At one point in time or another, you have probably heard the phrase, “There’s no place like home”. Well, that couldn’t ring truer for many individuals across the country. Beyond the freedom that comes with owning your own place, there are a number of financial aspects that come with your new home purchase.
Build Wealth by Owning Your Own Home
Growing up, you probably heard about how wise it is to invest in your own home. As time goes by, your home is going to become more and more valuable. Owning your own home is one of the easiest ways to build wealth.
Every Month, You Build Equity in Your Home
Equity is defined as the amount of money that is built up in your home based upon what you can get out of it minus what you owe on it. With every mortgage payment you make, a portion of it is going to reduce the total amount owed on the home. By reducing your mortgage amount, you are increasing your equity. As more time goes by, your equity will get larger and larger.
Use the Equity in Your Home as Leverage
By building up equity in your home, you may be able to use that as leverage to cover some of the unexpected expenses in life. Unlike the interest you pay on your credit cards, you may be able to deduct the interest you pay on your mortgage. It may make sense to pay any credit card debt by taking out a home equity line of credit. There are a number of reasons why you may want to borrow against your home, such as paying for college tuition, paying off medical bills or even starting your own business.
Don’t use your home to buy things you don’t need. Only use this loan to handle something that you need.
Mortgages are a Type of Savings Plan
By paying your mortgage every month and paying down the principal on your home, you are effectively saving money. Every month, you build value in your home. You are essentially being forced to save money, which is a good thing.
Buying is Cheaper than Renting for the Long-Term
For the first few years, it might save you money renting a home. Over the course of time, the amount of money you spend on interest is going to decrease. It ends up where the amount you are paying is going to be far cheaper than what you would spend renting. More importantly, you don’t have to worry about having someone watching your every move. Instead of paying off your landlord’s home, you can pay your own off.
Stop wasting time, and start stepping into a new mortgage and the home of your dreams.