Five Benefits of Brooklyn Homeownership
There are many benefits to Brooklyn homeownership. Homeownership has long been considered the American Dream. And it can mean different things to different people. There has been a steady rise in homeownership since the 1900s in the United States.
Let’s take a look at five benefits of Brooklyn Homeownership.
Financial Benefits
The most apparent benefits are financial benefits. A home purchase is one of the most significant financial investments one will make in their lifetime. The benefits to investing in a home are:
Strengthening Credit
Making your home mortgage payments on time consistently will build your credit rating, which allows you to obtain other types of credit like purchasing an automobile or investing in other properties. In addition, as you pay down your mortgage, your credit score will increase.
Fixed Housing Cost
A fixed monthly payment helps you budget your monthly income more consistently. Your landlord can increase your monthly payment at determined intervals when you rent. With a fixed-rate mortgage, your principal and interest payment remains the same throughout the life of the loan.
Equity
Each month, a portion of your mortgage payment goes to paying down the principal amount on your loan. Equity is the difference between what you owe and the current value of your home. Over time, appreciation and lowering of the principal amount will increase the equity in your home. You may be able to leverage the equity for other financial needs. Building equity contributes to your financial stability.
Personal and Emotional Benefits
Home has become our haven, primarily through the pandemic. Unison recently published a report, State of the American Homeowner. This report discusses how homeownership has become more important to us through the pandemic.
Sanctuary
Through the pandemic, our homes became our office, our schools, our gyms, and even our churches and synagogues, in addition to a place to eat, sleep and be with family.
Security
Many homeowners felt a sense of safety in their homes throughout the pandemic by controlling any potential exposure. As a result, people found refuge in their homes.
Importance
Our homes have gained more significance in our lives. More homeowners admit they love their home more now than they did pre-pandemic.
Health
According to a study by the National Association of Realtors, more people feel they have better health due to homeownership, having more control over their lives, and higher self-esteem.
Social Benefits
Achieving the American Dream has long been associated with success. But, owning your home also provides some social benefits.
Community
Living in a community provides a level of stability. Homeowners have a vested interest in keeping the community vibrant which attributes to maintaining property values. Many become involved in community organizations and government to better the livability of their neighborhood.
Financial Education
As homeowners gain the financial knowledge that comes with homeownership, they are likely to pass this down through the generations. This unexpected benefit of homeownership can change generations as parents teach their children how to handle mortgage payments.
Privacy
Community involvement is part of homeownership, but having a place to unwind in private is also a benefit many homeowners enjoy. You are in control of when you invite others into your home and when you just need an evening of quiet enjoyment.
Tax Benefits
Our tax laws have changed, but some tax benefits are still available for homeowners. The IRS Publication 530 outlines the tax information homeowners need when filing their federal returns.
You may have eligible deductions if you recently purchased a home. Check with your tax professional to determine what you can use as a qualified deduction.
The capital gains tax exclusion may allow you to exclude up to $250,000 of the gain on the sale of your home or up to $500,000 if filing a joint return and you meet the homeownership test. You can find out more information about the sale of your home on the IRS website.
Homeowners in New York State may also be eligible for some tax incentives. You can find out more information on their website.
It is always wise advice to consult with a tax professional to determine if you have taken advantage of all the tax deductions you are eligible to receive. This is because the tax laws change frequently.
Brooklyn Homeownership versus Renting Benefits
Many individuals are not sure that homeownership is right for them. In addition to the benefits above, let’s look at some of the specified advantages home ownership has over renting.
Building equity for yourself versus your landlord
Each month that you make a mortgage payment, you increase your equity. Likewise, your landlord benefits each month you make your rent payment.
Interest rates are low
With the currently low-interest rates, you are often paying less on a monthly mortgage than you would be paying for a similar home’s rent.
Stability
Homeownership is considered a long-term investment. Renting is regarded as a short-term solution. If you plan on staying in an area for the long term, you should consider owning versus renting.
More Freedom
When you rent a home, the landlord dictates what you can and can not do regarding painting, flooring, and updating. You will need permission from your landlord to make any changes. You would be increasing the value for the landlord if you were permitted to make any updates.
Building credit
Showing your ability to pay your mortgage consistently improves your credit rating. However, different types of loans have different weights when evaluating your credit. For example, car loans and credit card payments do not elevate your credit as quickly as a mortgage.
There are some reasons when renting is a better option, and you must decide what is right for you. For instance, if you are a seasonal employee, temporary employee, or expected to be working only short-term in the area, it may not be to your advantage to purchase a home.
So how do you determine if homeownership is right for you?
If you are thinking about Brooklyn Homeownership, ask yourself these questions:
- Do you qualify to purchase a home?
The first step is talking to a lender to determine if you will qualify for a mortgage. Many different loan programs require different percentages for down payments. Therefore, finding the right loan program is a significant determining factor.
- How long do you intend to live in this home?
When you buy and sell a home, you need to consider the added expenses of closing costs. It may not be an issue if you are in an area with a greater appreciation rate. However, if you are purchasing in an area with a history of lower appreciation, you may need to stay in a home for 3 – 5 years before selling to realize a profit.
- What are your total monthly costs?
The costs of homeownership can be more than just your monthly mortgage payment.
This previous blog post describes some of the hidden costs of homeownership. You need to know your total monthly expenses before committing to purchasing a home.
Everyone needs to decide what is right for them in their current situation. If Brooklyn homeownership is something you would like to achieve, but you are not ready now, saving for your downpayment and closing costs and increasing your credit score will put you in a great position when you are ready to buy.
Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I help many home buyers understand the home buying process. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected]
