Whether you’re a recent college graduate or have spent some years working and saving, making your first home purchase may have crossed your mind. Thoughts about the real estate market in New York and the overall affordability of a home for first-time buyers may have quickly followed as well. However, buying a home is more attainable than you think and can be a valuable tool in building your net worth and overall wealth.
Homes Appreciate Over Time
One of the largest reasons people buy a home has more to do with selling it down the road than anything. The value of a home has consistently appreciated over time. While their appreciation can take years and you may experience some downturns, the overall trends are consistently positive.
And when the time comes to sell, any return on your investment is yours, not your landlord’s, to keep.
If you buy property in a developing neighborhood, especially here in New York, chances are that your home will yield a high return within a few years. Spending those same years renting a property will put you at a disadvantage when you do decide to buy. The home that you could have bought in the developing area will now be selling for a lot more in that same area, leaving you paying a much higher price for the exact same property. Worst case scenario of buying? The appreciation value will be slower than expected but investing in property has always been one of the safest investments you can make.
When you take out a loan to purchase a property, you will be eligible for a tax deduction against the interest paid on the loan. If you itemize on your income taxes, you can
deduct all or a portion of your mortgage interest and property taxes.
You’re also eligible for a big exclusion in place to help reduce your capital gains tax when you’re ready to sell.
The Earlier The Better
The earlier you start, the earlier you save. EMIs (equated monthly installments) are typically lower when you opt for a longer tenure of loan. By having the opportunity to opt for a longer loan, you’ll be able to take advantage of low monthly payments when you need them and eventually repay the loan or increase the EMI amount as you become more financially stable in later years.
Studies have shown that those that purchased their first home in their twenties had an average of $10,000 left on their mortgage at age 60. Those that waited until their thirties averaged around $50,000 but typically purchased more expensive homes.