Home is a place to put your feet up at the end of the day. It’s also an investment in the future. If you play it smart and talk to the right mortgage provider, you can use your home to generate income and create a cushion for retirement.
Here are some of the top reasons you should consider purchasing your first (or next) home:
It is perhaps the most common motive for purchasing instead of renting: Equity. When you buy property, you accumulate equity with each mortgage instalment. When you rent, you might as well be dispersing each month’s payment into the ether. Why contribute to your landlord’s retirement fund when you could be padding your own?
Chances are, your home is the largest single asset in your portfolio. If you work closely with a mortgage company and plan correctly, you will have paid off your mortgage by the time you retire. When that time comes, you can tap into your home equity to fund your retirement benefits. Many people also choose to downsize to a smaller place and use the difference in sale price to get them through their golden years.
Home ownership can help ease the nightmare of tax day. That’s because there are significant tax incentives for owning a home.1 Not only are property taxes deductible on your federal income-tax return, but some or all of the interest on your home-equity loan may also be deductible. That allows you to pocket more money at the end of the year.
Smart homeowners turn their houses into investment properties. Renting out a spare bedroom might be the most common way to turn a profit, but it isn’t the only way to monetize your home. From leasing out a garage for storage to renting out a driveway for parking, more and more people are finding creative ways to generate income off their property. As space becomes more scarce, properties will only become more valuable.
As long as interest rates remain low, buying makes sense. Even a small change in rates can have a noticeable impact on your monthly payments. With an increase of just 1%, you might wind up paying an extra $100 per month. Another percentage point, and you might as well add another $100.2 It’s always best to take advantage of low interest rates while they last.
Add on the availability of distressed home sales (properties that banks have foreclosed on), and there are still plenty of incentives to purchase.
Homeowners enjoy greater stability than renters. Never again will you receive an unexpected eviction notice on your door after your landlord suddenly decides to turn your cozy apartment into a high-end condominium. While that’s good news for young people who are looking for continuity, it’s even better news for older people on a fixed income. For such people, purchasing security against a landlord is essential.