- US Census: Only 36% of Millennials Own
- #1 – You are Putting Your Money Toward Equity
- #2 – You Receive Benefits Every April
- #3 – You will Simply Feel More at Home
- #4 – You Can Benefit from Good Interest Rates
- #5 – It’s a Potential Nest Egg
- Millennials are Busy
US Census: Only 36% of Millennials Own
The same basic wise financial choices remain essentially the same for millennials as for their parents’ generation: put money away as early in life as you can, invest in a 401(k) at work, and pay down any credit cards. Homeownership is often lost in the shuffle, distrusted because of the housing market crash, but it is still a strong way to diversify your investments.
Buying a home is a good way folks as young as their 20s can prepare themselves for the decades ahead, says Riccardo Ravasini of NYC’s Rava Realty. Ravasini, who is in charge of the company’s properties in Florida and New York, notes that buying is the best way to go “because it is inflation-protected and a physical asset that doesn’t disappear like stocks can.”
Many millennials have not yet transitioned from renting to homeownership because their careers are sputtering, they have high amounts of student loans, and they are still single. US Census data shows that millennials became less likely to own homes last year, when the renting population among them grew to 64%.
That said, millennials are still buying houses; in fact, they make up a larger chunk of first-time buyers than any other age group. Experts in the real estate industry believe that the millennial market is gradually starting to take off, and projections generally show that the age group is becoming more open to homeownership.
Why buy? These are some of the reasons that many finance professionals advise young women and men to go out and buy homes sooner rather than later.
#1 – You are Putting Your Money Toward Equity
When you give a landlord a rent check, it is going toward his/her mortgage. In other words, you are helping another person build equity. Why do that when you could build your own?
Mortgage payments go toward actual ownership of the property, Now of course, that’s provided you get a strong home loan, so that your house is building real equity and doesn’t become “upside-down.”
“As the remaining balance on a mortgage is reduced, home equity increases, padding your own retirement account – and not your landlord’s,” explains Amanda Falcone of US News & World Report. “Better to spend your money on your own home than on unnecessary, short-term expenses that won’t provide value later.”
#2 – You Receive Benefits Every April
There are IRS write-offs related to homeownership. Payments toward interest are tax-deductible. Plus, as long as you are a typical homeowner in two ways – your property value hasn’t skyrocketed by more than $250,000, and you have lived at the home for at least two years (as your primary address) – you are also exempt from capital gains tax if you sell. These tax write-offs may sound relatively small, but Kent State University finance professor Tony Via says that the overall payoff is better than both tax-deferred retirement packages or IRAs.
#3 – You Will Simply Feel More at Home
People often think of homeownership in terms of feeling more stable and grounded. Buying is thought to be the way that you settle down. That actually is a big advantage of buying – a better establishment in the world around you, explains Mike Hardwick of Tennessee’s Churchill Mortgage.
“Although it is not a primary benefit for millennial homebuyers, there is also a sense of pride that homeownership invokes,” he says. There is actually a way in which homeownership serves as a social good, adds Harwick. “Through the investment of a home purchase, millennials can play a key role in restoring faith in the American dream.”
#4 – You Can Benefit from Good Interest Rates
If you are thinking about generally building your credit, buying a house is a much better route than signing up for credit cards – especially now, since mortgage rates are ideal.
#5 – It’s a Potential Nest Egg
For millennials, they should be able to pay off the house by the time they retire, notes Via. Once you have that equity in the property, you will always have the potential to tap into it during your retirement.
It’s critical for this age bracket to save smartly for retirement since Social Security checks are expected to dwindle in the future.
Millennials are Busy
Here’s the thing: there are plenty of reason to buy a house, but we all know that it’s a big project, and it requires time. What millennials need is fast solutions.
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