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For many people, buying a home is the ultimate transition between being a carefree young adult and being a full-fledged grown up. Much like graduating from a 4-year university is much more about surviving the battle of attrition then it is about being an expert in a particular field, getting through the home buying process is a sign of maturity, perseverance and responsibility.
The day that someone decides that they want to buy a home, their spending priorities change. Gone are the days of frivolous spending on items that, in the long run, don´t really matter. A smart home buyer will start socking away every spare penny to put towards a down payment and closing costs. It´s true that there are ways these days to buy a home with no down payment and no closing costs, but those fees simply get rolled into your mortgage and you end up paying more over time, anyway. A prepared and mature home buyer has shown self-discipline and saved as much as they can to buy a home.
Your savings ability is tested as soon as you apply to the bank for a home loan. The bank will completely evaluate your financial situation, and the more money you have to put towards a down payment, the better the chances are of you getting approved for a mortgage AND the better your chances are of having your first offer on a home accepted. The benefits of saving for a home really can´t be overstated. You will be better off in every possible way when you can save.
But the forced savings that buying a home makes you do don´t stop once you´ve bought it. When you buy a home, and keep it in good shape, you earn this little thing called equity. Equity is essentially the additional value your home has gained since you bought it. Since real estate is such a safe investment, most homes gain equity even if you don´t do any drastic improvements. In most cases, all you have to do is keep the place in good shape and you build equity.
What does all that have to do with savings? It´s simple. Every year you own a home, you gain approximately five percent in equity. It´s almost like free money your home is giving you just for living there. Of course this amount isn´t always five percent. It can be more or less depending on a whole bunch of circumstances, but in most cases, all you have to do is not let the home fall down around you and you´re saving money.
You can even spend this equity to help pay off other bills or to do a major addition or renovation to your home. There are two different ways you can get access to this home savings account. You can get a home equity loan, which works a lot like a second mortgage from the bank or you can get a home equity line of credit, which works more like a credit card that spends your homes equity.
No matter which you choose, by owning a home, you´ve gained a whole new way of saving money. But the benefits don´t stop there.
A home is one of the best tax write offs in the world. You get to write off your property tax, your mortgage interest and lots of other things. Now, there is no hard and fast rule that says you should put this tax savings in the bank, but that option is available to you. By saving so much on your taxes, you´re more likely to have more money left in your bank account come tax time. Consider it a different kind of forced savings.
Buying a home is truly one of the best investments you can make in your life. Not only does it force you to grow up in a hurry, it teaches you the true value of a dollar. Your beautiful new Sarasota home can be the first step down the path towards savings and equity that you didn´t even know you had. Buying your piece of Sarasota FL real estate is one of the smartest things you can do for yourself, and for your family.
GBrey | 