Make Sure Your Home is a Great Investment
People often consider owning a house to be part of building an investment portfolio. After all, houses are promoted as wealth-building assets. By purchasing a home, you’re making an investment – every payment builds equity rather than pays a landlord. And that equity has long-reaching benefits. After all, at the age of retirement, 83% of the average American’s personal wealth comes from their home equity.
Here are some ways you can start thinking of your home as an investment and make adjustments to keep building that benefit.
Is the Home Affordable?
Home affordability is more than having a down payment in cash ready to go. You need to make sure you’re prepared to pay the monthly mortgage without issue. Even if you’re approved for a larger sum, it’s not a good idea to purchase more home than you can comfortably afford. Make sure you know exactly how much home you can afford so you can make a smart decision up front and benefit long-term from your house’s appreciation.
Are Refinancing Options Available?
Mortgage rates continue to be at a historical low. If you purchased your home several years ago, look into refinancing options now. You might be able to considerably lower your interest rate, which would lower monthly payments or potentially allow you to pay the home off sooner.
Could You Invest in a Fixer-Upper?
Houses that need a good amount of TLC tend to be less expensive. If you’re handy and don’t mind a DIY project – or if you’re skilled at the labor needed – this is an excellent way to invest in yourself. Paying less for a home that builds value with your sweat equity means significant gains in the future when you sell it. As a bonus, you can slowly add upgrades and improvements that will greatly increase the price of your property.
Could This Home Be a Rental Property in the Future?
Rental properties can be highly profitable, especially if the house has low property taxes and plenty of amenities nearby. Choosing the right property to rent out can be a daunting task because there are costs associated with being a landlord. While you’ll need to handle maintenance and upkeep, you’ll also be receiving passive income to cover the mortgage and then some. Buying a home now that could be a future rental property is an excellent addition to your investment portfolio.
Whether you consider your home simply a place to sleep at night or a long-term financial boon, buying a house is an investment. Making a few smart moves at the start, and taking the time to check for ways to lower monthly payments, can help you maximize that investment.
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