For many people, owning a house is a financial fulfillment. For others, it can be a huge problem. Acquiring your own house can be the biggest financial decision you will ever make. But, there are many factors to think of before you become a homeowner.
Do you really need to buy a house? Is your income enough to sustain the payment? Are you ready for financial obligations. These are just some of the questions you need to answer truthfully. Yes, it can be difficult at first but buying a property has its financial benefits that are good in the long run. When you think of a house as an investment, you will realize how it can help your finances.
Here are some of the financial benefits of buying a house:
Offers lower mortgage rate.
This is one of reasons why you need to buy a house than rent. Over the year, interest rates decrease resulting to cheaper home ownership compared to renting. For some, there is an option for homeowners to deduct the mortgage interest from their tax obligations. Interest payments are often the largest component of your mortgage payment, so expect a higher deduction during the first years of paying for the house.
Builds equity on a monthly basis.
Equity means the amount of money a homeowner can sell the property minus the other pending payment. Homeowners make a mortgage payment, and it reduces the amount they have to pay. Reducing the mortgage means increasing the equity. Building equity means the value of the house increases over time.
Becomes a hedge against inflation.
Generally, real assets like land and real estate hedge better compared to your stocks, bonds and other financial assets. Since real assets has a value of their own, inflation cannot affect them. There are four properties for a good hedge: value, marketability, divisibility, and financing. Unfortunately, not all of these are found in a house. This is why a real estate is not considered a good hedge, nevertheless it still helps protect your money.
Acts like forced savings plan.
When homeowners pay their mortgage every month and reduces the principal, it becomes like a forced savings plan. On a monthly basis, they are building up more valuable equity in their properties. The monthly mortgage payments lower your mortgage which can become you mandatory savings account.
Recommends lower home prices.
For first-time home buyers, it is essentially a great chance to select a real estate at prices that may never happen again. For example, if a buyer is able to find a pre-selling property, then the price is still low. When the price goes up, the appreciation allows homeowners to build wealth. This also goes for homes for sale on McGrath that increases value in the long run.
Despite the great benefits of owning a house, you need to remember that there are plenty of things to consider before buying a house. Don’t rush and plan first. After all, a house is expensive and it takes responsibility and commitment to own one.