Is a home purchase on your 2019 “to do” list?
If so, now is a great time to do it, as market conditions are quite good!
Homeownership has traditionally been an important way to build wealth and the financial returns on homeownership have been more far more beneficial than renting for most homeowners.
Your home is likely the biggest investment you will make in your life, which brings with it some fear and anxiety. Don’t let it! While home ownership may seem a bit scary, buying your home should be an exciting time.
Enjoy the process and engage the right people.
“Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”Mark Twain
Why Home Ownership is Important
According to a Trulia report, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.”
That may have some thinking about buying a home instead of signing another lease extension, but does that make sense from a financial perspective?
In the report, Ralph McLaughlin, Trulia’s Chief Economist explains:
“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”
The report listed five reasons why owning a home makes financial sense:
- Mortgage payments can be fixed while rents go up.
- Equity in your home can be a financial resource later.
- You can build wealth without paying capital gains.
- A mortgage can act as a forced savings account.
- Overall, homeowners can enjoy greater wealth growth than renters.
- 87% of people said owning a home is part of their American dream
- A typical homeowner’s net worth was $195,400 while a renter’s was $5,400
- Academic studies have shown that homeowners are healthier. This result arises from a better sense of self-control and self-worth among homeowners versus renters
- Owning a home is good for the economy. With each home sale there are expenditures related to lawn care, home remodeling, new furniture, mortgage origination, moving, and an inducement to build new homes
Infographic courtesy of Trinity Homes
Homeownership benefits the homeowner’s family and their surrounding community. This includes improved health and school performance for children, increased civic engagement and volunteering, reduced crime, and higher lifetime wealth.
When taking a look at the lessons learned from the last housing crisis, the Bipartisan Policy Center’s Housing Commission noted that homeownership can “produce powerful economic, social, and civic benefits that serve the individual homeowner, the larger community, and the nation.”
The reason is fairly simple: economics. When someone owns an asset, they are more likely to engage in behavior that ensures its future value. You can find out more here from US News and World Reports….
Unlike stocks and bonds, a home’s value is determined by both the physical quality of the structure as well as the general character of its neighborhood.
That means homeowners are more likely to spend their limited time and resources engaged in improving their neighborhood, if for no other reason than to protect the value of their investment.
Before you sign another lease, perhaps you should sit with a mortgage professional and real estate agent in your area to better understand all your options.
Let 2019 be the year you make the move into your own home!