Why homeownership is a huge step toward building wealth
For as long as we can remember, we’ve heard that homeownership is the path to building wealth, and all of us here at Metro REIG agree. Of course, different people have varying needs, which means homeownership isn’t for everyone, but it can certainly be a game-changer for those who are able to build equity. Today, we’d like to go into wealth and why we believe homeownership is a great way to start building it.
What is wealth?
Wealth looks different for each individual, and can also be ever-fluctuating. Is wealth having a certain dollar amount in the bank, or is it owning dozens of assets? Is wealth having zero debt, or having a well-funded retirement? Regardless of what wealth may mean to you, there’s a good chance you have been making financial decisions in an effort to achieve that goal. For many, building wealth starts with buying a home.
How can homeownership build wealth?
While buying a home isn’t right for everyone, when done with proper guidance, it can be a huge catalyst for financial success. Why? Because paying a mortgage essentially translates into your making an investment each month into your property. Some can even argue it makes it easy to invest, seeing as you are basically “forced” to do so—after all, you don’t want to miss those monthly payments, do you? Housing costs are a necessity, which means you can’t forego a payment the same way you might putting in $500 in a savings account each month. With a mortgage, you are building a nest from which you can draw in the future.
More importantly, homeownership builds wealth because of the ever-growing housing market. Though the market will always have dips and swells, and relies heavily on where and what you bought, it’s been on a steady climb for decades. Chances are that a home you buy today will be worth significantly more in 30 years, which leaves you with a robust, all-equity asset.
Should I buy or should I rent?
Before deciding on whether homeownership is right for you, it’s important to do the proper research. You’ll want to look into your finances to determine what you can realistically afford. Getting pre-approved for a loan is a great way to get an idea of what you can afford and what your monthly payments will be, so that you can compare it to typical rental prices in your area. Don’t forget to pay attention to what potential property taxes will be, as well as local market trends.
If buying a home is the path you choose, then there are a few things you may want to consider to maximize your investment.
- Seeing as a home isn’t the same as having liquid assets like a savings or investment account, you’ll want to create an emergency fund so you can be prepared for unexpected situations.
- Since the market is constantly fluctuating, when you buy a home can have a big impact on your equity-building potential. If possible, try to buy during a downturn, and only invest in a property you can see yourself living in for many years so you can start building equity from day 1.
Ready to buy?
Buying a home may not be for everybody, but for many it is the chosen path for building wealth. If you’re ready to embark on a homeownership journey, we can help! First of all, read up on common real estate terms so you’re familiar with the jargon. Then, give us a call and let’s set up a consultation to see how we can serve you. We’re a full-service brokerage committed to helping you find your dream home or next investment.