If your dream to live independently includes homeownership, you are on the right path. Being ready, willing, and able to buy a home starts with planning. In the previous Steps, you learned about the vital role that income, credit, and a household budget play in planning for tenancy. These three—income, credit, and budget—are also your foundation for buying a home. This Step in The Guide builds on what you have learned and provides the information and community resources needed to move forward on your path to owning the American Dream.
For most people, homeownership is the largest investment in their lives, and it offers many benefits, including:
• Prevents displacement – In contrast to a renter, a homeowner's monthly mortgage is not based on current housing prices but on the cost of housing when the home was purchased. Therefore, homeowners in D.C. are not subjected to being outpriced and displaced from their community.
• Cost of housing stabilizer - Homeowners with fixed-interest rate mortgages are typically insulated from rising housing prices. Homeowners' property values may increase, which will cause an increase in property taxes and homeowner's insurance, but not at the market rate renters are subjected to. D.C. also has programs for low-income homeowners, persons with disabilities, veterans, and senior citizens to reduce their property taxes.
• Accessibility modifications – The homeowner owns the property; therefore, whatever accessibility modifications the owner wants and can afford, the owner can make it.
• Age in place – The homeowner owns the property and does not have to worry about the landlord selling the property and being displaced.
• Builds equity – Equity is the difference between what is owed on the property and the current market value. Equity is like money in the bank. Homeowners and landlords can build equity, not renters. FYI, some affordable housing programs have equity restrictions. For more information, speak with a HUD-certified housing counselor.
• Earn extra income - Homeowners can rent out rooms, basement apartments, Airbnb, etc., to earn extra income. FYI, some affordable housing programs have restrictions on earning income from property. For more information, speak with a HUD-certified housing counselor.
• Income tax deductions– The IRS and D.C. Office of Tax and Revenue (OTR) provide homeowners with tax deductions for mortgage interest, home improvement for accessibility, home office, and other tax breaks.
• Creates generational opportunities – Homeowners can give (if there is no mortgage) their properties to heirs, place the property in trusts as a rental to generate income for their heirs, use the equity to pay their heir’s college education, etc.
Tenancy offers benefits too. It frees you from responsibilities that come with ownership, such as property upkeep, repairs, taxes, insurance, and mortgage payments.
A. What is the Homebuying Process
B. What Help is Available for 1st Time Homebuyers in the District of Columbia (D.C.)
C. What Are the 10 Steps to Homeownership