“Home ownership is Good for Parents Too!”
I wrote last week on “Home ownership is Good for Kids!” I explained how in many ways, home ownership impacts children’s development in positive ways. In my 41 year career in the real estate industry, I have seen many instances of this lived out, where my clients bought a home and were able to provide that stable environment for their children. This article explains how home ownership is also good for the parents of those children.
One of the most important benefits to the healthy development of a child is that loving, stable home environment. Parents who commit to providing that for their children and enhance that effort through the purchase of a home are usually rewarded with the financial benefit of growing equity over the long term.
A stable monthly housing expense is critical to providing that stable home environment that we seek for our children. Ideally, when buying a home, one is able to qualify for a fixed rate mortgage. Loan payments are calculated to amortize or pay off over a period of 15, 20, or 30 years. Choosing one with a fixed rate keeps the payments stable and predictable. If one can make the payments initially- based on the “rule of thumb” that one’s payment should not exceed about a third of one’s monthly income-then it should not be a problem making the payments year in and year out. (This, of course, is barring any unforeseen negative circumstances that may come up, such as loss of job or long-term illness) As time goes by, the equity in the home grows through the pay down of the principal balance or loan amount. This is a form of “forced savings”, an additional benefit. Usually, the equity is increased even more so through appreciation of property values over time.
Mortgage interest and property taxes paid on the purchase of a home are tax deductible, and are another benefit to homeownership. This reduces the net or effective payment that the homebuyer makes. In many cases, the net or effective monthly payment ends up being less than what it would cost to rent a comparable property. Consistently making the mortgage payment on time will also improve one’s credit, thereby providing an additional benefit of better terms on other interest-bearing debt, such as car loans, student loans, or credit cards. Factors that contribute to a better financial credit picture will contribute to a healthier financial position. Wealth creation is dependent on good fiscal management, and lower costs on debt supports that effort.
This article was written by Nef Cortez, a licensed Real Estate Broker, Ca BRE # 00560181 since 1976. He can be reached via e-mail at firstname.lastname@example.org. Please feel free to email any questions regarding real estate.