Is buying a home the right wealth-building decision for you and your family? It is one of the biggest decisions a family can make but if you do your homework it does not have to be scary or complicated. The truth is when you position yourself as a well-qualified buyer, it actually takes a good chunk of the drama out of the process. Plus, homeownership is still a strong path to building your family’s wealth. Yes, even with the recent crash homeownership is a solid component to any financial plan.
To Buy Or Not To Buy
Whether you are a first-time buyer or recovering from a home loss, your first step should be assessing your readiness. Many buyers look solely at the financial aspects, and while important, they are not the only criteria buyers should analyze.
- Why—Finding your why not only lets you know if you are ready but it can actually help you zero-in on the type of property you really want—urban/rural, HOA, condo/free-standing. Buying the wrong home just because you can is never a sound financial decision.
- Goals—Do you have goals to consider? If you are working toward a job change, you should be willing to stay in your home five to seven years to recoup any equity. Perhaps your plan is to never leave your homestead because if so then you need to be able to see yourself growing with the property.
- Investment Potential—Could you use the property as a rental at some future point? The positive cash flow of a rental property is an excellent wealth building strategy. If you do not plan to rent, a typical mortgage provides a 26-percent return on your initial investment according to a recent study by Harvard University.
Of course in addition to these aspects, your total financial readiness is important. From credit score to employment need to be carefully considered.
Making Your Money Work For You
Despite the recent housing market crash, using homeownership as an investment vehicle is still a sound strategy. If you experienced a home loss, you undoubtedly learned a few what-not-to-do lessons. The butterflies in your stomach might be fluttering but as you use what you learned you will avoid another disaster. If you are a new buyer, working with a financial planner and a real estate agent will help you make a solid purchase. The Joint Center for Housing Studies at Harvard University found there is no comparable investment to homeownership.
Once you have explored all the variables, it is always wise advice to work with a qualified real estate agent and lender. Knowing the ins and outs of the market in which you intend to buy can help you find a great deal while the support of a good lender can help you tremendously as you negotiate the deal. If buying a home is the best wealth-building move you can make, making it with the support of industry professionals will help you avoid potential pitfalls.
If you are interested in becoming more familiar with Park City please call Jensen and Company at (435)901-8333 for information on local real estate.