5 Reasons to Invest in a Home

Why should you buy a home?

1. It’s cheaper to buy than rent in the long run

If you calculate it out over time, buying a home can actually be a much better option than wasting your money paying rent every month. When renting (be it an apartment, condo or house), you are essentially throwing your hard-earned dollars away. That money is not invested in anything and you get no returns; it just slips itself into the landlord’s pocket and never returns your phone calls. In many cases your home mortgage payment can actually be very similar to what you pay for rent. In Seattle, the average rent per month is around $1,200. If you buy a $240,000 home, your average monthly payment will be around $1,500. Sure, it may be a bit higher than your rent rate, but if you think about it, this money is being invested into property which will gain you many returns down the road. It’s a great way to build equity and keep your money where it belongs – with you!

2. Mortgage interest rates and housing prices are near an all-time low

Mortgage rates are near an all-time low in recent years. The current rate is about 4.25 percent. Compare this to the 80s when the mortgage interest rate then was a whopping 18 percent! Even as recent as 2001, the interest rate was around 7 or 8 percent, still relatively high, especially for many first-time homebuyers. Having a good interest rate makes all the difference in how much you pay a month and even in how much house you can afford. For example, if the mortgage interest rate were any higher during the time my husband and I were looking at houses, we would have been priced out of the house we ended up buying. We would not have been able to afford our home had the mortgage rate been even a few tenths of a percent higher. Those numbers after the decimal point can really make all the difference!

Another good thing is that housing prices are also relatively low. You can get a lot more house for your money. Now, this doesn’t necessarily apply to homes in downtown Seattle, where you can get a postage stamp-sized house that’s falling apart for the same cost of a $2,500 sq ft newly-built home in Everett. But overall, the trend seems to be that houses are costing less – it’s a buyer’s market. You can get a better house, in a better neighborhood, for less than you could even a few years ago.

The thing to remember about both interest rates and housing prices is that they are very likely only going to go up. Right now is the time to buy if you want the most bang for your buck. Interest rates and the cost of houses are only predicted to increase as time goes on as supply and demand find more tension. Better to get in the game now!

3. It can give your credit score a boost and help with your taxes

Owning a home is also a great way to build credit. Making your monthly payments consistently and on-time gives a great boost to your credit score. Your lender will report your new home loan to the credit bureaus and it will from then on be a part of your credit score. Owning a home is a big deal and showing that you can pay for it on time and in the full amounts can really be impressive to anyone checking your credit history! Mind you, this can go two ways – if you are late or neglect your payments it will affect your credit score negatively.

There are also several tax deductions that you can make as homeowner. All of the interest you pay on your home (which is the majority of what you pay each month) is tax-deductible. Unless you are a multi-millionaire, that is, but I doubt very many of us have to worry about that. There are also deductions for things such as refinancing or using a line of credit for your home. You can even get deductions for making your home more “green” and energy efficient!

4. You have the freedom to make design and lifestyle choices

Have you ever lived in an apartment that was just absolutely revolting? The walls a pale and smudgy cross between clinical white and cigarette smoke, the 70s linoleum in the kitchen tearing at the seams and a suspicious stain spreading across the ceiling of your bedroom? When you rent, there are very few instances where you would be able to change any of those things. In the last apartment we lived in before we bought our house, we actually had to sign a release stating that we understood that there was very likely lead paint in the walls and asbestos in the popcorn ceiling and that we wouldn’t blame the landlords if we contracted any horrible diseases.

With a home, your own home, you can do whatever you want to it, whenever you want to it. Always wanted a purple bedroom with a UW Huskies mural? Go for it! Hate the Formica kitchen counters? Rip ‘em up! Want to be a cat lady (or man) without paying exorbitant pet rent and deposits? Get some cats right meow! Being a home owner enables you to make all of your decorating and lifestyle dreams come true. There are no landlords telling you what you can and can’t do, and no wall-sharing neighbors that could potentially be offended by the volume of your music when you sing in the shower. It is a special kind of freedom that is oh-so-gratifying!

5.  It’s an investment in your future

Having your own home also enables you to really set down roots and start strategizing for your future. This can be especially true if you plan on starting a family anytime soon. Neighborhoods can provide great sense of community and safer places to play for children than alleys behind city apartments. A home is something you can really invest your time, money, and energy in and reap the rewards. It is something you can be proud of, it is a place where you can come home at the end of the day, a place to celebrate with friends, and a place to grow old with your loved ones. A home is a magical place and can be anything you make it!

Sources:

http://www.freddiemac.com/pmms/pmms30.htm

http://www.zillow.com/mortgage-calculator/house-affordability/

http://www.realtor.com/advice/the-top-10-real-estate-tax-deductions-for-homeowners/#.Uu_68vZXh3I