If you’re tired of giving part of your paycheck to a landlord without building your credit or amassing equity, buying a home can be an attractive – and terrifying – prospect. After all, then you can decorate however you’d like, enjoy greater privacy, and put your money toward an appreciable asset that can help you save for the future.
As you consider buying a house and preparing what you’ll need to close the deal, you might find yourself checking out the recent news about housing and growing nervous no matter whether the market is hot or not. It’s easy to get caught up in doom-and-gloom thinking about the housing market, but the reality is that no matter the current market, your personal circumstances are far more important than outside forces: here’s why.
The future is never guaranteed, but home ownership is a consistently good bet
It’s natural to be nervous about economic fluctuations while considering purchasing a home, but the hard truth of the matter is that there will always be some discouraging news about nearly any topic out there.
Economic forecasting is helpful only because it’s better than nothing; major outside forces like geopolitical issues can totally turn forecasting on its head. Consider the recent COVID-19 pandemic, which saw explosive growth in the housing market as people sought more comfortable places to work from home: it was a seller’s market that sent the assets of homeowners through the roof.
But no matter what’s happening in the market, appreciable assets are always a good idea for the average person, as they remain very stable over time. If you buy a home and take great care of it, you will almost certainly get a return on your investment in the future.
Building equity will prepare you for what’s ahead
Whether you’re building a family or planning to sell your home as you approach retirement, you are nearly guaranteed to get your money back and more; when the future is uncertain, choosing safe bets like housing is a way to ensure peace of mind.
In basic terms, equity is how much your home is worth minus how much you still owe on your mortgage. For example, if your current home is worth $150,000, and you owe $50,000, then your home’s equity is $100,000. Obviously, this equity goes up the more that you pay on your mortgage, but houses are an appreciable asset, so over the time that you owe the home, you’ll build more equity.
Let’s say that you purchased the home for $150,000, paid off the entire mortgage, and then held onto the home for ten more years. By then, it appreciates to $250,000, meaning that you have made a little under $100,000 in profit, deducting the interest that was added onto the mortgage. Not only did you have a comfortable and beautiful place to live for many years, but now you can sell the home for a profit that can purchase another property, be placed in an investment account, or be used to help you stay comfortable during retirement.
Contrast that to the fact that if you continue to rent, you’re not building any equity, and it becomes clear that purchasing a home, no matter the economic conditions, is a sterling choice to help you save for the future.
You can always refinance
You might look at current interest rates and worry that they’ll drop over time, leaving you high and dry, but there’s great news that you might not realize: refinancing your home to take advantage of lower interest rates is not only common but very easy. In the mortgage industry, there’s an adage that you can “marry the house, date the rate;” in other words, you can buy a beautiful home at a certain interest rate, then find a better one down the line as the market changes. District Lending can assist you in refinancing your home, and they can even notify you when a lower interest rate is available so you can get started on the process right away.
Mortgage brokers already work hard to find you the very best interest rate for your mortgage when you purchase your home, but they’ll continue to search out the greatest deals for you even after you’ve closed on your home. With a mortgage broker, you can rest assured that you’re getting the lowest interest rate right off the bat, but that you can go even lower when market forces push rates down again.
The bottom line
Regardless of the current housing market, purchasing a home is the best way to prepare for your own future: it’s a safe bet no matter how the economy evolves over time, and it can be made an even more efficient investment through refinancing. Whatever your circumstances, if you can reasonably afford to purchase a home, it should be top of your list of moves to make to guarantee yourself a prosperous and comfortable life.
