The global economy is in flux, and it’s more important than ever to ensure that your finances are in order. Many people think you must be a millionaire to own your home, but this isn’t the case. According to a recent report, the number of owner-occupied housing units in the United States has grown again, reaching 83.5 million in 2021.
However, this growth is due primarily to buyers who already own at least one other property. As a result, the percentage of first-time buyers in the market is relatively low. Among those who are buying their first home, the majority are Millennials born between 1981 and 1996. The data suggest that many young adults put off homeownership in favor of renting or other living arrangements.
Still, this is an excellent sign that more young adults will enter the real estate market in the coming years. And to give you a little motivation, here are five great reasons to start owning your home in your 30s.
You’ll build equity
One of the biggest advantages of homeownership is that you’ll build equity over time. Equity is the portion of your home’s value that you own. It’s what’s left after you subtract the amount of money you still owe on your mortgage from the appraised value of your property.
For example, let’s say you buy a home for $200,000 and put down a 20% down payment. This means you’ll have a mortgage balance of $160,000. After five years of regular monthly payments, your equity will grow to $48,000.
Not only does this increase the value of your investment, but it also gives you a financial cushion in an emergency. If you ever need to sell your home, you’ll be able to pocket the equity as a profit.
You’ll get tax breaks
Another great reason to own your home is that you’ll be eligible for certain tax breaks. The most common is the interest deduction in the mortgage, which allows you to deduct the interest you pay on your mortgage from your taxable income.
For example, let’s say you have a $1,500 monthly mortgage payment and are in the 25% tax bracket. This means that you’ll save $375 on your taxes every year. You may also be eligible for other tax breaks, such as the capital gains exclusion, which allows you to exclude up to $250,000 of profit from the sale of your primary residence. Of course, you should always speak with a tax advisor to see what deductions and exclusions you may be eligible for.
Your mortgage is like ‘forced’ savings
Though it may not seem like it, making monthly mortgage payments is a form of forced savings. Every time you make a payment, a portion of that money goes towards paying down the principal balance of your loan. This means that you’re slowly building equity in your home without realizing it.
And, if you ever need to access this equity, you can do so by taking out a home equity loan or line of credit. This can be a great way to finance major expenses, such as college tuition or home renovations. If you purchase your house without a mortgage lender, you’re missing out on this type of savings.
To obtain these benefits, you’ll need to work with the best mortgage lender to help you throughout your house-hunting procedure. Here are some benefits you can gain working with them:
- They give you more extensive access to loans
- It will help you go through the steps to get your credit report free from errors and offer advice on the best loan deals based on interest rates, payments, and other loan questions.
- Get you pre-approved for the best mortgage rate.
- Calculate your monthly mortgage payment, including taxes and insurance, so you know what to expect.
You’ll have a sense of stability
One of the best things about homeownership is that it provides a sense of stability that renting can’t offer. When you own your home, you’re free to make changes and improvements as you see fit. You don’t have to worry about a landlord raising your rent or giving you notice to vacate the premises.
Additionally, homeownership can be a great way to invest in your future. You’ll likely make a profit if you decide to sell your home. And, if you’re looking to retire one day, you can always downsize to a smaller home or use the equity in your home to supplement your income.
You’ll have a place to call your own
One of the best things about owning your own home is that it gives you a sense of stability and a place to call your own. After years of renting, it can be liberating to finally have a place you can call home. Homeownership can provide you with the stability you need if you’re looking to raise a family or simply want a place to call your own after years of instability.
Plus, owning your own home comes with living in security. Unlike apartments or rented houses, you won’t have to worry about a landlord changing the locks on you or giving you notice to leave. You’ll also be free to make changes and improvements to your home as you see fit.
If you’re considering buying a property, consult with a financial advisor to see if it’s the right decision for you. As a young investor, investing now in a property can be one of the most brilliant things you can do for your future. Homeownership isn’t just for millionaires — Homes are an excellent investment, and the sooner you start investing in one, the better off you’ll be in the long run.