Everyone needs a place to lay their head at night – but not everyone owns a home. Some people rent their living space, and others own property through more complicated deals, like time shares. But owning a home has traditionally been understood to be the most financially sound way to manage your living situation. Why is this? Why does owning a home make sense?
The Downsides of Renting
The quickest way to see why homeownership makes sense is to look at renting. Rent payments can often be cheaper than mortgage payments in the short term, but they’re ultimately more costly in the long-term, for reasons that will be clear in a moment.
Let’s take real estate out of the equation for a moment and think about cars. If you buy a car in cash, you spend a good chunk of change. If you take out a car loan, you’ll pay for your car regularly for months or years. But would you be better off if you got rid of your car? You’d be able to use a car service or public transit instead of your car, which might cost less in the short term.
But, of course, you’ll finish paying off your car at some point – and then it will be yours. You’ll still have expenses associated with it, of course (car insurance, for instance, and gas), but you’ll no longer be paying the car dealership, and your costs will plummet. If you relied only on taxis, your costs would stay the same. And, at some point, you can sell you car and make money. While you won’t make back as much as you paid for the car, you’ll at least get something for all the money you spent, which is more than you can say for our taxis-and-trains option.
Renting a space is like taking a taxi – it fills the need, but gives you no permanent value. Owning a home is different. Your mortgage payments are turning your home into something you own. Your costs will plummet if you pay the whole thing off, and you’ll be able to make money back when you sell your home. In fact, unlike your car, your home can actually rise in value.
Your Home as an Investment
If you own property, you’re in the real estate market. All this means is that your home has value – not just because of its structure, size, and location, but also because of how the market perceives it.
For people who own a single home, this may seem like a peripheral concern – and it is! But even if you don’t keep close tabs on your property’s value, the fact that you’re invested makes homeownership a smart financial choice. In both homeownership and renting, you’ll pay money each month in exchange for a place to live. But only homeownership also gives you a stake in an investment. If the market is kind to you, you may find that you can live in a home for decades and actually make money on the deal!
Of course, while homeownership is generally considered a wise financial move, it isn’t without its drawbacks. Homeownership means new responsibilities and costs, including homeowner’s insurance, liability risks, more utility bills, and (in some areas) property tax. But owning your own home can be rewarding emotionally as well as financially. if you choose your property wisely from a wide range of options, you’ll likely end up in a home that you love while enjoying the financial perks of homeownership as a bonus!
So start your home search the right way – by looking at lots of options in your area. For Cincinnati-area real estate, look no further than Southwest Ohio’s best real estate website. You’ll find lots of options to choose from.