Why Buying Your First Knoxville Home Is A Smart Investment
Buying your first Knoxville home can be a daunting task. Taking the time to find the right home, applying for a loan, and taking on a mortgage, can be a bit overwhelming.
Still, owning a home is an easy way to help build long term wealth and financial stability. In this post, we’ll explain why buying your first home is a smart financial investment.
Forced Savings Plan
Housing is one of those expenses that you really can’t avoid. You’re either paying rent or you’re paying for a mortgage. When you pay rent, you’re just throwing money away, it’s not going towards any type of an investment. But, when you pay a mortgage, it’s going toward paying down your principal. This is what makes a home a smart investment.
When you have a mortgage, it sets up a forced saving plan for you. If you’re going to be paying for housing expenses, it might as well go towards a mortgage. A mortgage means you’re putting that money towards an investment, instead of just throwing it away when you rent.
Mortgage Payment Will Remain The Same
When you have a fixed rate mortgage, your mortgage payment will stay the same over the life of the loan. Occasionally, escrows can change a bit, which may cause your mortgage payment to increase or decrease by a few dollars.
But, for the most part, you’ll have a predictable payment so long as you have the mortgage. In the case of rent, rent often times increases over time, so there is that level of unpredictability.
By having a predictable payment, one of your biggest bills will alway be predictable, which makes setting a budget much easier.
Avoid Paying Capital Gains
Unlike other investments, when you sell your primary residence where you’ve lived for at least two years, you don’t have to pay capital gains. While there is no guarantee that your home will earn you money, it’s still good to know that if you do, you won’t be responsible for paying taxes on what you gain.
When you do think about buying a home, there are things that you can think about to ensure the home that you’re buying is a smart investment. Here are a few general rules of thumb that help with resale value:
- Good school system
- Functional layout
- Buy in a good location (i.e. not next to the interstate or junk yard)
Takes Away An Expense When You Retire
Housing expenses can be one of the largest expenses in your monthly budget. When you take on a mortgage during your working years, you can hope to have your home paid off by the time that you retire. This will help eliminate the costly housing expense when you retire.
Even if you don’t plan to stay in the same home when you retire, you can take that equity with you that you’ve built up. You can put it towards another home when you do retire. It can be nice to not have to worry about paying for housing when you do retire.
Buying your first Knoxville home is an exciting and overwhelming experience. If you’re like most first-time buyers, you may not be sure where to start. If there is anything we can do to help you in your home search, please do not hesitate to contact us. We’ve helped countless homeowners buy their first home and we’d love to do the same for you. Rick can be reached at 865-696-9002 or via email at Rick@KnoxvilleHomeTeam.Com. Kati can be reached at 865-696-1888 or via email at Kati@KnoxvilleHomeTeam.Com.
Are you ready to start your home search? Visit our home search page to get started today. Or, be sure to keep up with our Knoxville First Time Home Buyer’s Blog to keep up with the latest information about buying your first home.