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Benefits of Homeownership
Jun 09, 2021
We’ve talked before about analyzing what makes more sense for you, renting or buying and the benefits of both. We recognize that homeownership is a big decision and one that cannot and should not be made lightly. However, in our opinion buying a home provides so many benefits and opportunities. Today, we are going to dive a little deeper into what those are and why they matter for you.
Building Your Personal Wealth
According to the Census Bureau, homeowners on average have a net worth that's 80 times higher than that of renters. But why is that and how is it possible? Two of the largest contributors are building equity and tax benefits.
When you buy a home, you start to build equity. Equity is the difference between who you still owe on your mortgage and what the home is worth. For example, if you buy a $300,000 house that appraises at the same $300,000 and put 10% down, at the beginning you have $30,000 in equity. As you pay down your mortgage your equity grows. Additionally, if your home appreciates in value your equity also continues to rise. But why does equity matter? As a homeowner you can use the equity in your home. Perhaps you need to pay for home renovations or sending a child to college, you can tap into the equity in your home using a cash-out refinance and utilize the cash to fund those expenses.
Additionally, as a homeowner you have tax benefits available to you. Currently, if you file your taxes as a single person or jointly if you’re married, you can deduct up to $750,000. If you are married and filing separately the deduction is limited at $375,000 per person.
Homeownership with always be one of the three largest ways to build personal wealth. Your home is and will remain a sound investment with return.
Customization and Satisfaction
Do you love to read or cook or spend time outside? Maybe you desperately want a home gym. Well, home ownership allows you to prioritize and make your home exactly what you need for your life. If you love to read, maybe a sunroom with a reading nook is something that is super important to you. If you love to cook, maybe you need a gourmet kitchen. When you’re renting, it’s a struggle to get permission to even paint a wall. When you own however you customize your space to your needs.
Additionally, there is a sense of pride that comes with being a homeowner. People are far more likely to care for their space, invest in upgrades and want to share their homes when they feel it represents them and is an accomplishment they worked for.
If you think this might be the right time for you to think about buying, we’d love to talk to you about your options. You may be far closer to achieving the goal of homeownership than you realize!
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We've begun to see signs that the Spring Market is here and could be robust! Here is what we know: According to NAR, home sales were up 14% in February over the previous month which marked the biggest monthly increase since July 2020. While March results are not yet published, the mortgage industry saw an increase in purchase applications for the 3rd straight month; a great sign for the housing market. Driving much of this activity is the stabilization of rates in January & February and lower interest rates this past month. We’re starting to see signs of a slowing economy and the markets are now pricing this in. This week we saw the 10-yr Treasury drop under 3.4%, a level it has not reached for quite some time and the lowest it’s been since September 9, 2022. This is great news for consumers as decreasing rates mean more home affordability. Over the past year, most markets have seen home prices stabilize if not even decline, albeit by a very small amount. This stabilization was still a relief for homebuyers as it helped to offset higher interest rates. As rates continue to decrease, we would expect home prices to again increase due to demand increases. In addition to increased demand, there is still a shortage of homes for sale nationwide and that will continue to worsen as more and more homebuyers enter the market. So what does it all mean? Now is a GREAT time to buy a home! Rates and home prices are stable, there is not as much competition as there will be when rates do decrease, and buying a home is still extremely affordable for most. Once rates fall, we will likely see home prices rise and the competition for the shortage of homes will increase alongside it making the window of a buyer-dominated market very small.
We are well into Q1 and feel confident saying that the market appears to be stabilizing. Before we start looking forward, let’s quickly look back at the end of 2022.
Buying a home is a huge investment and one we talk about often - BUT the flipside is that you have an opportunity to cash in on that investment when you’re ready to sell your home! While you do have the chance to cash-in, a lot more work goes into selling a home than you might think! If you are considering selling your home, working with a listing agent will help you market your home, negotiate with potential buyers, work through paperwork, and ultimately close on your home! So what is a listing agent? In its most basic terms, a listing agent is a real estate professional who represents the seller in a real estate transaction. The listing agent lists the home for sale and works on behalf of the seller to sell the home at the best price and terms for their client. Listing your home is a BIG deal and it is not a place to try and DIY. But why can’t you just grab a sign at Home Depot and try and sell yourself? Well, there are lots of reasons some of which include: Professional consultation: A listing agent will walk you through each step and tell you what to expect along the way! They should understand the specific community you’re in and the current market environment and will help you determine a competitive but realistic asking price for your home. Marketing and selling your home: Your listing agent will list your home on the multiple listing service (MLS) in order to better market your home to potential buyers. They also can make staging recommendations and hire a photographer to best show off your home and its features. They’ll schedule house showings, and can be present to answer any questions. Communication and negotiation: Communication is key to both buying and selling a home in order to minimize stress and misunderstandings. Listing agents take care of this important task, by staying in touch with interested buyers and their agents, fielding questions, handling paperwork, and negotiating the final sale price and terms. Recommendations: Seasoned listing agents might come with a list of professionals who they have worked with in the past that they enjoy working with in order to make the selling process smoother for you! Some of these professionals include: real estate attorneys or title companies, inspectors, stagers, those who specialize in home improvement AND of course trusted Loan Officers. How do I find the right listing agent for my situation? In order to find the right listing agent for you, make sure your agent is licensed and has experience, references, and a professional website where you can learn more about them and their qualifications. Most real estate agents work with both buyers and sellers, but some might specialize in one or the other. Once you find a few agents through referrals or online research, meet with them in person to ensure they meet your needs and work well with your personality. It is also important to ask questions during your meeting with them and it’s imperative that you determine what you’re looking for in an agent so you make sure you are happy with the product being delivered. Selling a home can be stressful, especially for first-time sellers. A listing agent can help by taking on some of the burden and providing the information and resources needed to help sellers make informed decisions. We work with agents on both sides of the transaction – if you have any questions or would like a recommendation for an agent in your area, please reach out to us!
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