07 Nov Buying vs Renting-Building Wealth
Buying a home is still part of the American Dream. A recent study by NerdWallet indicates that 84 percent of Americans say that buying a home is a priority. At the same time, many Americans feel that buying a home is much more difficult now than in the past. Once potential homebuyers start totaling up the down payment, monthly mortgage costs, and maintenance expenses, they are often afraid to take the plunge and rent instead. You might be surprised to learn that homebuying actually could be the smarter financial choice. Here are some reasons why you should consider diving into homeownership:
Affordable Down Payment
The idea of a large down payment is often the first and largest roadblock to purchasing a home. The misconception that you MUST put 20 percent down keeps potential buyers from even researching their options. There are many loan possibilities out there, many of which allow for a small down payment. Check out this post to learn more about loan options.
Price Per Square Foot
Seattle apartments are tiny- on average only about 700 square feet. This is the smallest in the nation! Homeowners here pay less per square foot and get so much more space! Read this post about getting more for your money.
Building Equity
In simple terms, equity is how much of your home you actually own. At time of purchase you become the homeowner. But if you borrowed money to buy the home, the lender still has an interest in the property until the loan is paid off. The value of the home, minus the amount left on the loan, is the equity. If you put 20 percent down, your equity is 20 percent of the market value. The good news is that your equity increases with every loan payment. And it also increases as the home’s value increases. This is great news for homeowners in the Puget Sound area, which traditionally sees rising home values. Your equity is included in your net worth and can be used to fund future home purchases or retirement.
Ultimately, buying a home is a step to building wealth. But owning your home is also so much more. Your house is yours− to love or to remodel, grow old in or sell off. Learn more about buying a home in our Free First Time Home Buyers Class. If buying a home is your dream, let’s talk. It’s time to turn that dream into reality.