Julie and her husband had a stable income and decided that it was time to start looking into purchasing a house. But they had no idea where to start. Just the thought of saving for a downpayment made her head spin—the median purchase price for a home in Utah County is more than $300,000, and a 20 percent down payment would be more than $60,000.
But the family’s homeownership dream wasn’t hopeless. With some help, they formulated a plan and joined the ranks of homeowners—the homeownership rate in the U.S. was 64.2 percent at the end of 2017.
The process of even preparing to buy a home is intimidating and can scare away first-time buyers. But it doesn’t have to be. The benefits of homeownership, for people who can afford it, far outweigh the drawbacks, and there are free programs in your community to help you get there.
Personal benefits of homeownership
There’s nothing like owning your own space, and being able to paint or remodel without a landlord’s permission. But the individual benefits of homeownership go well beyond those advantages.
Get federal income tax breaks: While Congress made some significant changes to the tax law starting in 2018, homeowners don’t completely lose. Homeowners still may deduct up to $10,000 in property taxes, though that’s much less than the uncapped amount in the past. This change especially hurts homeowners in high-tax states like New York and California. The good news is that Utah’s property tax rates aren’t in the high range. Congress also capped the mortgage interest deduction for new loans more than $750,000. Homeowners with pre-2018 mortgages may still use the previous cap of $1 million. The good news is that homeowners still may deduct property taxes and mortgage interest amounts, as long as they’re under the capped amounts.
Build wealth: With a few exceptions, homes and property increase in value. With a good loan, even if the home values go down, they go back up. Real estate is one of the best investments—just be prepared to hold on.
Be healthier: Studies show that homeowners may be healthier and happier than renters. And their children are happier as well.
Stop wasting money: You may pay the same amount toward your mortgage as you did for rent. But your money is going toward a purchase instead of just to a landlord, so you’re benefiting from the payments.
Privacy and freedom are benefits of homeownership, but people who own homes also benefit financially from tax breaks and saving for the future.
Community benefits of homeownership
Homeowners enjoy personal benefits from a house purchase, but the community benefits as well.
Lower crime: Research shows that crime rates are lower among people living in a stable housing area or who own their home. Stable neighborhoods also have a positive impact on crime rates.
Education: Homeownership has a positive effect on educational achievement, though it’s unclear whether it’s the homeownership, living in stable housing or neighborhood—or all of the above—that contribute to the positive outcome.
Local involvement: Studies show that homeowners are more likely than renters to be involved in civic groups, local elections or their neighborhood.
So not only does the homeowner benefit from a house purchase, the community becomes a better place to live.
How to get there
Long before you start filling out loan applications for a home, you need to consider your financial situation. Do you have a stable or growing income? Do you have a budget? What about savings? And do you know anything about your credit score? Community Action Services and Food Bank can help. Its free Homebuyer Education and Mortgage Counseling Program are designed to help people buy their first home.
The Pre-Purchase one-on-one counseling teaches people how to:
- Analyze their financial and credit status
- Help them create a sustainable budget that will support a house payment
- Form an action plan to become a homeowner
- Find a down payment assistance program
The Homebuyer Education course teaches participants about:
- Financial management
- Working with Realtors and lenders and understanding contracts
- Finding downpayment and closing cost programs
- Consumer Protection Laws: understanding your rights
- Loan terms and costs
- Appraisals and inspections
- How to understand loan closing documents
- Responsibilities of home ownership: making payments, home maintenance, and safety
- How to avoid predatory lending, scams and foreclosure
Community Action Services helps people make a plan and prepare to become responsible first-time homeowners.
Preparing to buy a home can be an intimidating process for first-time buyers. However, the advantages of owning a home far outweigh any drawbacks. Come and learn about the home-buying process at Community Action Services and make a plan to get on the path toward homeownership.