Families these days are under pressure to build a happy financial life. Aside from having a car and ensuring that your children will go to college, there are other expenses that couples with children need to take care of. This includes balancing the savings part with the need to unwind and take kids to vacations and allow them to explore more of the world.
However, despite the many financial expenses that families need to spend for, there is one thing that parents should always strive for: That of owning a home. There are financial benefits that come with homeownership. If you are not familiar with them yet, the next section will outline the most important ones.
First, home ownership builds equity. As you pay off your mortgage month after month, you are slowly building equity or an ownership interest in your home that you can borrow against when you find yourself in a financial bind later on. Of course, this equity can also be converted to cash when you will sell the house. In contrast, renting a home does not give equity.
Second, home ownership also provides tax benefits. You can subtract the annual interest you paid on a mortgage from your income tax. Homeowners can also earn tax breaks if they pay private mortgage insurance or PMI since this can be tax deductible.
Third, your housing costs will also remain the same over time—if you’re getting fixed rate mortgage, the most common kind of mortgage. Since the principal and interest rate of your mortgage remains the same over time, you actually get to pay less as time goes by because your pay is going to increase with time as well. The story is not the same with adjustable rate mortgage, however, so make sure that you know what you are getting into if you prefer this kind of arrangement.
Finally, your home appreciates with time, making it a form of savings. While there are no guarantees that your home value will go up—as the events of the housing crisis in 2008 have proven—homes values generally go up as time goes by. If you simply treat your mortgage payment as a regular part of your budget, you’ll be able to pay off your mortgage in 20 to 30 years (depending on your time arrangement) and if you would like to sell your house, you’ll end up getting a very good deal for it.
Having a home also serves as a way for you to secure your retirement. By the time you retire, you are sure to have already paid off your mortgage and as such, you already have a place to live. For as long as you are in relatively good health, there won’t be any need for you to transfer to an assisted living facility or a nursing home.
However, if worse comes to worse and you need to move to an assisted living facility then your fully-paid for home can be sold to fund your long-term care health needs if you don’t have long-term care insurance.
If you have children, you should strive to get your own home. This is because raising your kids in your very own home is beneficial for them. The Habitat of Humanity provides very compelling figures that should encourage couples to strive to get their own home.
According to the Habitat for Humanity, children of homeowners do better in school and are less likely to have behavioral issues compared to children of renters. Take these figures: Children of homeowners are 25 percent more likely to get a high school diploma and are 116 percent more likely to get a college degree. Their math scores are 9 percent higher while their reading scores are 7 percent higher than those of non-homeowners.
If you have a daughter, you might be encouraged to get a home because they are 20 percent less likely to experience teenage pregnancy and be teenage mothers. As far as their future is concerned, parents might want to get a home because children of homeowners, according to the Habitat for Humanity, are 59 percent more likely to have their own home in just a decade after they have moved out from your house.
Homeownership also strengthens families. Again, the Habitat for Humanity shows figures to prove this benefit. Homeowners are 10 percent more likely to go to church and 16 percent likely to be a member of a club or a parent-teacher organization or some other organization. They are also less likely to suffer from dependence and abuse problems related to alcohol, drugs and other forms of substance abuse.
Homeownership is also beneficial to communities. According to the Habitat for Humanity, they are more likely to have a garden in their yard and make improvements to their homes. They are also more likely to work for the safety of the local community, reporting to solve local problems and are also more likely to be active in exercising their right to vote. The Habitat for Humanity says homeowners have a greater chance of knowing who their congressman or school board representative is. They also stay longer in a neighborhood, helping to facilitate stronger communities.
In addition to the advantages already mentioned, homeowners also get other benefits. Survey shows that homeowners are happier and are more self-satisfied compared to renters. They are also more inclined to help others and have a more confident outlook in life. That is, they believe that things will work themselves out. They also have lower levels of depression.
All these benefits are actually understandable. Knowing that you live in your own home gives you a certain sense of stability. It also gives you and your children a sanctuary from the challenges given by the outside world. You are also encouraged to make improvements and beautify your home because you know it’s going to be yours for life—at least until you’ve already paid off the mortgage.
As far as your concern for the community is concerned, homeowners have more incentive to ensuring that their neighborhood is peaceful. Not only will reporting minor troubles to local authorities make their community a safer place to live in, it will also help increase home values down the road. The more expensive their home is, the more advantageous it will be later on should they decide to sell their home down the road.
There are many pressures that modern families face these days—especially when it comes to their finances. Admittedly, it’s hard for the average household to split the budget for rent or mortgage, food, car, education and other needs.
While it can be challenging to make ends meet and still be able to put some money for savings and your own retirement, one thing that couples should strive to get is their own home. It need not be grand. A house that’s enough for your family, even if it’s not necessarily your first choice, is worth striving for.
If you are still renting and would like to get your own house in the near future, you can start by saving for the downpayment. Usually, banks require you to give anywhere from 10 percent to 20 percent of the price tag of the home as downpayment. On top of that, you will also need to prepare for the closing costs. Look at your budget and see areas where you can cut down on your spending so that you can put money towards your downpayment.
When you are ready with the money, look at your prospective houses and see to it that you are not so carried away with the features of a particular property that you don’t consider the monthly mortgage and the maintenance that owning it will entail. While a home can certainly enhance a family’s life, being “house poor” will only cause you financial and emotional stress. If this situation leads to foreclosure, you should know that being told to get out of your house by the bank can be a traumatic experience not only for you but for your children as well.
It’s smart to get your own house but you have to see to it that you can afford the monthly mortgage, homeowners insurance and other expenses that come with homeownership. Be sure that you consider your budget and make the adjustments so that you can get your family a home everyone can call their own without making all family members suffer unnecessarily by overly reducing the food or leisure budget, for example.
Aside from the downpayment, make sure that you also set aside some money for the purchase of new furniture and appliances. Your new home might not come furnished and the bed, chairs and tables you have from your cramped apartment might not be enough to fill your more spacious house. Save for it so that you can get all these in cash and won’t have to worry about making monthly payments for these purchases.
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