Understanding the Advantages of Buying Your First Home
Are you thinking about buying your first home? If this is the case, it can be beneficial to understand what prompted others to make that decision. According to a recent survey of first-time homebuyers by PulteGroup:
“When asked why they purchased their first home recently, the answer was simple: because they wanted to. Either the desire to stop renting or recognition that homeownership is a smart financial investment was the main motivator for 72% of respondents.”
While that survey focused on first-time homebuyers purchasing newly built homes, the same feeling applies to everyone purchasing their first home. Here's a little more information to help you consider those two advantages of homeownership to see if they're important to you as well.
When You Buy a Home, You Have More Stability than When You Rent
Rents are continuing to rise, so you may want to reconsider renting. If you're a tenant, this implies your payment may go up each time you sign a new rental agreement or renew your current one.
On the other hand, when you buy your home with a fixed-rate mortgage, your monthly housing payment is predictable over the length of that loan. This stability can give you a peace of mind that renting just can’t provide. Jeff Ostrowski, a real estate journalist, breaks it down:
“With a fixed-rate mortgage, your monthly principal and interest payment is set for as long as you keep the loan. Sign a rental lease, however, and you could see your rent rise the following year, the year after that and so on.”
When You Buy a Home, You Grow Your Wealth as Home Values Climb
Aside from that, owning a home may be a terrific long-term investment. While renting may be the more economical alternative for now, it does not allow you to build wealth over time. Mark Fleming, Chief Economist at First American, explains that’s an important distinction to consider:
“Given current dynamics, more young households may choose to rent in the near term as the cost to own, excluding house price appreciation, has unequivocally increased. Yet, accounting for house price appreciation in that cost of homeownership, whether to rent or buy will depend on where, and if, a home is likely to cost more or less in the near future.”
Basically, renting doesn’t allow you to build equity. In contrast, homeownership can help you grow your net worth as your home’s value appreciates. That’s a significant perk you can’t get if you keep renting.
Taking this into consideration, purchasing may make more financial sense. Most analysts predict that home prices will continue to rise at a more regular market rate over the next several years. That is, when you buy a property, you are not just investing in a place to live but also in your financial future.
If you're ready, buying your first home instead of renting might be a wise decision. Let's get together so you can stabilize your mortgage payment and begin accumulating wealth for the future.