Is Buying a House a Good Investment?

Most people don’t look at a home as a long-term opportunity to get a return on their purchase. However, homes are an investment for the long run. A home can help you build wealth, and it’s a relatively safe investment as homes typically tend to rise in price with time.

A home is not a good investment if you are looking for a quick return on your money. Real estate averages about 3-4% return per year compared to stocks or other aggressive investments that may average around 10%. However, homes are a better investment than renting, which does not provide any return.

Buying a home allows you to build equity instead of renting and paying someone else’s mortgage. Owning a home can also provide tax benefits and credits. There are also other benefits to buying a home.

What Are the Benefits of Buying a Home?

Owning a home comes with some other great perks.

  • Improved Credit. Once you start making your payments on time, you will notice your credit score starting to rise. However, be prepared for a dip when you first start your loan.
  • Greater Privacy. You’ll have more control over your area when you buy a home. You won’t have to worry about sharing a wall or asking permission to design the home to your style.
  • More Stability. When you buy a home, you’ll be tied into a fixed interest rate on a home for the next 20-30 years. You’ll be less likely to move compared to renters who could have spikes in cost. Also, owning a home can help you create generational wealth if you plan to pass it on to your children.
  • You Will Have Access To Equity. One of the advantages of owning a home is the ability to tap into your home’s equity. Equity is the value of your home versus the amount of loan you have to pay off. Some people use equity to finance large expenses such as home renovations, debt, or paying for a wedding. There’s a piece of mind also knowing that you have another source of an emergency fund should you need it.
  • You Can Use Your Home as a Rental Property. Many homeowners rent out their homes as another source of income. As you continue to build wealth, you can rent out multiple locations to keep a steady flow of income coming in.