March 22, 2019
How Homeownership Benefits Younger and First-Time Buyers
Considering how much has been made of the differences in how Millennials have approached their financial standing in the world as compared to previous generations, one may be forgiven for a misbegotten belief that this generation is not engaging at all in the housing economy. They are getting involved. But it would be hyperbole to say this belief couldn’t be further from the truth, because there is an element of veracity to the claim—Millennials are engaging with the housing market later in life and in lower numbers than their predecessors. Whether one considers this a problem or not depends on one’s stake in the economy, to an extent. Some younger people simply enjoy the freedom and flexibility of renting. Others can’t even hope to afford a down payment on a home. But there is a strong argument to be made in favor of younger people buying houses from a young age—there are serious benefits to being a younger and first-time buyer. Perks accrue to those who purchase starter homes.
Much of the reluctance to enter the ranks of homeowners on the part of the younger set simply belies something of an ignorance of these benefits. While the negatives are simple enough to list—low income, high mortgage payments, being unable to afford the “perfect” home just yet—the positives of investing in a smaller starter home from as early as possible, so as to move up the ladder of homeownership and wealth, often evade the inexperienced.
Besides the (hopefully) obvious benefits of building equity and the number of tax deductions available to homeowners that renters don’t get, there are other financial and practical advantages.
The rates of mortgages are relatively low right now. Yes, they’re going up as compared to the past decade or so, but looked at historically, five percent is practically nothing. Consider: in 1981 the average mortgage loan had an interest rate of around (and sometimes higher than) 18 percent. There’s no reason that couldn’t happen again. So, yes, the iron is cooling, but it’s still hot, which makes now a good time to strike.
Moreover, while a starter home’s duties and responsibilities may seem like a lot to handle for younger folks, the truth is that skills accrue over time, and dealing with these responsibilities in a less-expensive home is good training for the larger home one may own in the future. That way you’re not going straight into the deep end, and have a stronger sense of the realities of homeownership.
Our team here at Topouzis & Associates, P.C. does everything we can to be absolutely sure our clients are conveying and purchasing title clear of judgments and defects—whether it’s for a starter home or for a “forever” home. And, yes, we help our clients put into place a good policy of title insurance to make certain they don’t get surprised by any nasty lurking issues with a property. Contact us if you’d like us to do this for you.