Owning a home can be more than just a financial investment; it is an investment in your future self.

Deciding to purchase a home is a big step, and looking at a mortgage can certainly be scary compared to your monthly rent. However, there are many benefits of owning your own home to consider, both short- and long-term.

If you haven’t made the leap into homeownership yet, it can be understandable to think that now is not a good time, with higher interest and mortgage rates than in prior years. However, data from the National Association of Realtors‡ most recent report showed that the number of first-time homebuyers increased to 32% in 2023, up from 26% in 2022. Now can still be a good time to buy if you are financially ready because interest rates constantly change and you can refinance down the road if rates lower.

If you are considering a home as part of your 2025 financial plan, making this decision lightly or without preparing is never recommended. So, before you roll out the welcome mat on a new home, weigh your personal pros and cons. Make sure the timing is right for you to begin the homeownership process. Then, do a personal finance review to assess your financial readiness.

Once you think you might be ready for a mortgage payment, consider what else a mortgage can offer you, both now and in the future.

Short-term benefits

Customization and personal style

First off, homeowners can add personality and customize their home to their liking more than those that rent. While this may not have financial benefits, it can certainly have personal benefits and increase your happiness and how you feel at home! You have the freedom to add a funky light fixture or build the coffee bar of your dreams. In some cases, these changes can add value to your home should you ever decide to sell. Renting would not offer these benefits.

Improved credit score

If you pay your mortgage on time every month, you can improve your credit score over time. This has huge implications on your financial wellness and future spending. You can even set up your mortgage as an automated payment through your bank, so improving your finances is something you don’t even have to give a second thought to.

Taxes

There can be tax benefits that come along with being a homeowner. According to the IRS‡, the costs a homeowner can deduct include their state and local real estate taxes and home mortgage interest, within the allowed limits. Talk to your financial advisor and see if either may be a fit for you.

Sense of accomplishment

Nothing can beat the feeling of accomplishment of owning your own home. It is part of the American dream and is a huge life step that many look forward to.

Long-term benefits

Consistent payments

With a fixed-rate mortgage, you can expect consistent monthly payments for the duration of your mortgage terms. On the other hand, renters have very little control over their monthly payments, especially as they rise at the hands of landlords and the greater economic and societal landscape.

Equity

As you pay the mortgage on your home, you are obtaining something in return instead of renting, where no matter how long you stay there, the property will never be fully yours. A 2024 report from Redfin‡ says a homebuyer on a $3,000 monthly budget could afford a $453,000 home with a 6.7% mortgage rate, the average rate at the start of 2024. That buyer has gained nearly $40,000 in purchasing power since October 2023, when they could have bought a $416,000 home with an average rate of 7.8%. And according to Bankrate‡, Americans’ collective home equity hit record highs in the first quarter of 2024, clocking in at nearly $33 trillion. Many homeowners are “equity-rich,” meaning their mortgage balance is no more than half the home’s fair market value. In other words, they own more than they owe on their residences.

Stability

Another personal benefit is the security and stability that a home can provide a person. A home provides a place that is your own and allows you to build roots in your community. It typically allows for neighbors who are doing the same, which can provide opportunities for social engagement and community as well.

All in all, owning a home is a big decision that you should not take lightly, so be sure to consider all these factors when looking ahead to your future. Informed decision-making for the future you want is the most important investment of all.

When you are ready to begin taking the next step to homeownership, get prepared with tips on qualifying for and choosing a mortgage provider, putting in an offer, navigating inspections and the buying process, unexpected home buying costs and more. You can find a bank to work through the entire process with, which can lead to increased financial advice outside of your homeowner experience and into the rest of your life.

Review the homebuying process and learn about the benefits of owning a home through the Owning a Home playlist on the UMB Financial Education Center.

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