Many young people are debating whether they should renew the lease on their apartment or become a homeowner. It's a great time to do so because there is a build-up in new-home prices, and the struggle in your current location will likely be worth it in the long run.
Housing Mortgage Cost & building your Net Worth
When you rent or buy, you have a monthly housing cost.
Buying or renting a house can be expensive, but it's important to remember that housing costs don't just cover the rent or mortgage. Your monthly housing cost includes other expenses such as insurance, maintenance, utilities, and taxes.
As a homeowner, you're investing in your home, creating equity, and responsible for its upkeep.
Homeownership can be one of the most important financial decisions you'll ever make. Investing in a home will allow you to create equity and reap the benefits of owning your own home by building equity over time. It also makes it easier to maintain your property, which is essential for your home and its surroundings.
Here's one way your mortgage might help your financial situation. Check out Harvard University's Joint Center for Housing Studies published that every mortgage payment is a form of 'forced savings.'
Making your mortgage payment is a smart way to build your net worth in the long term. Your principal portion of the payment builds equity in your home, which will grow over time.
A renter pays the mortgage of their landlord and builds their landlord's wealth and equity.
A renter is someone who leases the property from a landlord. This term can also refer to the person leasing the property. A renter will generally pay their landlord's monthly mortgage or rent and deliver it to them monthly. In exchange for this, they will build equity in the home that their landlord owns.
Many people are curious about what it would be like to purchase a home in their lifetime. This is a great way to analyze the home equity that would accrue during a person's homeownership to make an intelligent decision when purchasing a home.
This example breaks down how the value of paying your mortgage consistently over time is equivalent to having an additional $34,000 in your home's equity bank account.
Remember, when owning a home, you are still building equity with home appreciation on top of paying down the principal every month.
Home values have been on the rise continuously since the market crashed in 2008. Some of this increase is due to a strong economy, but a lot of it is expected to how easy it has become to get a loan and mortgage these days, and record-low mortgage rates are keeping homes more affordable than renting per month! With that said, it's important to remember that the housing market isn't going anywhere anytime soon.
Want to Use your monthly housing cost to your advantage? Let's get together and discuss the opportunities available in our market.