Benefits Of Homeownership While Working Remote

Homeownership has long been associated with the idea of the American Dream. For many, owning a home represents stability, financial success, and the opportunity to contribute to the community. The benefits of homeownership, ranging from social to financial, have directly resulted in a steady rise of homeowners in the United States starting in the 1900s. Learn about some of the more unique benefits of homeownership to help determine whether or not owning a home lines up with your personal American dream.

Historical Homeownership Trends

Before you learn the benefits of homeownership, you may be interested in understanding some of the historical trends of homeownership in the United States. According to the National Association of Realtors (NAR), at the start of the 20th century, less than half of Americans owned their own homes. This rate hovered roughly around 45 percent until the start of the Great Depression, which saw homeownership rates drop to as low as 42 percent. However, starting in the 1950s, homeownership increased to almost 55 percent and continued to rise through the rest of the 20th century. The rising rates of homeownership can be attributed to several political and economic factors.

The homeownership rate peaked in 2005 at almost 70 percent, although it wavered slightly during the recession. Currently, over 60 percent of Americans own their own homes. The benefits of homeownership 2018 are not far from the historical benefits; however, increased education access and economic expansion are credited for the rising trends. Buying a home offers the opportunity to secure a strong financial future and contribute to the community, making this an appealing option for many.

Financial Benefits Of Homeownership

Perhaps the most obvious benefits of homeownership fall in the financial realm. Buying a home may be a significant investment up front, but it represents the opportunity to build wealth and create long-term savings. Familiarize yourself with the financial benefits of homeownership to ensure you understand how this arrangement could impact your personal finances.

• Building Equity: Equity refers to the amount of value you have in a given asset. As you pay off your mortgage each month, you will be building equity in your home. This differs from paying rent because you will be contributing to a physical asset rather than making monthly payments to a landlord. This is why purchasing a home is often thought to be a financially savvy move.
• Long-Term Savings: By building equity in your home, you are also setting aside money for your future. That’s because there are several ways to tap into your home’s equity down the road. Studies show that homeownership rates peak at or near retirement ages, suggesting that home equity contributes to retirement savings for many Americans. Therefore, by buying a home, you are promoting financial stability.
• Building Wealth: As your property increases in value, so does your equity, allowing you to sell for a profit. You could use that extra money to reinvest in a new home as well as an investment property. Additionally, you could use your home to build wealth right away by using it as a rental property or house hacking.
• Control Over Expenses: When you own a home, you can be certain of the monthly payment you will need to make while living in the house. On the other hand, when you rent a home, you are faced with the uncertainty of an increase in rent if your landlord decides to change it. Unless you decide to change your mortgage terms, your monthly payment will remain the same throughout the duration of your home’s mortgage.
• Strong Credit History: Buying a home can help you strengthen your credit over time, as long as you are consistently making your monthly mortgage payment. As you build your credit, it will become easier to secure other forms of financing, for example, if you decide to purchase a new car or finance an investment property. Sylvie Coleman from Family Destinations Guide believes that “owning can build your credit. Paying your mortgage on time will make your fico score start going up. Payment history near debt makes up the larger portion of your fico score and that is about 35%. That is also what lenders look at when they’re trying to decide how much money to loan you, at what interest rate and on what terms. So it’s very important to keep a good record and pay on time. And as your mortgage balance goes down, your fico score will continue to increase. That is, in essence, a great way to build your credit”.

Social Benefits Of Homeownership

Aside from the financial factors, there are several social benefits of homeownership and stable housing to consider. It has long been thought that buying a home contributes to a sense of accomplishment. Still, most individuals fail to realize that homeownership can benefit your mental health and the community around you. Here are just a few social benefits of homeownership to consider:

• Civic Participation: When compared to renters, homeowners will often remain in one area for longer periods of time, adding a certain degree of stability to the neighborhood. Homeowners are also more likely to contribute to the maintenance of their properties and surrounding areas. This then translates to increased incentives to participate in local politics and community organizations, potentially leading to increased civic participation.
• Financial Education: One little-known perk of homeownership is that, oftentimes, the financial knowledge that comes with buying a home will be passed onto future generations. By demonstrating the financial skills required to handle mortgage payments, parents can help prepare their children for several financial decisions.
• Health Benefits: A study from the NAR homeowners have higher self-rated health when compared to non-homeowners. This study also showed homeowners have higher perceived control over their lives and higher self-esteem and happiness rates than renters.
• Lower Crime Rates: Homeowners often have more incentives to deter neighborhood crime when compared to renters because of their ties to a given area. Areas with a high percentage of homeowners are therefore more likely to have voluntary crime prevention programs and lower rates of property crime when compared to markets dominated by rental properties.
• Privacy: It’s true that buying a house becomes public record. However, living in a home compared to an apartment often affords people more privacy overall. In most cases, you will not share any walls or spaces with other tenants. As a homeowner you can decide who comes over and when, rather than receiving notices from your landlord to enter. Many first time homebuyers enjoy this new level of privacy after buying a property.
• Property Improvements: One of the biggest benefits of homeownership is that it offers the freedom of customization. Homeowners can complete renovations to make the house exactly as they want, which could boost the property’s value in the process. Additionally, as a whole, owner-occupant housing is often better maintained than rental properties—creating yet another benefit of homeownership.
• Home Office: As the country continues to adapt to COVID-19, many businesses are implementing permanent work-from-home policies. Homeowners can create an office set up that maximizes productively and comfort, without worrying about moving. Also, if they work remote, they should make sure VeePN is used. There is also an option to buy a house with an extra bedroom or designated area for an office, which may not be an option when renting.

Renting vs. Homeownership

While there are many benefits to homeownership, one should weigh these benefits to those of renting. There are benefits to either renting or buying, as well as downsides. At the end of the day, the decision to buy instead of rent should be based on your personal and financial goals. Many individuals enjoy renting for the flexibility, while those who opt for buying a home prefer the stability involved. If you wonder “why buy instead of rent,” there are several factors to look at. Start by examining the most popular benefits of renting:

• Flexibility: Renting awards tenants the flexibility to move without penalty. Renters have to wait until a given lease ends to move out. For individuals who frequently move due to a job (or personal preference), renting allows the freedom to pick up and leave more easily than owning a home. While homeownership does not necessarily mean you are stuck in a given place, more transactional costs are associated with buying and selling a home if you decide to move frequently.
• Low Responsibility: As a renter, you are not responsible for property maintenance in the same way that homeowners are. Landlords are often in charge of lawn maintenance, trash pick up, water and sewer services, repairs to the property, and more. While these costs are accounted for in the price of rent, tenants have a low level of responsibility regarding property maintenance compared to homeowners.
• Predictability: When you sign a lease, you are agreeing to a set amount of rent for each month. In some cases, your bills and living costs may be included as well. This means that renting comes with a sense of financial predictability: the cost of living will roughly stay the same month to month. While homeownership is not inherently financially unpredictable, you may deal with unexpected costs or flexible interest rates compared to renting.

While there are several pros to this flexible arrangement, there are also some downsides to renting. Many renters will hear they are wasting money by paying rent each month. At the same time, that is not necessarily true. Renters are forgoing the opportunity to build equity by buying a home. For example, if you plan to live in the same area for the next few years, it may make more financial sense to buy a home rather than contribute monthly rent to a property you will never own.

While renters are not responsible for most maintenance costs, there are some intangible benefits to owning a home. By renting, tenants give up the opportunity to customize and renovate a given property. In most cases, renters may not even be able to change the walls’ colors, let alone make changes that could improve daily life.

At the end of the day, individuals should examine their given situation and ask whether renting suits their needs. If you find yourself growing increasingly frustrated with the cons of renting, it may be time to consider the benefits of homeownership instead.

Summary

As homeownership rates continue to rise, more and more Americans aspire to own a home to fit the narrative of the American Dream. If owning a home is part of your dream, taking the time to familiarize yourself with the benefits of homeownership can help set you up for success as you determine whether or not to one day pursue this goal. If you do think you might be ready to take the first step towards buying a home, check out our homebuyer’s quiz to determine what your next move should be.