Building Equity: Why You Should
Quit Renting and Buy a House
home equity articles and tips
If you're like most young adults, you've probably been renting since you moved away from home. Although this works, once you live in a place where you plan to stay for the long haul, it's smart to save up a down payment and buy a home. Here are the top four reasons why this is a good idea.
You'll Build Equity
When you're renting, all that money you spend isn't doing a thing besides keeping a roof over your head. Buying a home gives you the opportunity to start putting that money towards something of value. What was once rent money becomes a mortgage payment, and each payment you make is home equity. Look at it like this—over 30 years of paying $1,000 per month for your housing, you could simply pay $360,000 in rent and have nothing to show for it, or you could pay $360,000 towards a home.
You Can Customize Your Home
When you own a home, you can do whatever you want with it. If you want to remodel the kitchen or upgrade another area, you're free to do so without needing to get a landlord's permission. And while you may be able to make some upgrades when you rent a place, this doesn't make much sense, because any money you put into the home will just benefit the actual owner later.
Real Estate Values Tend to Increase
A home isn't just a place to live. It's also one of the better investments you can make. Real estate values usually go up over time, barring the rare crash, such as the one that happened in 2008. Other than that, you could look at homes just about anywhere and see a steady rise in value. If you buy a home for $350,000 now, it could be worth double in 10 years' time.
You'll Have Excellent Leverage
Another benefit of investing in a home is the kind of leverage you can get. If you wanted to buy $350,000 worth of stock, you'd need to spend $350,000. With a home, you can put down 10 to 20 percent (or less with certain loans) and get a loan to cover the rest of the purchase price, which gives you excellent leverage.
Buying a home isn't a decision to take lightly, but it could be the best choice you make in life. If you're interested, start working with a mortgage lender like Home Mortgage of America or someone similar to see what sort of loan you qualify for. After taking that first step, it's just a matter of time until you find a home you'll fit perfectly into.
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