Here’s another benefit of home ownership — it improves retirement security.
As home owners make their monthly mortgage payments and increase their home equity, they increase the amount that they can cash out later on if they decide to sell.
There are even homeowners who will be able to fully pay their mortgages before their retirement, and thereby be able to keep all their sales proceeds in case they sell.
According to a study by Urban Institute, which used data from the Health and Retirement Study by the National Institute on Aging and University of Michigan, home equity could bolster retirement security.
Based on household income data for homeowners aged 65 and older in 2012, the annuitized home equity significantly increases the household income if it is added to the household income computation.
The data also shows that annuitized home equity incomes are greater in households that are high-income, non-Hispanic white and made up of college graduates.
For many people, there are three usual sources of retirement income: Social Security, pensions, and savings. The study says that home equity can be added as the fourth conventional source of retirement income.
What are the Other Benefits of Home Ownership?
The benefits of home ownership can be grouped into three: Social, Psychological and Financial Benefits.
According to research economists of the National Association of Realtors, among the documented social benefits of home ownership are the following:
- Homeowners and their children develop home maintenance skills and financial skills to manage mortgage payments.
- Families are more able to participate in community activities.
- Teen pregnancy rates are lessened.
- Teenage delinquency rates are reduced.
- High school graduation rates are increased.
- Homeowners have higher self-esteem, life satisfaction and control over their lives.
- Families are more able to participate in voluntary organizations and church activities.
- Awareness of civic and political issues is increased.
- Participation in charitable activities is increased.
- Higher test scores by children living in owned homes
- Positive outlook of life
- Sense of community
- Sense of putting roots in a neighborhood
- Building of home equity
- Tax benefits (Full deductibility of mortgage interest)
- Wealth creation (One needs to save for the down payment and monthly mortgage payments)
- Pride in ownership
- Freedom to do whatever wants with one’s own home
- Sense of Stability
- Financial Benefits