Homebuyers

The Benefits of Homeownership: Is Buying a Home Right for You?

Homeownership is a goal many people aspire to—and for good reason.

Owning a home allows you to build equity in your property, fix the majority of your housing costs, and personalize your residence.

“You feel like [the home] is yours, because it is. That feeling matters more than people think,” said Realtor Andrew Fortune of Great Colorado Homes in Colorado Springs.

But homeownership comes with a few serious considerations, too. Here’s what you should think carefully about before purchasing a home.

Homeownership benefit No. 1: Fixed monthly housing payments

One of the biggest draws of owning a home is that you don’t have to worry about a landlord suddenly jacking up the rent.

This is because most fixed-rate Conventional mortgages have the same monthly principal and interest payment throughout the life of the loan. (The principal is the amount you borrowed, while the interest is based on the mortgage interest rate you locked in when you took out the loan.) This makes up the bulk of your monthly housing payment.

“When you own your own place, your payment stays pretty steady, while rent goes up almost every year,” said Fortune.

However, keep in mind that home insurance and property taxes may increase over time. These increases are typically minimal increases. But home insurance costs have been accelerating rapidly in some parts of the country due to natural disasters.

Homeowner benefit No. 2: Building wealth

Another benefit of owning your own home is that you’re slowly building wealth for yourself—instead of your landlord.

That’s because each monthly payment you make slowly pays off a bit of your principal, the amount you borrowed. That increases your equity, which is how much of the home you own instead of the lender.

Additionally, that equity is likely increase on its own over time as your property value rises.

“[It’s] how most regular people build wealth over time,” said Fortune.

Homeownership benefit No. 3: Tax savings

Another perk of homeownership is that it can help reduce your overall tax burden come April 15.

Homeowners can deduct their mortgage interest, as well as some of their state and local real estate taxes, from their taxable income.

This can help homeowners lower their tax bills and how much they owe the government each year.

Homeownership benefit No. 4: Personalization

If you own your own home, you have more freedom to customize it to your tastes. While you may still need to follow local or homeowner’s association rules and restrictions, you should be able to personalize your home far more than you ever could when renting.

“It gives people freedom,” said Fortune. “You can paint your kitchen orange if you want,” or add a screened porch or redo a dated bathroom.

What to consider before buying a home

Unfortunately, owning a home isn’t all about building equity and saving money on taxes. There are some serious things to consider before purchasing, like the unexpected costs, repairs, and labor that will be required.

“Lots of folks forget about repairs,” said Fortune. “A water heater breaks and suddenly it's a thousand bucks. No landlord to call now.”

An air conditioner can malfunction, a roof can leak, a refrigerator may suddenly need to be replaced. And all of these pricey repairs can happen with little to no warning. Plus, lawns need to be mowed, gutters need to be cleaned, and snow has to be shoveled. And you (and your wallet) will be on the hook for them.

“Even little stuff adds up,” said Fortune.

While many of the more common home maintenance tasks are generally low cost, they can take time out of already-busy weekends.

That’s why it’s important for prospective homebuyers to take a hard look at their finances, think about how handy they are, and start putting money aside for unexpected expenses.

Is buying a home right for you?

While buying a home comes with plenty of great perks, being a homeowner is also a responsibility.

If you’re considering purchasing a property, you will want to think about how long you plan to live there. Typically, you want to stay for at least five years to ensure you have time to build equity. Otherwise, you may lose money on the sale in paying for closing costs—even if your home value has increased.

You also want to make sure you can handle unexpected repairs and regular maintenance. A general rule of thumb is setting aside 1% to 3% of a home’s value each year for repairs. You also want to allocate four to eight hours a month for home maintenance. 

Another way to know if becoming a homeowner is right for you is if you’re ready to personalize your living space and you’re tired of being constrained by builder-basic features and restrictive rental rules.