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5 Reasons Why Homeownership Is a Good Financial Investment

5 Reasons Why Homeownership Is a Good Financial Investment

According to a recent report by Trulia, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.” That may have some thinking about buying a home instead of signing another lease extension, but does that make sense from a financial perspective?

In the report, Ralph McLaughlin, Trulia’s Chief Economist explains:

“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”

The report listed five reasons why owning a home makes financial sense:

  1. Mortgage payments can be fixed while rents go up.
  2. Equity in your home can be a financial resource later.
  3. You can build wealth without paying capital gains.
  4. A mortgage can act as a forced savings account.
  5. Overall, homeowners can enjoy greater wealth growth than renters.

Bottom Line

Before you sign another lease, perhaps you should sit with a real estate professional in your area to better understand all your options.


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4 replies
  1. Troy Erickson
    Troy Erickson says:

    There are certainly financial advantages to owning a home, but it does have a lot to do with what the economy is like when one purchases a home. You can either pay too much for a home, and watch the value decrease over the years, like what happened in 2006 through 2011. On the other hand, you can buy a home at a very good price and watch the value increase like what we saw between 2003 and 2007, as well as 2010-2016. As they say, timing is everything.

    Reply
    • Paul Striefsky
      Paul Striefsky says:

      When a prospective seller questions the realistic-market value of their home and feel that they are being “short-changed” by the price being quoted, I simply ask them how much would they have paid to rent the home they are living in. Then I ask them what tax benefits are they enjoying while owning the home. If you are smart enough to have done your homework and have the answers to these questions ready, you will be amazed how appreciative they will be that you assisted them in making the right decision to buy the home when they did regardless of the market conditions. Everyone needs shelter, we need to provide the assistance and tools to demonstrate the positives of home ownership

      Reply
    • Kerstin Gladstone
      Kerstin Gladstone says:

      I do agree with you, to a point. While no one should overpay for the current value of a home they are looking to purchase, even in a not so great economy, you still have to pay for shelter whether you’re paying someone else’s mortgage via paying rent, or paying for your own mortgage. Real estate is always cyclical. The market always turns itself around. Why not pay for your own mortgage and reap the tax benefits of doing so? Since you have to pay for a roof over your head no matter the situation, pay for your own benefit, not someone else’s.

      Reply

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