Over 70% of seniors say that their home is their most valuable asset. Nearly 75% also say that buying a home was one of the best financial decisions of their life. A lot of Americans have no other assets besides their home.
There are many advantages of buying a home earlier in your life, rather than waiting until you are settled and older. Read through some of the benefits of buying a home early below so you can make the right decision for your financial situation.
1. A Consistent Way of Building Net Worth
Do you have more bills than income at the end of the month? A lot of Americans are one paycheque away from homelessness which is terrible news in itself.
But more than that, this means that most folks are not investing anything for retirement. They are too busy taking care of their current expenses to think much about the future.
Inevitably, though, the future does arrive and you are left with nothing to show for decades of hard work.
But if you invest in a home when you are younger, no matter what other expenses you have, you will always at least have this house that you are putting money into. Slowly over time, you will pay off your home and then have a solid asset that you can use to do other things.
And because it's mandatory to pay your mortgage every month, that is, you can't skip it because you don't feel like it, you are being 'forced' to build an asset over time.
Since most Americans don't have the self-control or discipline to invest in stocks or other assets monthly, a mortgage is a great way to invest in their future.
It's not even a forever thing. Most mortgages are 25 years long, so before you know it, you will have paid it all down (unless you remortgage). And you will have an asset that no one can take away from you.
You can even gift it to your children before you die, so they can have their finances set up in advance. This way you are building generational wealth, something not a lot of Americans can say.
2. Buy Before Real Estate Prices Zoom Up
Every year, real estate prices seem to go up and up and up. It seems like the sky's not the limit when it comes to American real estate prices.
This is good news for anyone who's invested in real estate, especially when they got in on it early on. But there's never a bad time to get into real estate, it seems.
If you think long-term, you will realize that investing in some real estate right now, even if it's not the most expensive or luxurious home out there, is better than staying out of the market completely.
There's no need to get the perfectionist bug and think that you have to buy the perfect house out here for you. You can always upgrade after some time, but getting into the market right now is more important than anything else.
3. Remortgage and Use That Income to Build Other Assets
If you have a solid tangible asset like a home, then you can feel a sense of confidence knowing you have that backing you in everything you do. And if some emergency or big-ticket expense comes up, then you can always remortgage your home to pull some money out of it.
Of course, you should always be careful when you do this, not remortgaging your house to pay for vacations or something silly like that. But if you have a financial emergency, having an immutable asset like real estate is such a stabilizing and grounding presence.
It also gives you confidence when you wish to help out your children or family members who are in dire straits. You don't have to take out loans from instant cash places that charge you exorbitant interest rates and take advantage of your plight.
4. When You Upgrade You Can Rent Out Your First Home
Most folks tend to use the equity built up in their first home to buy a bigger house down the road. But it might be a better idea for you to leave that equity in your first home, rent it out for passive income monthly, and buy a new home.
It's a novel idea, but it could be something that could result in immense wealth down the road because you were able to build up a portfolio of real estate assets.
If that sounds like too much trouble, consider that you don't have to take care of all this yourself. You can always hire a property management company to take care of your real estate assets for you.
Even if you don't rent out your first home, you can still use the equity built up to purchase a bigger home. And perhaps, you could rent out part of this bigger home to fund your child's college education or to pay for your annual vacation to a tropical country.
It's all about thinking outside the box, building up your potential options, and not doing things like everyone else because you are afraid to venture out of the built-up paradigm.
5. Real Estate Is More Stable Than Stocks or Crypto
If you are worried about investing in real estate, then you would be one of the few people who are. Americans love investing in real estate because of the stability and solidity of this investment.
You rarely hear of someone going bankrupt or losing all their investment in their home or real estate. You will hear of this happening with stocks or crypto quite often, though.
Not to say that you shouldn't invest in stocks or cryptocurrency, but real estate is always going to be a more stable investment than anything else. Also, you don't have to be an expert in investment lingo or reading charts when it comes to buying real estate.
You can hire real estate services for home buyers and they can help you navigate the unknown waters of real estate purchase and ownership. You are not alone in this journey.
If you are not interested in learning the intricacies of investing in stocks or crypto, and you feel overwhelmed just thinking about it, sticking to real estate investment is a great idea.
6. Pay Down Your Home Faster and Have a Home for Life
You don't have to follow the schedule that banks offer to you to pay down your home mortgage. If you get a raise or a tax refund, you can put it into your mortgage to pay it down faster. If your interest rate goes down, you can pay down your home even faster.
And before you know it, you will be mortgage free and own an asset that is yours for life. Besides minor property tax payments and some maintenance, you won't ever have to worry about having a place to live.
Some people can pay off their mortgage by the time their 30s hit and then they can use that additional money every month to put into other investments or to upgrade their family's life. If you want to be financially successful, then this is a paramount way to do so.
7. The Illiquidity of Real Estate Can Be a Positive
Even though lots of financial gurus consider the non-liquidity of real estate to be a deterrent, it can also be quite an asset. If you are not fiscally responsible and tend to splurge any free money on nonsensical purchases, then having a mortgage in place will force you to be responsible.
But more than that, you can't just decide one day that you are going to sell your house and the next day have cash in hand. It's easier with stocks and crypto investments to do that (and that can lead you to make bad decisions to sell when you should be holding your investment).
With real estate, because the process of selling a home is so long, you will have ample time to realize if you have made the wrong decision to sell. Your impulsivity will not have a chance to ruin you financially and you can change your mind and unlist your home.
Gain Financial Strides Using the Advantages of Buying a Home
If you read any article on finances, there will be lots of different recommendations on how to become financially successful. Lots of them will probably also mention all the advantages of buying a home.
The earlier you buy your home, the more beneficial it becomes. Are you ready to buy your first home now?
Contact Team Steele San Diego Homes today to get started on your homeownership journey. There's no need to delay any longer.