achievement, civic participation and health status can also be impacted by homeownership.
“Consistent findings show that homeownership does make a significant positive impact on educational achievement. Less clear, however, is whether homeownership in itself, stable housing or favorable neighborhood characteristics are the main underlying factors contributing to better educational outcomes. … Homeowners remain more likely to participate in local elections, civic groups and neighborhood compared to renters.”
So why is that? The study hints at the fact that it might be due to a stable lifestyle. “Homeownership and stable housing go hand in hand. Homeowners move far less frequently than renters, and hence are embedded into the same neighborhood and community for a longer period. While five percent of owner-occupied residents moved from 2014 to 2015, nearly 25 percent of renters changed residential location,” the study shows.