Spend Smarter: How Young Couples Can Save Money by Buying Their First Home
Many real estate and financial experts are hoping that the rising trends for homeownership rates for young Americans will promote the benefits available to young couples who are looking to own their own home, like being able to spend smarter.
Amidst a vast amount of investing advice (there’s great Money Morning info here), many hope that they will see the benefits of investing in their first home, leaving behind the worry of their student debts and without succumbing to high-interest credit cards. With a volatile job market and a delay in life events, lower percentages of millennials have been purchasing property but they do still represent the highest amount of first-time homebuyers.
With the slow improvement of figures, benefitting from homeownership appears to be on the to-do list of more millennials than in previous years, with some of the beneficial reasons being:
When you rent a property, the money you pay to the landlord each month just vanishes into a black hole, never to be seen again (except by the landlord). You don’t have anything to show for your rental payments while with mortgage repayments you would have a home to show for it.
Furthermore, as you continue to pay off this amount, you’ll reduce the amount owing while increasing the equity in your property, providing you with a comfortable retirement fund. Owning a home allows you to invest in the future instead of something that isn’t going to provide you with any return further down the line.
A Resale Value
Increasing the net worth of your property is also a worthwhile consideration and can be done by purchasing a house in an area where property buying trends are on the increase. Equally, areas such as San Francisco, Boston or New York, are great investment properties as they are areas where many professionals will settle down for quite some time.
Always conduct research into the potential resale value before purchasing (unless you want to stay put for quite a while) and make sure the property market is stable enough so you’ll be able to sell the property when you want to.
Your tax burden can also be lowered by your mortgage as the interest on this will be deducted from your income tax. And, if you’ve lived in a property for more than two years and you sell it for a value that’s less than $250,000 more than what you paid for it, you won’t have to pay capital gains tax. This can be a far more beneficial saving plan than many others, providing you with a comfortable financial cushion to fund retirement plans and so on.
An Emotional Connection
If you’re a homeowner you’re more likely to reinvest your time back into the community you live in than if you rent, providing you with a strong network of people around you. It can also evoke a sense of pride and restores the faith of the American Dream, creating a greater desire and ambition in the younger generations. This is something that has been lost in previous years and many hope that with increasing amounts of millennials purchasing properties, this will be reignited.
A Safe Retirement Income
While you’ll be looking for a home that’s right for you during your younger years, it’s also important that you consider what things are going to be like in the future. Buying a home will help you to store up your retirement funds, with the likelihood being that all of the payments on your property will have been done before you retire, giving you access to the equity in your home to fund your retirement plan.
This will help with the funding of IRA and 401(k) accounts, which are increasingly important amidst the financial insecurities faced by those looking to retire.
What to Remember When Buying a Home
While the financial benefits of buying your own home may be clear, it is a huge undertaking that you need to carefully consider. Being a homeowner is for anyone who’s looking to stay in the same location for several years to come and for someone who can afford it.
Shopping around and researching the available options is key, as is getting financial advice from professionals. Understanding the process involved in buying a house and what monthly payments, interest rates and so on you’ll be subject to, will help you to make a decision as to whether this is something you can afford, or want to do, at this moment in time. This will help you spend smarter.
Liam Moore works as a stock broker. In his spare time you’ll often find him blogging about investments, sharing his trading tips and writing more generalized personal finance articles which appear online.
Photo courtesy of: WDnet
Latest posts by Kayla (see all)
- 5 Types of Employee Benefits to Offer Beyond Health Insurance - October 14, 2016
- Radius Bank Hybrid Checking Account Review: Checking Made Easier - October 25, 2015
- Halloween Tricks and Treats: Saving Money and Staying Healthy - October 24, 2015