Your home is more than just a place where you live. It’s where you make a life, whether that’s by crafting the perfect environment around you or by pursuing the activities you love the most. Imagine hosting a reception for your first grandchild’s wedding or growing an award-winning rose garden, for example. Memories that would be tough to make in a rental.
Being in control of your living situation is one of the most visible benefits of homeownership, but there are many more. Your home is also an important pillar of your financial plan, especially as you age. We’ll show you the full range of benefits of owning a home so you make the most of your homeownership experience.
Lifestyle benefits of homeownership
If you’re like most people, the biggest appeal to owning your home is that you can make it a more permanent presence in your life, rather than something you’re just inhabiting temporarily. This benefit can show up in several different ways:
Create your own space
If you’re a homeowner, you can change your living space however you like. You can paint the walls whatever color you want, install new windows for your preferred views, or build new additions to house extended family. You’ll have access to a full range of functionality and layout styles, according to your preferences and ability to finance home renovations.
Enjoy more hobbies and activities
Homeownership also opens the door to more possibilities — sometimes literally. If you have a larger home, for example, you’ll be better able to host Thanksgiving dinner for your extended family or build the custom woodworking shop of your dreams. Many of these skill sets take years to develop, as well — yet another reason why many people prefer to stay homeowners once they’ve already purchased their home.
Sense of stability
Many of the things that bring people the greatest joy in life take years or even decades to develop. That’s hard to accomplish if you’re living in a temporary rental. Community gardens are a great option for people who don’t have their own plot of land to work with, for example, but they can be plagued with weeds and pests if just one neighboring gardener doesn’t manage their plot well.
This sense of permanence and place echoes throughout other areas of your life too. It’s easier to develop a sense of community when you know you won’t be moving anytime soon. Your children can feel secure knowing that it’s safe to develop strong, lifelong friendships with classmates, for instance. Children raised in stable environments like this are more likely to thrive in their studies and other areas of life too.
Adapt to changing needs
An underrated benefit of homeownership is that you’ll be able to stay home longer because you can update it for your needs as they change over time. If you heal up from an old injury and want to install a home gym to help you stay in shape better, you can. As you get older, you can add new upgrades and renovations to help you age in place more comfortably at home, like wider doorways or a stair lift.
This includes your family situation as well. You can upsize or downsize your home accordingly, depending on whether you’re adding new children to the family or seeing them off to college. It also gives you more options to care for aging parents and extended family members too.
Sense of belonging and pride
Buying a home is the biggest financial goal most people will have in their lifetimes, and that’s why owning your own home is a big point of pride among many people. It’s a sign that you’ve worked hard and been rewarded for it with something you’re excited to show off. Many people consider it the ultimate status symbol.
Financial benefits of homeownership
Owning a home can bring a lot of meaning and joy to your day-to-day activities. Those activities can be expensive, though — unless you take advantage of all of the financial benefits of homeownership too. Your home also serves as an investment that generally grows in value over time, after all.
Lock in your housing costs
One of the biggest frustrations many renters have is their lack of control over housing costs. If you own your own home, however, you can lock in your housing costs at today’s prices, even if they rise in the future. Once your mortgage is paid off, you won’t even have a housing payment at all anymore — aside from things like utilities, property taxes, and insurance.
Leverage home equity for new opportunities
Your home also serves as an important financial safety net because every mortgage payment helps you with building equity. You can use your home equity — the amount your home is worth, minus your remaining mortgage balance — to finance future purchases more easily and for a lower cost. You might use a home equity loan to help fund a new business, for example, or to send your grandchild to college.
Having good credit is important for your overall financial health because it affects your ability to borrow money at an affordable cost, aside from many other factors. It can be tough to build good credit, but making on-time monthly mortgage payments is one of the quickest and easiest ways to do this. A good tip is to set up automatic payments on your mortgage so that you don’t forget. This will help you preserve your good credit.
Homeowners have many more options to save money on their taxes than most renters. Depending on your financial situation, you may be able to save a lot of money on your taxes with options like the mortgage interest deduction or the state and local tax (SALT) deduction. You can get tax deductions for other things too, like having an office for a home-based business or installing energy-efficient appliances.
Build generational wealth
One of the most loving gifts you can leave to your family when you’re gone is the biggest financial asset you have now: your home. Homeownership is becoming increasingly difficult for many younger people, and offering a beautiful gift like your own home when you no longer need it can help your loved ones continue your family story.
In addition, since home values generally increase over time, you’ll likely be leaving them a more valuable gift. Your heirs — or even you, during your lifetime — can use the appreciation in your home’s value to your advantage so that you can more easily afford to borrow money in the future, which we’ll show you next.
Home equity and flexibility
Being able to tap into your home equity to borrow money more cheaply and easily is one of the biggest understated benefits of homeownership. It gives you more of a sense of security: if you want or need to borrow money for something, you can. Here are some of the different ways you might be able to use your home equity:
- Home equity loan: This is also known as a “second mortgage.” Many lenders allow you to borrow up to 80% of your home’s value, minus the remaining balance on your mortgage.
- Home equity line of credit: This is often abbreviated simply to “HELOC.” It works similarly to a home equity loan, except you can borrow money as needed instead of in one lump sum.
- Cash-out refinance: This option allows you to refinance your existing mortgage for a larger amount. You receive the difference as cash that you can use however you like.
- Home equity investment: Also known as an HEI, this partnership offers you an upfront lump sum in exchange for a portion of your home’s future appreciation in value. In the meantime, you won’t need to repay it until you sell or refinance your home.
Most people consider the pros and cons of renting vs. buying when they choose to make the leap into homeownership. The freedom of being able to choose your home and what you want your life to look like are some of the biggest attractions, but there are many more benefits of owning a home that most people don’t consider at first glance.
In particular, the financial flexibility offered by your home equity is one of the most underrated benefits of homeownership. You can use your home equity as a financial safety blanket in ways that most other people aren’t able to, all while remaining in place in your home.