Any investment can be scary, but few feel like more of a commitment than buying your first home. It's where you'll spend most of your time, and it's likely the biggest purchase you've made. Luckily, buying a home has amazing benefits that make it—not just incredibly worthwhile—but downright exciting. Here are six reasons why:
1. You're About to Save Money
It might seem like you’re spending more, but rent prices can fluctuate dramatically. Even if you live in a rent-controlled building, your rent goes up year after year. Compare that to a 20-year fixed-rate mortgage, and you know exactly what you'll be spending year in and year out. If you're in the San Diego area, there’s a good chance that your mortgage payments will be less than your rent.
It's also expensive to move, and the average tenant spends less than four years in their apartment. Further, you’re lease likely expires every year, making a long-term residency a bit precarious. Both issues are solved with homeownership.
2. Your Investment will Appreciate
One month after buying a new car, its value dropped by 10 percent. By the end of the first year, it's worth about two-thirds what you paid for it. Yikes. But a house sits on land, and land (almost) always appreciates. Even if you never update the house for thirty years, the ground surrounding it is valuable. But the house is also likely to appreciate with the right upkeep.
Further, if you're focused on buying a condo, pay even closer attention to the neighborhood. The more expensive the area becomes, the more valuable your condo gets.
Alternatively, you can't get a return on investment (ROI) from renting an apartment.
3. You Can Customize and Upgrade to Your Heart's Content
You might want an addition in ten years, knock down a wall or two, or finish the basement. As a homeowner, you have the freedom to do anything you like (as long as it's up to code), and any upgrades, such as adding a pool, increases the value of your investment.
Today, sustainability is one of the more popular upgrade ventures. You can get special loan rates on green investments, which you can often get without collateral. But if you do need collateral, you own a home. Creating a more sustainable property can even make you money, as the power company will compensate you for generating excess energy. And at the end of the day, any green upgrades will likely increase your home's value. So get those solar panels!
4. You'll Have Powerful Equity
The percentage of your home that you outright own is basically money in the bank because you can sell the home at any time, leverage the equity to receive another loan, and so on. Equity isn't exactly liquid cash, but it's the next best thing. Plus, you can't exactly live your life inside a pile of cash.
5. Did Someone Say Tax Benefits?
The interest you pay on a mortgage is a write-off because the federal government encourages homeownership. If you work from home, you might even be able to write off part of the principal balance on your mortgage. The money you don't pay in taxes? That's just money in the bank.
6. You're in a Better Position Than Second-Time Homebuyers
First-time homebuyers receive all sorts of added benefits, like lower interest rates and a far lower down payment (5% down, anyone?) You're making the jump into homeownership to set yourself up to do more of what you love. That's a specialty of ours at MyPoint Credit Union, with an amazing deal specifically for first-time buyers. Are you ready to get excited? Apply today!
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