Buying a home is one of life’s exciting milestones.
While some may be hesitant at the idea of homeownership as it can be costly upfront, there are many wonderful (and more cost-effective)benefits of becoming a homeowner over a renter.
So, is it worth to buy a home instead of continuing to rent? We’re going to discuss the eight benefits of buying a home versus renting and the steps of the home-buying process.
Is it worth it to own a home rather than rent?
The answer to whether owning a home is worth it depends on what you’re looking for, your plans, and what’s feasible for your situation.
Consider your current and near-future financial scenario and if you can make a large investment and long-term commitment.
It’s also beneficial to research the steps of buying a home to see if the requirements align with your financial situation and lifestyle.
If you’re looking to stay in an area for a significant amount of time and have a reliable source of income, then it might make more sense to buy a home rather than pour your money into a landlord’s pocket.
Understanding the benefits of buying a home can also help answer whether buying a home is right for you.
The top 8 benefits of buying a home
Homeownership actually has many different benefits based on the buyers’ different preferences. But to give you a better idea of what you’re in for, we’re going to review our top eight.
Build home equity
Home equity is, essentially, how much of the home you own. Since you borrow a loan to purchase the home, you only really own the percentage of the home you’ve paid off.
Every time you make a mortgage payment to your lender, typically monthly, you’ll gain a bit more equity each time.
You can think of a down payment as your first amount of home equity. For example, if you put down your own money for a 20% of down payment, you’re at 20% equity right away when you purchase the home.
The benefit of equity is that you can use it in a variety of ways, such as cashing it out for other major expenses. And the more equity you have in a home when it comes time to sell it, the more profit you get from the sale rather than having to pay it back to the lender.
Renovate as you please
When you rent an apartment, you’re pretty limited on what you can change in your space to make it your own.
When you own a home, you can make as many changes as you please to the home; you can install a pool, add an addition, and paint the rooms whatever color you want —your imagination (and budget) is the limit.
Additionally, if you need to make any necessary updates or urgent fixes, you can make the arrangements on your terms rather than accepting whatever your landlord decides and arranges.
More flexible payment terms
When you take out a mortgage, you have a say in the loan terms which can help make your monthly payments more affordable. Terms include the length of your mortgage and your interest rate.
To lessen your monthly payment, you can make a large down payment upfront or you can improve your credit score before getting a mortgage to receive more affordable interest rates. Additionally, you can shop around for lenders as each one may offer different terms than the other.
With renting, your monthly rent payment is entirely out of your control.
One of our favorite benefits of buying a home is the tax breaks. If you itemize your federal income tax deductions, then you may be able to deduct various costs, such as:
- Mortgage interest
- Mortgage insurance
- State and local property tax
It’s important to note that you can deduct up to 100% of your mortgage interest payments on your home, with a maximum home mortgage amount of up to $750,000.
Additionally, you may be able to write off your home office expenses if you work from home.
It may seem backward that you can build credit by taking out a home mortgage.
If you maintain your monthly mortgage payments, you can build your credit by making those consistent monthly payments. Lenders will recognize that you can efficiently manage your income and debt. Over time, this will help open the door for future investments.
Home values can rise
Typically, the value of your home increases if you keep your home in good condition; you can also add value to your home by making updates to the home.
Your wealth increases as your home value increases. When you’re renting, the only person who sees the benefit of the property value increase is the landlord.
This also means that when you sell your home, you can sell it for a higher price than what you paid—which puts more money in your wallet!
Sense of pride & community
A substantial amount of pride comes with owning a home, as it can be a long and sometimes challenging process to get through. It means a lot when you complete the home-buying process and can call a home your own.
Additionally, when you purchase a home, chances are you expect to stay there for a while, allowing you to settle into the community and start laying down roots.
When you obtain a mortgage, you can use your equity for refinancing and other investments.
A mortgage refinance is when you use your current mortgage to change your loan terms for better interest rates and lower monthly payments.
Some lenders offer cash-out refinancing, which is when you use your mortgage to apply for a new mortgage based on the home’s current value, and the difference between the two is given to you in cash.
You could renovate your home, pay off any large debts, or use the money for investment purposes like purchasing a rental unit or investing in the market.Check your refinance options
The home-buying process
To start the home-buying process, research homes in your desired location and check out the housing market to see if it’s a buyer’s or seller’s market. These things will help you narrow down what you want and to see what you’re up against.
You should then speak with a lending professional about the most suitable loans for your situation and apply for a mortgage pre-approval. This is basically a preliminary application that gives you an idea of how much a lender is willing to loan you, based on your finances.
Pre-approval isn’t required but it’s absolutely beneficial as you house hunt.
You can establish a budget with your real estate agent once you know how much you’re likely to be approved for. Sellers will also want to know that you’ve secured financing for the deal and that it’s less likely to fall through because of that.
Once you find a home, your agent will help you make an offer that’s, hopefully, accepted. Depending on the market, you may need to make an offer that stands out amongst others to secure your dream home. This could mean offering above the asking price or waiving some contingencies.
If your offer is accepted, the underwriting process begins.
You’ll officially apply for the mortgage and an underwriting officer will review your financial scenario and the home you’d like to purchase to determine if you’re approved for the mortgage.
Once you’re approved and you close on the home—you’re an official homeowner!
Buying a house is easy with GO Mortgage
With the right lending team on your side, you can seamlessly obtain your dream home.
GO Mortgage has a wide range of home mortgages with flexible requirements and terms. Our experienced team is here to answer your questions and guide you along the way.
Fill out our short questionnaire to stop renting now and start the process of buying a home.