Yes, there is some harsh weather out there, but home buying is still happening. Our Mortgage Advisors are constantly surprised at the tales they hear from our clients, especially when it comes to buying a home. There are a lot of good reasons to buy a house, and probably a lot of bad ones too. But our clients seem to get fixated on the investment side of things. This is especially true with home prices up substantially. People don’t want to overpay or buy a home at the top of the market. And that’s a fair concern. The thing is, a house isn’t just an investment, if it’s even an investment at all.
When you make that pros and cons of buying a house list, you need to think outside the box as well. When you rent, you’re at the mercy of your landlord, and you don’t have any sort of stability outside the duration of your lease. If you want to put down roots, or call the shots, renting won’t get it done.
Another huge factor in buying a home is the ability to lock in your price. With a fixed-rate loan from Opes Advisors, your monthly housing payment won’t change, even if home prices rise substantially over time. Although there could be some fluctuation with insurance and property taxes. If you rent, you can expect your monthly rent to increase annually. Real estate can be a great inflation hedge because you can keep paying the same amount you paid a decade ago. At the same time, your home’s value will likely rise over time simply due to inflation, so it’s potentially a better place to stash your cash than a bank account or elsewhere.
One financial plus to homeownership is the concept of forced savings. Each month, a portion of your mortgage payment goes toward the principal balance of your loan, assuming you have a fully-amortizing mortgage. This essentially forces you to set aside a certain amount of money each month for the entire loan term, or until you sell and move on. When it comes time to sell, all those months of savings will represent your home equity.
You’ve heard the old location, location, location line. It’s true for property values, but also true if you want to be in a certain school district, or close to work, family or friends. If you can cut down your commute and/or situate yourself in an excellent school district, the value is essentially immeasurable. And the space in a home is usually better than an apartment. If you plan on starting a family, or are already in the midst, a home can be a great asset for your sanity.
It’s not a coincidence that condo listings constantly have a nursery in them. The new parents got the message fast and realized it was time to move out and buy a home instead.
It’s also nice to have an outdoor space that you can call your own. Maybe even a pool and a spa that you can relax in, weather permitting. That space will also come in handy if/when you have kids, giving them room to explore and an excuse to put down the iPad. And you can own a pet. There’s the freedom of design you get with your own home. When it’s yours, truly yours, you can do whatever you want with it. When you rent, you might get to do some things, but even if you are able to do them, it’s not really yours. You’ve either improved your landlord’s property or simply made a temporary space for yourself.
And our Mortgage Advisors continue to see the pride of ownership associated with owning a home. It feels good to own as opposed to rent. The American Dream typically includes buying your first home, and that will probably never change. And owning a home means you have something to pass along in the future. Many homeowners grow to love their properties, so much so that they insist that they stay in the family. It would certainly be nice to have something to show for all your blood, sweat, and tears over the years. And even sweeter to be able to take care of those you love.
If you rent, you simply walk away at the end. If you own, you wind up with something of value that can be shared. Ultimately, the reasons mentioned are investments, even if not strictly monetary.
Opes Advisors, A Division of Flagstar Bank, is neither a law firm nor a certified public accounting firm and does not provide legal or tax advice. Consult your accountant or tax advisor for advice specific to your situation.
Information is accurate on the date of publication. Please check with a Mortgage Advisor and consult with your tax advisor for current information related to your specific situation.
Programs only for qualified borrowers. All borrowers subject to credit approval and underwriting terms and conditions. Programs subject to change without notice. Some restrictions apply.
Opes Advisors, a Division of Flagstar Bank | Member FDIC | Equal Housing Lender