Buying a home is a great investment for millennials. Being in your early 20’s and thinking about buying a home may scare you, but it’s actually a great way to get started investing. Here are the top reasons to buy a home as your first investment.
#1 Mortgages are Cheaper than Rent
In 42 out of the 50 states, it’s cheaper to own a home than to rent. Taking on a mortgage can actually save you money now and in the future. The biggest thing standing in most people’s way is the down payment. Luckily, in Washington state, there are many programs that will help homeowners purchase a home for a lower or no down payment.
#2 Start Building Equity
As you start to pay down your mortgage, the amount of equity you have in your home grows. Unlike rent, you’re not just throwing away your money, but securing it to your home. When you’re ready to move you can use that equity to buy your next home.
#3 Your Lower Budget is in your Favor
When buying your first home, odds are you won’t be able to buy the nicest home on the block. Go for the fixer upper that you can actually afford. Over the years take the time to make improvements to the home and when you’re ready to sell, you’ll be making money
#4 It’s an Investing Stepping Stone
Buying a home is one of the best stepping stones to get started investing. Buying a home, paying your mortgage, building equity, and selling for more than you bought it for is a great way to learn how investing works. You invest in something while it is low, wait for it to grow in equity, then sell when it is high. This is exactly how homeownership works. If you make enough money on the sale of your first home you can even invest some of that into other types of investments such as stocks, bonds, retirement accounts, or more real estate.
Buying a home is a big decision, but as long as you make your payments on time and let your equity grow, it’s one of the best investments you can make… especially in your 20s. Investing is all about risk, start off with a small but beneficial risk of buying a home and see how it can help guide you towards a future of great investments
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