Buying a home is one of the biggest financial decisions most people make. Homeownership is often referred to as the “American Dream.” The real estate industry touts helping clients find their “dream home” – that place where you put down roots.
But before buying a home, it’s important to consider how such a purchase will affect your finances and your lifestyle. It makes sense to review all of the advantages and disadvantages of becoming a homeowner before making this big commitment.
5 Advantages of Home Ownership
A common trend among people who rent a home or apartment is they are frequently on the move to new places. People tend to stay longer in a home they buy, if only because buying, selling and moving frequently is difficult. Buying a home requires confidence you plan to stay there for several years.
Good long-term investment
While a home is large purchase, it also provides a much better return on investment than other large purchases such as a car. The Federal Reserve Bank of St. Louis reports that the average price of homes sold in the United States rose 28% in 10 years starting in 2009 and 10% from 2014 to 2019. Even if the value of the house itself depreciates, the land on which it sits can become more valuable. When you buy a home, you’re investing in an asset for yourself rather than a property management company or landlord.
Opportunity to Build Equity
Your equity is the difference between what you can sell your home for and what you owe. The longer that you own a home, the more you’ll pay towards the principle balance of any liens. As the balance of any liens against a property gets lower and hopefully the value of the property increases, the larger your equity.
When you rent a property it can be difficult to make even the simplest change such as painting a room as it is often spelled out in a lease that you cannot alter the property in anyway. Home ownership gives you the ability and flexibility to make changes – whether it’s something simple like painting a room or more complex like a bathroom or kitchen remodel. It’s your home and you can make changes as you see fit.
Stable monthly payments
A fixed-rate mortgage means you will pay the same monthly amount for principal and interest until the mortgage is paid off. Rents can increase at every annual lease renewal. Fluctuating property taxes or homeowner’s insurance can change monthly payments, but that typically does not happen as often as rent increases.
Bottom Line: Before you buy for the first time, it’s prudent to make sure you are ready for the responsibilities homeownership brings. Find an experienced, trusted realtor to help you through the process of finding a home, making an offer and buying it at the price you want to pay. For more information or answers to your questions, contact The Mesimer Team.
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