Have you ever debated with yourself about the pros and cons of switching from a renter lifestyle to one that includes homeownership? If so, you’re not alone because the question is a perennial one. Many working adults in their twenties and early thirties crunch numbers, read books, have discussions with friends, and seek professional advice to figure out how they might benefit from buying a first house.
It’s true that for a minority of people, purchasing a home is not a wise choice, but that’s actually a tiny percentage of people. For most, the change from paying rent to paying down a mortgage is a smart financial play that opens up numerous positive avenues, including the chance to own a long-term investment that appreciates year after year, get excellent loan terms whenever they need cash, establish better credit, and more. Here’s a short review of useful tips and several things you can look forward to if you choose to say goodbye to your apartment landlord and opt for homeownership.
Long-Term Investment Advantages
To hear some people tell it, there’s not a better long-term way to invest your hard-earned money than to purchase a house. The principle holds true in nearly every kind of economy and for everyone who can get qualified for a mortgage. Over the long-haul, real estate of all kinds, both commercial and residential, tends to appreciate in value.Plus, this kind of investment compares favorably with the alternatives, like owning stocks and precious metals. Another consideration is that when you rent, those monthly lease payments are essentially earning zero interest and holding you back from leveraging the true power of your income, whether it’s large, small, or in between.
Favorable Loan Terms
For millions of people who own their homes, the central advantage is being able to take out a home equity loan to meet various financial needs. Of course, owners choose both loans and lines of credit for different reasons, but this luxury is only available to homeowners, not renters. To learn more about this key benefit of being a mortgage holder, review on online guide that details all the specific home equity loan rates from major lenders for HELOCs (homeequity lines of credit) and HELs (homeequity loans). Whether you need quick cash to cover an emergency or simply want to finance an addition or renovation, both options are available.
Better Credit
Almost invariably, people who own the property in which they live have better credit ratings than those who don’t. The reasons are simple in that homeowners have at some amount of built-up equity that can serve as collateral for a loan. And paying off a mortgage on time demonstrates to potential creditors and credit bureaus that you’re a good financial risk.
Income Potential
Older couples whose children are grown often rent out one or more rooms in the family home to earn extra income. Likewise, some people pay off one mortgage and then purchase a second, smaller property in which to live while they rent out the first. This is one of the simplest ways to become a renter and turn your first home into a long-term source of income.