Is Buying a Home “Still” a Good Idea? Eighty-Four Percent of Americans Think So
Someone who's had a terrible homeownership experience might discourage others from taking the plunge. Given the unpredictable nature of the housing market, some could argue that owning a home is too risky since there's no way to predict the return on investment. But although there are no guarantees, buying a home has long been considered a smart financial move. In fact, according to the National Association of Realtor’s 2017 National Housing Pulse Survey, “84% of Americans believe purchasing a home is a good financial decision”— the highest percentage since the 2007 mortgage housing crisis.
According to the survey participants, here are the top five reasons to bet on homeownership.
1. “Homeownership means the money you spend on housing goes toward building equity, rather than to a landlord.”
Renting might be favorable when you're starting out on your own or when you don’t have the credit score or savings to purchase your own property. But while renting has certain advantages, it doesn’t offer the same long-term benefits as owning.
Rent isn't cheap. In fact, the monthly cost of renting compared to buying can actually be more expensive depending on where you live. Considering how housing is typically our biggest monthly expense, it only makes sense to earn equity from payments and get some of your money back when you move (as long as your home value doesn’t decrease). You can’t earn equity unless you’re an owner. So instead of investing in your landlord, invest in yourself.
2. “Homeownership creates the opportunity to pay off the mortgage and own your own home by the time you retire.”
Renting is a monthly expense that can haunt you until the day you die—it never goes away. At least there’s light at the end of the tunnel with a mortgage because you’ll eventually pay off this debt. It might take 15, 20 or 30 years to reach that light; but once you do, you’ll enjoy mortgage-free living.
3. “Homeownership is an investment opportunity to build long-term wealth and increase net worth.”
When you buy a property and build equity (which is the difference between your property value and what you owe the mortgage lender), you’re essentially building your net worth. In this way a mortgage acts as a type of forced savings account, and the single biggest contributing factor to your personal wealth. The more equity you have, the more opportunities available to you. For example, you can tap into your equity for home improvements or an emergency, or you can use it to supplement your retirement income.
4. “Homeownership means a stable and predictable monthly mortgage payment.”
Rental rates are unpredictable, so even if you’re fortunate enough to live in a city with cheap rent, rates can increase with each year and eventually surpass the monthly cost of owning. This is unlike a fixed-rate mortgage where the interest rate and monthly payment remains the same for the duration of the term (keep in mind, however, that insurance and taxes for your property can increase from one year to the next).
The truth of the matter is, renting doesn't provide the same safe, secure or stable environment as homeownership. The amount you pay in rent today could rise incrementally over the next few years. And if your landlord raises your rent too much, you're forced to find a cheaper place to live, which could mean uprooting your family and life.
5. “Homeownership allows for various deductions on federal, state and local income taxes*.”
The opportunity to reduce your tax liability is another reason why many Americans still consider homeownership a good financial decision. Unlike a renter, owning a home opens the door to tax write-offs like mortgage interest, property taxes, and other expenses related to acquiring a mortgage such as mortgage insurance and mortgage points. These deductions reduce your taxable income and can potentially save you thousands in income taxes. The less money you pay the federal or state governments, the more cash in your pocket for other things.
You can't put a price tag on the stability and security that home ownership can power. Owning a home has always been likened to the American dream. If you’re ready to apply for a home loan and claim your piece of this dream, give Cherry Creek Mortgage a call today. We offer a variety of mortgage solutions to meet your individual needs.
* This does not constitute tax advice. Borrowers should consult their own tax advisers regarding the tax consequences and deductibility of mortgage interest and/or property taxes. This material is informational only and not an advertisement to extend credit as defined by TILA/Regulation Z nor an application for credit as defined by RESPA/Regulation X. All applications are subject to underwriting approval and determining applicant’s ability to repay. Not all applicants are eligible for or qualify for all loan products offered. All loan programs, terms and conditions are subject to change without notice. Rates and terms are valid as of the date of printing/distribution [7/25/2017].