While home prices are on the rise here in Middle Tennessee, it is important to remember that compared to many other parts of the country houses here are very affordable. We have lower than average property taxes and no state Income Tax. There can be risks associated with buying a home, but homeownership usually brings great benefits, such as:
- Paying a Low Mortgage Rate. This one is actually an advantage of buying a home right now and does not necessarily apply to all time periods. Currently, we are experiencing some of the lowest mortgage rates historically offered. To put this into perspective, the average 30 years fixed rate mortgage interest rate in 1984 was 13.88, whereas this year it was below 3% a few months ago.
- Hedging Against Inflation. One of the most significant financial benefits of owning a home is that it protects you during periods of inflation. What does this mean? It means that if you have a fixed-rate mortgage, the price you pay to have a roof over your head can’t change—no matter what happens to interest rates or the economy.
- Tax Benefits. There are a few tax breaks that can only be deducted if you are a homeowner. One of these is the interest on your loan. When you sell your home, you will be able to avoid some of the taxes on the profit you make if you meet the ownership and residency requirements. In most cases, you have to have owned the home for at least two years.
- Building Equity. Equity is a term that gets thrown around often when talking about buying a home. Equity is the value of a property that you own. For example, if your home is valued at $350,000, and you owe $200,000 to the lender, you have $150,000 in equity. Equity is great to have when you want to downsize or move to a different city in Middle TN.
- Stability. Aside from the apparent stability of a consistent place to live and putting down roots. People who own homes are more likely to be involved in their community and build relationships with other people in the community, providing them with a solid foundation upon which to build their lives.
- Great Savings Plan. Paying a mortgage every month and reducing the amount of your principal is like a forced savings plan. Each month you are building up more valuable equity in your home. This equity is essentially part of your net worth.
- Personalization. When you own a home, you are free to customize the home to your liking. Many renters have rules against pets or changing the unit. When you own, you can do all the things that make a house your home without having to get anyone else’s approval. Add whatever you like to the inside of your home (just be careful not to do anything that might decrease its resale value).
- Safe, Quiet Space One of the greatest benefits of owning your home is the safety you feel in it. Most of my clients want “Their Own Four Walls.” I have lived in apartments and I understand. And some townhomes are designed correctly with soundproof walls or bedrooms, not against shared walls.
- Pride of ownership.One primary advantage that homeowners report is the feeling of accomplishment that comes along with owning a home. Having somewhere that you and your family can make memories, feel safe, and celebrate holidays is an important milestone in many people’s lives. Homeownership represents the American dream for thousands of families each year.