Hooper is just the second player in Australian rugby history to take up a five-year deal after ex-rugby league star Lote Tuqiri in 2007.
The flanker is expected to pocket approximately $6 million but could have earned far more if he played overseas during the next five years.
"Long deals aren't uncommon in other sports. In AFL and rugby league they're fairly common," Hooper told reporters.
"Maybe we're just starting to look (more at it), that it's really an option for us.
"These things always take some working through but the decision at the forefront of my mind was always to stay.
"I don't want to play anywhere else. I love playing here ... and see so much potential."
Some Wallabies have opted to put their international careers on hold and sign more lucrative contracts in Europe and Japan during recent years, a trend that coach Michael Cheika is desperate to stop.
Finalising deals for superstars Israel Folau and Bernard Foley, who remain unsigned for 2019 and beyond, will now become Rugby Australia's contracting priority.
"I put the heat on them yesterday. They've got to sort themselves out now," Hooper laughed.
"Everyone makes their own mind up.
"But if they (long-term deals) are out there and people are willing to do it then fantastic. It's great. You can lock it in, build a future and start looking at how we develop players."
Hooper has been sidelined since the June Test series against Ireland. He hurt his hamstring and missed the Waratahs' Super Rugby finals.
Hooper is confident he'll lead Australia in the Bledisloe Cup opener against New Zealand at Sydney's ANZ Stadium next Saturday night.
The new deal will mean the 26-year-old NSW captain will be available to lead Australia at the next two World Cup tournaments in 2019 and 2023, adding to his 82 Tests.
If Hooper remains on the park then he could overhaul George Gregan's record as the most capped Wallaby.
"It's not something I've looked at," Hooper said, when asked about bettering Gregan's 139 Test caps.
"What's amazing is he managed to rack up that number back in the day. It's testament to the player he was ... I'd be silly not to talk to him and ask him how he did it."
Hooper was named captain of Australia in 2014, becoming the youngest Wallabies skipper in more than 50 years.