Homeownership is a long-term financial commitment. It requires a down payment and transaction costs. Plus, the value of your house may not increase right away.
Despite these drawbacks, here’s why buying a home can be a smart money move.
Pick the right mortgage and buy a home you can afford and home ownership can be a very savvy financial move.
As home prices eventually go back up, the appreciation will allow you to build wealth.
Paying your mortgage every month and reducing the amount of your a principal is like a forced savings plan that helps you build equity (home value minus mortgage) over time.
By taking a renter in, you’ll be able to increase your income by raising rent based on prevailing market conditions.
Nor do you have to wait anymore to get the dishwasher fixed, the air vents cleaned or leave messages about repairs. As the homeowner, you’ll be in charge. And you’ll have to pay the plumber.
No one can kick you out. You also won’t have to worry anymore about rent hikes or moving house, should your landlord decide to end the lease.
Lock in a low monthly payment and you’ve just protected yourself against inflation. This way, your costs are predictable and more stable than renting.
Get a pet, knock down walls, paint them pink or do anything you like with your home without worrying about losing your security deposit.
While it may be cheaper to rent in the first few years, as the interesting bit of your mortgage payment decreases, it will eventually be lower than the rent you’d be paying your landlord.
Of course, buying isn’t for everyone. If you might move soon, want the flexibility to upgrade your home or your job situation is uncertain, then renting can be ideal. Use our Price Index to know the cost of properties in your area. And consider the transaction costs of homeownership before taking the plunge.