The Case for Buying Your First Home Pt. 1
If renting a home is all about flexibility, then owning a home is just the opposite: it’s about planting a flag in the ground, and setting up your base.
This makes buying a house or condo one of the most constructive — indeed, one of the most consequential — things you can do in your life. If this is how you choose to write your Homestory, make sure that it’s for the right reasons.
Consider the following.
1: Home ownership unlocks a lot of doors for you 🔓
In my previous article, I discussed how people are dismayed that their rent cheques line the pockets of their landlords, with little to tangibly show for the investment. These renters feel that their money is spent, but isn’t invested — the implication being that there is a means of paying for one’s living space that can grow (as opposed to limit) savings.
If you choose to buy a home, with time, your mortgage payments can do just that. When you are your own landlord, every cent you invest towards paying off your mortgage puts you one step closer to owning a property of enormous potential value.
Homes, once owned, constitute an asset in your name and contribute to your net worth. Of course, any measurement of your wealth takes into account what you own, minus whatever you owe, but this simple arithmetic obscures what should be the most important lesson you can ever learn about personal finance.
Just as it is that you will find it easier to get a new job, if you’re already in one; just as it is that you are more attractive to others when you are already in a relationship: so it is that financial institutions will provide you with more opportunities to gain wealth, if you already have it.
Wealth attracts wealth; debt, debt.
The reason you choose to spend as much as you will on entering into a mortgage, and paying it down over many years to come, is because of the future opportunities it grants.
Provided that you keep your finances in good order, home ownership has the potential to kickstart a wealth creation snowball.
Have you ever considered getting yourself a summer home in Florida? What about starting your own business? Ventures like these can be immensely profitable, but they first require an allocation of funds. Most people do not have very much lying around. Those who own homes, however, can borrow against the value of their property, with a home equity line of credit (HELOC), and use the funds to invest elsewhere, consolidate other debts at a lower rate, make a major purchase, etc.
This sort of opportunity only comes when you’ve built up enough equity in your home through mortgage payments. HELOCs can be appealing options, I’ll dedicate a future post to explaining them thoroughly.
The core point is that purchasing a home can present you with financial options that would otherwise be unavailable. This is just the first benefit of purchasing a home, I’m going to write a few blogs touching on the others, but for now I’ve got to run! 🏃♂️💨