6 Reasons Financial Experts Say You Should Be Investing In A Home

Each day you’re swarmed with financial advice. Particularly Millennials… start saving early, start investing, use employer’s 401(k) match and for heaven’s sake, dump those high-interest credit cards!

Ultimately, financial advisors concur, purchasing a home is a great investments. Why? Because it is inflation-protected and a physical asset that doesn’t disappear like stocks can and do.

home-investment-calculatorHere are 6 reasons why financial experts say you should be investing in a home:

1. You’ll spend smarter
Rent payments go straight into the pocket of the landlord – and at the beginning of the next month, you’ve got nothing to show for it.

But mortgage payments are an investment in the future. As the remaining balance on a mortgage is reduced, home equity increases, padding your own retirement account – and not your landlord’s. Better to spend your money on your own home than on unnecessary, short-term expenses that won’t provide value later, he says.

RELATED: How to Pay Off Your Mortgage Wisely

2. Consider the resale value
Properties in solid markets such as ours are a good investments because we attract buyers who want to live here for a long time. Buying in areas where the market is trending up can increase net worth.

3. Enjoy the tax breaks
Mortgage interest is deductible from your income tax, lowering your tax burden to Uncle Sam. And homeowners usually don’t have to pay a capital gains tax when they sell if the property value increases by less than $250,000 and if the home has been occupied as a primary residence for more than two years. That’s a benefit that trumps even a very good IRA or other tax-deferred retirement plan.

RELATED: Homeowernship: A Shelter from Taxes

4. Homeownership has emotional benefits
Homeowners are more likely to be invested in the local community and develop interpersonal relationships that create a reliable support system than those who rent.

There is also a sense of pride that homeownership invokes. Through the investment of a home purchase, millennials particularly, can play a key role in restoring faith in the American dream and preserving it for decades to come.

5. Low interest rates
Borrowing to buy a place to live is seen by banks as a much safer investment than credit cards, and interest rates are still at rock bottom. These days, mortgage debt is not a BAD financial decision.

6. Supplement your retirement income
As you contemplate buying a home, think about the future. You’ll benefit from having a home as a storehouse for retirement funds, and for most of today’s home buyers your homes will likely be paid off by retirement. You then have home equity to tap into to fund retirement benefits.

This will help you supplement 401(k) and IRA accounts, which will become increasingly more important as the U.S. struggles to fund Social Security.

There are plenty of benefits to owning a home, but Chris Copley, a regional sales manager for TD Bank in New Jersey, notes the important consideration that you’ll be staying in one location for a while.

For prospective homeowners – particularly Millennials – Copley’s best advice is to do research. Talk to loan officers, ask questions and walk through the home-buying process from a financial perspective. “Sit down and do the math. My advice always comes back to doing the homework.”

RELATED: The Am I Ready to Buy A Home Checklist

Crunching numbers is exactly what our client David, 30 – a Millennial – and his wife did before they purchased their first home in August. In an effort to make a smart decision, the couple weighed how long they expected to stay in the home, rent potential and their finances.

“We were nervous,” he says. “But we realized we’d be here long enough that it made financial sense now and for our future.”


Did investing in a home impact your overall financial well-being? How? Sound off on Facebook, Twitter and LinkedIn.

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