Home affordability is at near record highs. Homeownership allows people to grow wealth slowly over time, to hold assets that build equity, and to bring stability into their lives.
Currently, homeownership is around 59.2%. This is lowest rate since the Census Bureau began tracking in 1965. Given the fact that homes have never been so affordable nor interest rates so low it makes one wonder if this reduction has been based on fear.
Let’s review the benefits of homeownership. The top benefits of homeownership haven't changed, even in the face of a down economy. Here are the top five:
1. Savings: Long-term homeownership is still a way to get big savings.
2. Tax Breaks: Homeowners are able to take their mortgage interest that they pay each month as a deduction along with great rebates and credits associated with upgrades made to the home during the year.
3. Equity: When you pay a landlord, it's money down the drain. When you pay on a mortgage, you are paying towards owning a piece of something. You may still owe $100,000, but perhaps the home is worth $200,000. This means you have $100,000 worth of equity you've built up over time.
4. Budgeting: If you live in an apartment or rental home, each lease renewal could mean a jump in prices. We are seeing that now in the Colorado Springs area. There is a shortage of rental property so rents are increasing in some cases quite dramatically. A fixed-rate mortgage, however, means your monthly payment is the same amount for the life of the loan. A $1,000 a month principal and interest payment on a 30-year mortgage is that same now as it will be in 30 years!
5. Security: When you own, it's yours. You can paint, improve, and decorate. Most homeowners are in neighborhoods with other homeowners, meaning more time to build relationships and friendships.
Experts have recommended for years that if you're planning on staying put for 5+ years, buying becomes an increasingly better deal. You have time to recoup any closing costs you paid and benefit financially with the mortgage reduction and any home price appreciation that occurs. Once your mortgage is paid off, you'll have a real asset.
Home affordability is at near record highs. Now is a good time to see if buying makes good financial sense for you. If it does, then you're in store for a wealth of benefits that only homeowners can experience.
Tip of the day: If you already own a home, ask your bank or Realtor to provide you with an amortization schedule for your loan. You will be surprised at how little of your payment goes towards principal. If you discipline yourself to pay an extra principal payment each month with your mortgage payment, you will be surprised at how quickly the equity in your home will begin to grow!