Many of us dream of becoming homeowners. Yet the hurdles to starting out in home ownership can be a challenge. Here is an article that helps you understand why it is worth persisting, and why exactly buying a house is a smart investment.
Why buying a house is a smart investment
Buying a home is part of the American dream. Many people expect that, once they go to college, get a good job, and get married, they will then buy a nice home and settle down. Buying a home can give people a sense of security and peace of mind, and it is also an excellent investment. Young people have been staying away from home ownership due to a rocky job market and high student debt. But, there are reasons why young people should consider buying. Continue reading to better understand this investment.
Paying rent to a landlord each month is like throwing money away. At the beginning of the next month, there is nothing to show for the rent paid the previous month. Making monthly payments toward a mortgage, however, is slowly and consistently paying for a home. As the balance on the mortgage is reduced, the equity increases, and it will build wealth. It is better to spend money on one’s own home rather than paying for someone else’s home.
Buying a home where the market is trending up can be a great investment. Some markets, such as New York, Miami, or San Francisco, attract professionals who want to stay there long-term. In some of these markets, the prices of homes can double in just a few short years, making an investment worth twice as much. Even modular homes, purchased through companies such as Modly, increase in value.
Mortgage interest is deductible from income taxes, thus lowering the amount that has to be paid each year to the government. Homeowners don’t usually pay a capital gains tax if the property value increase is less than $250,000.
For many people, owning a home provides a sense of financial stability. When renting a home or apartment, the monthly rent price can increase from year to year. However, a mortgage stays relatively stable, so even when the housing market rises, your mortgage payment will be the same.
People who own homes usually have more square footage than those who rent. Couples who are planning to grow their family and need more room may wish to consider home ownership for this very reason.
Emotional benefits of home ownership
When people buy homes in a community, they are more likely to be invested in that community and build relationships within the area than those who rent. There is a sense of pride in homeownership. Buying a home can help restore faith in the American dream and preserve it for years to come.
Although interest rates are constantly changing, buying when the rates are low is seen as a much safer investment than credit cards. Homeowners can even refinance when rates become lower than at the time when they originally bought, saving them even more money in the long run.
Increase your retirement income
Most homes are paid off by retirement time, which means that homeowners can tap into home equity to fund retirement benefits. As the U.S. continues to have trouble with the Social Security system, it will be more and more important that young people have a way to supplement their retirement accounts.
Property investments can also provide steady and consistent income, even in the face of economic volatility. Property markets don’t necessarily go through the same highs and lows as other investments. With the right education and strategy, there is potential for significant returns on investment in real estate which can supplement your income come retirement time. Property investments allow retired individuals access to a reliable and steady source of cash flow with minimal risk involved since the market value of most properties tends to appreciate over time, in most cases.
Do some research. If you can afford it and plan to stay in one location for a while, buying a home is probably a great investment for you.
FURTHER READING FOR HOMEOWNERS & PETOWNERS
At Housesitmatch.com we like to offer useful and practical articles on topics for our readers. In this selection we offer you a number of suitable pieces from our own blog on renovating and decorating a home.