What to Know About the Benefits of Owning Your First Home

Are you thinking about acquiring your first home? If so, it can be informative to understand the motivations that led others to take this step. According to a recent survey of first-time homebuyers conducted by PulteGroup:

When asked why they recently bought their first home, the answer was straightforward: they did so because they wanted to. Either the desire to stop renting or the understanding that homeownership is a wise financial decision served as the primary motivator for 72% of respondents.

Although that survey specifically focused on first-time homebuyers purchasing newly constructed homes, the same sentiment applies to nearly anyone acquiring their initial home. Here's some additional information to assist you in considering these two advantages of homeownership, helping you determine if they are also significant factors for you.

When You Buy a Home, You Have More Stability than When You Rent

You may be considering ending your rental arrangement due to the persistent rise in rental prices. As a renter, this implies that there's a possibility your rental payment will rise each time you enter into a new lease agreement or renew your existing one.

On the other hand, when you secure your home with a fixed-rate mortgage, your monthly housing payment remains steady throughout the loan's duration. This stability can provide you with a peace of mind that renting simply cannot offer. Jeff Ostrowski, a real estate journalist, explains:

“With a fixed-rate mortgage, your monthly principal and interest payment will stay the same for the life of the loan. But if you rent, your rent could go up every year.”

When You Buy a Home, You Grow Your Wealth as Home Values Climb

Owning a home can be a great long-term investment, even if renting is more affordable in the short term. Renting doesn't help you build equity or wealth over time, but owning a home does. Mark Fleming, Chief Economist at First American, explains this important distinction:

Considering the current circumstances, it's likely that many young households will opt for renting in the short term, as the expenses associated with homeownership, not factoring in property value appreciation, have undoubtedly risen. However, when factoring in the potential for property value appreciation, the decision between renting and buying hinges on whether a home is expected to appreciate or depreciate in the near future and where it is located.

Renting doesn't help you build equity, but buying a home does. As your home's value increases, so does your net worth. This is a significant benefit of homeownership that you can't get if you keep renting.

Considering this aspect, purchasing a home might align more favorably with sound financial reasoning. The consensus among most experts is that home prices are expected to continue appreciating over the next several years at a rate more typical for the market. This implies that when you become a homeowner, you are not only acquiring a place to live but also making an investment in your financial future.

Bottom Line

If you're ready to buy your first home, it can be a smart financial decision. A real estate professional can help you find a home that meets your needs and budget, and stabilize your housing payment. Homeownership can also help you build wealth over time.