Buying a Home and Securing Your Finances
Thinking of buying a home in New Jersey? The process can appear daunting and complex if this is your first time. Searching for the right home, making an offer, closing the deal, and the paperwork of course. The home buying process involves too many phases and elements, and is very different from finding a rented home and signing a tenant lease.
Agreed, renting is apparently an easier process that doesn’t put too many responsibilities on your shoulders. But crunch the numbers, and you’d realize that home ownership may be a much better option from a financial point of view.
Research concludes that buying a home is more affordable than renting. Considering the largest 100 metro areas, buying comes out to be 37.7% cheaper considering the current home prices and interest rates.
Are there any other reasons to consider buying a home? Your house allows you to build equity that you can use whenever any need arises in the future. You don’t pay any rent to the landlord and instead, pay yourself so that you get complete ownership of the house.
Let’s evaluate in greater detail the financial security which you enjoy after buying a home.
By Buying a Home, Your monthly payments remain the same for fixed mortgages
Average rents are always on the rise, and since 2016, they have increased by over 22% in the largest housing markets. If your landlord has a habit of demanding a higher rent every year, then renewing the lease can be stressful.
Contrary to this, mortgage payments can be fixed as well as variable. In the former case, you’d always know the amount that you have to pay for the entire tenure. Yes, taxes and insurance may change, but the principal and interest amounts will remain the same.
You can use home equity when you retire
Your monthly income may drop when you start receiving pensions and payments from your retirement accounts. And for some of you, the decrease may even result in you living from check to check.
In such a case, you can strengthen your financial security through reverse mortgages – if you own a home that is. This means that you’d live off your home equity and still be able to live in the house. Some complexities are involved, but working with a realtor can help you sort them out and decide if you’d want to use this option or not.
You build wealth but don’t pay any capital gains
The value of your home may not always appreciate depending on the location, current market conditions and other factors. But you can still sell your house for a price greater than the amount you paid when buying. And you don’t have to pay any capital gains on the profits. This means you preserve wealth, and thus, can build it faster.
So does home ownership sound interesting? Get in touch with us for more details.