Homeownership Month got its start in the mid-90’s as a way for the government to shine light on the American Dream that is homeownership. Since that year, it has been recognized on a national scale to promote and influence homeownership for those who may not know where to begin. As a lifelong renter, you might be wondering whether homeownership is right for you. Here are some of the accomplishments you will make when you become a homeowner:
Investing Your Money
For those used to renting their housing each month, get ready for a change in the direction of your income. Rather than filling the pockets of landlords and rental companies, your money will now be put into your own future. Investing always carries with it an element of risk. The housing market will rise and fall, depending on the economic climate. However, most homes are purchased through a mortgage. This is a loan from the bank that is then invested into the property itself. Purchasing property has historically been a savvy investment. When you buy a house and maintain that property over the course of decades, the rate of inflation alone will cause the property value to climb. This makes home buying the safest investment that the majority of Americans have access to.
Building equity on an investment is the most important part of homeownership. Equity, or personal interest in the property, increases as the mortgage on that property is reduced. Every time you pay your mortgage, your equity increases. Equity is only gained over time, and is not synonymous with profit. However, the more time spent paying down the mortgage and allowing the value to rise with the economic climate, the more equity (and therefore profit) may be gained.
Building Credit History
It may seem like credit building occurs only prior to receiving that big loan from the bank, but the best way to continue that climb is to continue treating your credit score like you haven’t yet bought your house. Making your monthly payments on time for such a significant loan amount will build your credit score substantially. Maintaining a home loan looks very good to creditors and will qualify you for a number of perks, like reduced interest rate and better terms, for future purchases. Don’t throw in the towel on your credit history once you’ve solidified your dream house, but rather use that investment to your financial advantage for your future.
Paying a Fixed Rate
For the majority of renters, a fixed monthly housing fee for years to come is a fictional dream. However, fixed mortgage rates make it possible to maintain the same housing payment for decades, despite the cost-of-living increases. Paying the same mortgage every month also means that one day, your mortgage will be completely paid off. Say hello to a retirement free of housing payments!
Whether you are just scratching the surface of home-buying research or are about to close on your first home purchase, remember the financial freedom you are gaining in the transition to homeownership!