While many industries faced significant problems in 2020 because of the coronavirus pandemic, the housing market thrived. Mortgage rates dropped to historic lows, and housing prices increased in most markets across the country.
With today's mortgage rates and mortgage refinance rates sitting comfortably below 3% (2.73% for a 30-year FRM, and 2.21% for a 15-year FRM, at publication), you may be considering buying a home. If your goal is to save as much money as possible, now could be a great time to find your dream home and take advantage of super-low rates. Your potential monthly mortgage payment may never be lower.
If you want to know what type of loan rates you could get, you can explore your mortgage options by visiting Credible to compare rates and mortgage lenders.
If you’re looking to find your first home or want to upgrade your property to boost the home value, there are benefits of homeownership to remember.
Benefits of owning a home
A major benefit of owning a home? The tax breaks. This is one of the top benefits for potential home buyers. Tax breaks are available for single-family homes, townhomes, condos, and manufactured homes. Homeownership tax benefits specifiically come in the form of deductions.
The most common types of tax deductions include:
- Mortgage interest
- Real estate taxes
- Private Mortgage Insurance
- Profit from the sale of a home
While your tax filings will likely get a bit more complicated, the savings may be worth the extra effort. When you have enough qualifying tax deductions, it can lower your tax bracket and the amount of taxes you owe.
Before shopping, first, check mortgage rates and receive preapproval with an online mortgage broker like Credible.
Appreciation of the home
Another benefit of a home is that the value is likely to increase over time. If you stay in the house long enough (typically at least 5 to 7 years), you could profit when selling your home. Housing prices can shift for various reasons, including supply and demand, comparable sales prices in the same neighborhood, and population growth.
For example, in 2020, the average sales price for a home in the Salt Lake City, Utah area was $384,000. In December of 2019, the average sales price was $330,000.
To ensure that your home maintains and/or increases in value over time, take care of it. Updating electrical and HVAC systems, replacing damaged roofs, and renovating outdated areas of the house can add value to your home (while making it more comfortable to live in).
Owning a home is a great way to build credit. If you make your payments on time every time, your credit age and payment history will improve your credit score. Further, a home provides potential access to home equity, which you could access in an emergency.
As you pay off your home, you continue to build equity. Equity is the difference between what you owe on the house and how much the property is worth. Overall, when managed correctly, owning a home can provide a significant boost to your credit score.
Build investment in the future
Over time, if your house continues to increase in value and you continue to pay down your mortgage, your net worth also increases. The less you owe on your property, the higher your net worth. Not only does this allow you to earn access to additional credit, as needed, you could also sell the home or rent out the property down the line for additional income or to fund your retirement.
Since market rates fluctuate, you could potentially gain a higher return on your investment if you take advantage of current mortgage rates.
If you’re looking to purchase a home in today’s market, you can explore your mortgage options by visiting Credible to compare rates and lenders and get a mortgage preapproval letter in minutes.
Stabilizes your expenses
One of the most common reasons people buy homes is for the immediate benefit of stable monthly payments. While rental prices can continue to go up, once you own a home, you have the option of steady monthly mortgage payments for years (if you opt for a fixed-rate mortgage; adjustable-rate mortgages are a different story). This benefit can help homeowners save money and more easily budget for other expenses.
As you embark on the home buying process, you can use an online mortgage calculator to determine your potential monthly payments. Some lenders offer a payment calendar so you can see how much you’re paying each month. You’ll also be able to calculate how much of your payments are going towards the balance versus interest. This type of loan calculator is key in determining costs, both short-term and over the life of the loan.
Many people strive to own a house. In addition to the financial benefits, owning a home provides security and privacy. Many homeowners enjoy feeling like part of a community and the ability to personalize their living space. If you plan on staying in a community for several years, owning a home is a great way to save money and potentially earn some if your home value has risen.
As you considering purchasing a home, don’t forget to explore your mortgage options by visiting Credible to compare rates and lenders. The real estate market is hot right now while today's mortgage rates are at historic lows, making now arguably the best time to act.