Mortgage rates are still at historic lows, and there’s no denying that now is a great time to purchase a home. Here are four reasons why it makes a lot of financial sense.
1) Homeownership Builds Wealth Over Time
Most of us were taught growing up that owning a home is financially savvy. Although that confidence was shaken during the economical turbulence of recent years, real estate is still proving to be a great long-term investment.
2) You Build Equity Every Month
Your equity in your home is the amount of money you can sell it for minus what you still owe on it. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity.
3) A Mortgage is Like a Forced Savings Plan
Paying that mortgage every month and reducing the amount of your principal is like a forced savings plan. Each month you are building up more valuable equity in your home. In a sense, you are being forced to save and that’s a good thing.
4) Long Term, Renting is Cheaper Than Buying
In the first years it may be cheaper to rent. But over time as the interest portion of your mortgage payment decreases, the interest that you pay will eventually be lower than the rent you would have been paying. But more important, you are not throwing away all that money on rent. You have to live somewhere, so instead of paying off your landlord’s home or building, you’re paying off your own!