STOP RENTING- How buying a home can save you thousands of dollars
With local real estate markets having suffered a drop in property values over the past several years, the debate over renting vs. buying has resurfaced. It is undeniable that there can be advantages found for both options. Financiers go back and forth on which option is more profitable in the long run, and the information can be difficult to make sense of. If you are wondering which option would be best for you, here are some financial advantages to consider about owning your own home.
Purchasing a home is a forced savings plan. Buying your own home makes you responsible for monthly mortgage payments which pay down your loan. After twenty five years or so your mortgage can be paid off and you have a significant amount of value stored in your property. If you are renting instead, at the end of that twenty five years you will be looking at yet another rent payment that has to be made to the landlord.
Home owners also have a forced savings plan in a second way. Since renting may be less expensive per month, the argument could be made that the savings would be invested. The honest truth is less glamorous than that; in most cases, that savings gets spent, not invested. Even if the savings does end up in a bank account, it is easy to withdraw, and tends to diminish for that reason. Money that is saved up in the value of your home is much safer since the home has to be sold or refinanced to access the equity.
Finally, a home can generate thousands of dollars by allowing you to leverage a relatively small amount of your own money to make a sizeable investment that can benefit from growth in the real estate market. In our local area of Powell River, you can invest $10,000 to purchase a $200,000 home that will appreciate in value for much of the time that you own it. (Twenty five years ago you could purchase a home here for $50,000. Today a similar home would be valued at $180,000. That is excellent income gains!) This can have a very positive impact on your net worth and earn you thousands of dollars over time.
In order to take full advantage of the money savings that comes from owning your own home, it is important to stay put for a while. Moving too often can be expensive when you are a home owner and eat away at profits. It is also necessary to take pride in owning your home; keep the property in a clean and well maintained condition so the value does not depreciate.