There’s a good reason why buying a home is a major goal for so many people — it offers plenty of perks that you just can’t get from renting. While you’ll also be taking some risks when you buy a home, the benefits of homeownership outweigh the downsides for many buyers.
Here’s a look at nine top benefits of owning a home.
1. Your Housing Costs Are Stable
If you buy a home with a fixed-rate mortgage, you lock in your interest rate. That means your monthly mortgage costs will be the same for the life of your loan, making your housing costs predictable and easy to budget for.
The cost of rent, on the other hand, often increases each year. Owning a home helps you avoid steep increases in your housing costs, and can help you budget for the long term.
2. Your Home’s Value Likely Will Increase
Owning real estate broadly is considered a good investment because home values have increased over the past 50 years. While short-term fluctuations are normal, the value of your home is likely to grow far beyond what you paid for it as long as you keep up with maintenance and repairs.
For example, the median sales price for a home in February 1973 was $29,700. By February 2023, the median sales price had grown to $433,200. If you bought that home in 1973 and held on to it, the property would’ve appreciated by $403,500 — a whopping 1,458%.
3. You Build Equity
One big difference between renting and buying is that owning a home builds equity. You can think of home equity as the difference between how much your home is worth and how much you owe on it. It’s usually expressed as a percentage that represents how much of your home you actually own. With each mortgage payment, you build more equity and own more of your home — something that your rent payments can’t do.
“Building equity is one of the advantages of homeownership,” says Pete Evering, business development manager at Utopia Property Management in San Diego. “Equity can grow organically as you pay down your mortgage or as the market value of your home rises. It can also be boosted by making extra mortgage payments.”
4. You Can Borrow Cash for Major Expenses
If qualified, you can use your home equity to borrow cash for big expenses that pop up along the way. Some homeowners borrow equity to pay for improvements that increase their home’s value, but you can actually use the money however you wish.
Homeowners with at least 20% equity can borrow it in several ways:
- A cash-out refinance involves taking out a new mortgage based on your home’s current value, paying off your existing mortgage, and keeping the difference.
- A home equity loan is a second mortgage that lets you borrow a lump sum of cash that you repay with a separate payment each month.
- A home equity line of credit uses your equity to establish a line of credit that you can access as needed.
5. You Strengthen Your Credit History
The factor that most affects your credit score is payment history. Your mortgage payment likely will be your biggest monthly expense — so if you pay the mortgage on time each month, your credit score will improve.
Don’t panic if your credit score dips when you first take out a mortgage. That’s because the total amount of debt you have and the average age of your accounts are other factors that affect your score. If you keep up with your mortgage payments, you’ll show that you handle debt responsibly, and your credit score will improve.
6. You Have Privacy
When you rent, your landlord has the responsibility to maintain the property and the right to inspect it when they see fit. Owning your home means there’s no landlord, and you get to set the rules for who’s allowed to be on the premises.
7. You’re Free To Customize Your Home
It’s not uncommon for landlords to prohibit tenants from repainting the walls or removing carpeting without their permission. As the homeowner, you get to do what you want to your home, whenever you want. If your home is part of a homeowners association, you’ll need to abide by HOA rules — but within that framework, you can make any changes that you like.
8. It Offers Significant Tax Benefits
Owning a home can be a big relief when tax time rolls around. Homeowners with a mortgage are able to deduct the interest they pay — as well as the amount they pay in property taxes — from their taxable income. They also can deduct the cost of mortgage points, where you pay an upfront fee to the lender in exchange for a lower interest rate.
“For the majority of America, the tax benefits are a huge plus,” says Ralph DiBugnara, a mortgage banker, real estate investor, president of Home Qualified, and senior vice president of Cardinal Financial in New York. “For every dollar you pay in mortgage interest on your primary home you can write it off against your income at end of the year.”
9. You Can Build a Stronger Sense of Community
Buying a home is an opportunity to plant some roots and become part of a community. Owning a home gives you a real stake in your neighborhood, and can help you build long-term relationships with your neighbors — especially if you plan on living in the home for a long time.
Here are answers to some frequently asked questions about the benefits of buying a home.