If you’re already a homeowner, close your eyes and remember the feeling of buying a home.  From the search to the closing – whether it’s your first home, your dream castle, or your waterfront retirement cottage – there’s a deep sense of satisfaction and excitement when you hold the keys to a new home.  Few purchases in life generate the hopes and dreams of homeownership and have such a profound impact on your family, community, and country.

June is National Home Ownership Month, an observance that began in the 1990s as a week to annually recognize and celebrate homeownership. In 1992, President George W. Bush expanded the observance to a month in recognition of the growing importance of homeownership as part of the American dream.  Owning a home is considered the cornerstone of building personal and financial security and wealth and REALTORS® play a critical role in helping buyers achieve their dreams.

Here are a few key ways homeownership impacts you in a positive way and a few tips on how to achieve your American dream.

It’s obvious that investing in a home is a serious financial decision made with the intent that the asset will appreciate in value and produce other financial benefits.  Financial advice website The Motley Fool says, “Homeownership can help you increase your net worth over time. According to U.S. census data, home equity and retirement accounts combined made up more than 60% of a typical household's wealth. And those who owned rather than rented had a median net worth more than 80 times greater than the median for renters.”

Over time, a home is likely to increase in value resulting in a gain when the house is sold.  The principal payments made toward a mortgage create equity – real money that can be used, if necessary, in an emergency, to finance home improvements, or purchase another asset.  Both appreciation and equity should grow over time and add to the homeowner’s overall wealth.

There are two important tools to help Alabamians achieve homeownership:

The Alabama Housing Finance Authority’s Step Up program is aimed specifically at moderate-income (income of $130,600 or less) home buyers who need help with a down payment even though they can afford a mortgage. Applicants who qualify, may receive four percent of the sales price up – up to $10,000 – in down-payment assistance in the form of a second mortgage.  For more information, click here.

First-time homebuyers – and buyers reentering the housing market who haven’t owned a home in the last 10 years – may take advantage of the First-Time Homebuyers Savings Account, to be used towards the purchase of a home.  Deposits reduce your taxable state income and interest earned is free from state taxes up to $5,000 per year for individuals and $10,000 for couples. The tax break extends for up to 10 years from the date the account is opened. Read the details here.

Homeowners score a win at tax time compared to renters.  Among the tax deductions available are:

• Mortgage interest including interest loans for home improvements on a primary or secondary home;
• State and local property taxes;
• Discount points paid when obtaining a mortgage;
• Private mortgage insurance;
• Home office expenses – click here for an IRS chart showing what is eligible;
• Medically necessary home improvements;
• Capital gains exclusions when you sell your home; and 
• Energy improvement tax credits through the end of the 2023 tax year.

Owning a home gives you an opportunity to put your own stamp on a property and make it reflect your style and meet your needs.  Over time, as your taste or needs may change, you have the freedom to make changes and improvements.  Some of those improvements may also increase the value of your home if you choose to sell.

A home – whether urban or rural – is part of a community.  The fabric of Alabama is woven with the threads of country crossroads, small towns, mid-size cities and urban centers.   Homeowners have a vested interest in community issues, elections, schools, churches, and local organizations and charities.  Pride of ownership is an intangible feeling with tangible social rewards.

Buying a home has a multiplier effect that ripples across Alabama’s economy.  According to the National Association of REALTORS® (NAR), the real estate industry in Alabama had an economic impact of $42.4 billion, or 15.3 percent of the gross state product in 2022.   NAR projects the total economic impact of a typical home sale in Alabama at $86,200. 

Home ownership creates jobs and improves Alabama’s and the nation’s economy by improving neighborhoods and attracting businesses which create jobs. 

If you believe homeownership is the right path for you, your first step is to contact a REALTOR®.  Friends and family can be a great resource in finding the REALTOR® who is right for you.  Most will be happy to walk you through the financial requirements to quality for a mortgage, help you determine your budget, search for the perfect home, and get you to closing.  

Your REALTOR®, friends, and family will likely all have recommendations for mortgage brokers.  Talk to a few to find the best fit for you and your needs.  Whatever company you choose, you can find out if there are any disciplinary actions against the broker here.  If you’d like to get an idea of the estimated mortgage payment for a home, use this handy mortgage calculator.

According to Bankrate, 79 percent of Americans consider owning a home one of the greatest goals to achieve.  With experienced REALTORS® and tools to encourage first-time, second chance and low-to-moderate income homebuyers, Alabama is a great place to make (and buy) your home.