Just the other day, a renter I know who’s never been a homeowner asked me an interesting question: Is homeownership still one of the greatest ways to secure one’s financial future? The answer is a resounding yes.
When you’re stepping into the market to buy a home for the first time, it’s easy to fix your attention on price and what your monthly mortgage payment will be, and understandably so.
Up to this point, you’ve known exactly how much you were going to pay in rent each month, and now you’re trying to figure out how much house you can afford given your monthly budget.
Beyond price and your monthly payment, it’s also important to think about the home’s future value, or appreciation, over the life of your mortgage. When you sell your home, the majority of your profits will come from the equity you’ve gained between the time you bought the home and the years you’ve lived in the home.
Although the market ebbs and flows and home values can ebb and flow with it, the value of real estate is always increasing, and there’s no real indication that will change anytime soon.
Another advantage of becoming a homeowner early in life is that, more than likely, you’ll be able to pay off your mortgage during your working years. When you enter into retirement on a fixed income, having to continue paying on a mortgage can interfere with your ability to maintain your desired lifestyle. The sooner you start paying off your mortgage, the better your financial circumstances will be later in life.
Finally, for those who struggle to save money, owning a home is a means by which you can achieve this. Think of it as a kind of forced savings. As a homeowner, you’ll be forced to put away enough money to stay on top of your mortgage, cover your monthly expenses, and so on. All the while, your home’s value will grow, and that equity will pay dividends when you sell it down the line.
If you have any questions about our local market or real estate in general or if there’s a topic you’d like me to cover in a future video, reach out to me by phone at 608-345-6594 or you can email me at JDHolt@KW.com. I look forward to hearing from you!