The title of this blog post may sound counter-intuitive for me as a Loan Officer, given that I work with borrowers to be qualified for a mortgage. For most of the United States (and in Kentucky), buying is often the better option for people in the long term. Buying a home, when done correctly, can be a key to building wealth since you build equity in your home over the course of your lifetime. Certainly, there are exceptions to to every situation - and there are buyers who are not in the financial position to buy. Before signing off on a mortgage, I always encourage borrowers to understand if buying a home is right for them. If it is the right call for you, I hope that you find yourself down the road in a position to own your home outright, and in this blog post I'll explain why.
So long as your financial picture is in order, buying a home is generally considered to build wealth in the long term. Although some disagree, many people do feel that buying a home and paying it off in the long term is an effective way to build your household wealth. According to Zillow, the median home price in Lexington is $194,994 - a full 21% lower than the national median home price. For an average family over the course of their life, buying a home can make a significant difference to their lifetime wealth, providing they make good financial decisions otherwise.
If buying a home can be a key to long term financial health, then why is this post about paying off your mortgage in time? The reality is that very few people can pay for a new home in cash, and is nearly a necessity if you desire to have a home that is yours. However, my hope is that borrowers would be to pay off their mortgage and own their home outright at the end of their loan term or closer to retirement. According to Forbes, 78% of Americans live from paycheck to paycheck, which indicates how we often struggle financially in the long term. A mortgage can be a type of forced savings plan tied to a property, and if buying is the right choice, can make a significant difference over time. In time, paying off a mortgage helps to alleviate the financial pressure on a household and can help prepare for retirement. Factor in that 20% of all Americans over the age of 65 continue to work to pay their bills and it's clear what an advantage of owning your home can be.
Mortgages can be a huge benefit to people when done right, as can owning a new home. Build wealth, pay off debt and prepare for your future. Your future self will thank you.