If you want to save money in the long run, then buying a home is definitely one of the best ways to do that. This has been a standard motto ever since the real estate market started, and it has been a pretty good motto to live by for quite some time now.
That is until the real estate market crashed, paving the way for the recession to grab us all by total surprise.
Do not misunderstand this – owning a home is still the only way to save money in the long run. There are just some things you have to understand before you start saving any money at all.
For starters, you have to pay your mortgage fees ASAP. The more debt you have, the more time the interest has to grow. Your payments must also be large enough to not only pay for the interest but for the principal amount as well. You really don’t want to pay 5% of a $100,000 debt every month – which, by the way, increases as the overall debt increases. You can easily overcome this problem if you opt for fixed rate mortgage, where your monthly payments will never change until your last payment. The terms may be stiff, but the stability helps you plan better in the long run than with variable interest rates.
Properly maintaining your home will also significantly affect your overall costs. Learning how to keep your house in tip-top shape and fix minor problems will result in major savings over time. By contrast, damaging your house and letting small problems will rack up the bills. The only person that will handle these problems is you, meaning that you’ll have to shoulder all the expenses if you do not take good care of the home.
Another important consideration is the value of the property with the passage of time. The value of property does not always shoot sky-high over time, especially when you consider that most property values increase along the same values as inflation rates. Even this slow rate of value is good as long as the value of the property increases over time. The last thing you want to happen is to sell your house at half the amount you paid for it.
Just remember, however, that any money you put into your mortgage fee is akin to a savings account. Paying for a hundred-thousand dollar home is like putting a hundred thousand dollars in the bank – except you ‘use’ your savings every time you step into the house. This is why you have to take care of your house, since it is a form of savings that will appreciate in value.
All in all, there are only a few ways you can really lose money when you buy a home. The fees you pay for the transaction, the interest you pay for your loan, the maintenance of your home and the value of the property dropping instead of rising over time. Keep these in check, and you’ll be able to save money in the long run!