If you’re like most home buyers and it is your first time, you’ve probably heard the advice of friends, family, and colleagues, many of whom encourage you to buy a house with a house loan if needed. However, you are still asking yourself if buying a house is the right thing to do. Relax since having doubts are normal. The more you know why you should buy a house, the less the fear of the process will be.
Here are eight good reasons why you should buy a house.
- Joy of owning a house – Pride of ownership is the main reason why people want to become homeowners. This means that you can paint the walls in the color of your choice, increase your music, place accessories in the garden where you want and decorate your home to your liking. Owning a home gives you and your family a sense of stability and security. It is an investment in your future.
- Appreciation of property value – Beyond the pride of being an owner, it is important to obtain another benefit. Real estate value moves in cycles, sometimes goes up, sometimes goes down, but over the years real estate has been constantly increasing. No other asset class offers this kind of steady return.
- Pay mortgage not rent – Do you live in a rented home? If so, it would be prudent to take a house loan and pay the bank mortgage installments instead of paying the rent. Simply consider it as a rental and at the end of 15-20 years, you will own a property. If you live with your family at your own home, it makes sense to buy a house that is ready to move in and rent. This would cover most of the cost of installment.
- Passive income – Property is a great source of passive income. If you own a property, you can also get regular income in the form of rental income. This can be a way to get a passive income after retirement.
- Owning collateral – A home can be used as a collateral to take a loan from a bank. This is called a home equity loan. It is always a good idea to have an “emergency fund,” but using the value of the home to cover unforeseen costs is an acceptable reason to take a home equity loan. Significant medical costs, loss of employment or other costly and unexpected circumstances can be a good reason to use your home as collateral. A common and good use of home equity is to make improvements in the home. But make sure that the improvements you make add value to your home.
Conclusion
Since homes are expensive it is often best to take a loan and buy one. But many are fearful since it is a large burden to pay off. But also remember a home is a great investment. You can live there, you can rent it out, you can use it as a source of funds. Banks readily extend loans against a house. One can also reverse mortgage a home whereby the bank pays a fixed amount like pension till the death of the owner and then takes possession of the property.
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This post is written in collaboration with Shweta Sharma —a partner of The Good Men Project.
Photo: Getty Images