For generations, home ownership has been a part of the American Dream. Affording a home isn’t always easy, and many argue that doing so is harder now than ever before. Still, the truth is clear: Most Americans own their homes, and many more dream of doing so one day.
You have much to learn about home ownership, of course. Many Americans who own their own homes also owe a lot of money toward a mortgage. Homes can be assets, but also sources of huge debts. And key decisions before, during, and after the purchase of a home can have a dramatic effect on the fortunes of the people and families that call these houses home.
Your home as an asset
For most people, buying a home involves putting down a huge amount of money and agreeing to pay down a mortgage for years to come. But all of this money doesn’t just evaporate. Like virtually all other physical things that money can buy, a home has value. And, unlike many other such purchases, a home can maintain its value — or even increase in value.
You shouldn’t necessarily view your home as an investment, experts say. Still, understand that a home is an asset. It’s part of an owner’s net worth that, in some cases, can be sold or otherwise transformed into some form of financial advantage.
Homes, loans, and debts
Viewing a home as an asset makes it easier to understand why home buyers take out so much debt when they make their purchase. For virtually any other kind of purchase, the idea would seem crazy. A home buyer has to put down a huge chunk of liquid cash and, on top of that, agree to take on huge amounts of debt that will take years to pay off. Because a home is an asset, though, this can work out. A homeowner can, for instance, move. To do that, they’d sell their old home, pay off the mortgage, and use the cash left over to put down the new down payment on the new home. Plus, over time, paying off the mortgage will give a homeowner more equity in the home.
Mortgages aren’t the only sorts of loans associated with real estate, explain expert hard money lenders in Texas. Hard money loans are loans secured with real estate properties, and they’re a great example of the ways in which homeowners can leverage their equity in a home to gain a financial advantage or solve a financial advantage. Secured loans (which are loans that have collateral, which in turn is something to be repossessed in the event of nonpayment) tend to have more attractive interest rates than unsecured loans because of the lower risk to the lender.
Maintaining your home’s value
A home can be a valuable asset that is well-worth taking out a loan to buy and that can be used to generate even more wealth later on — but all of this is only as true as your home is valuable. Let a home get rundown and dirty, and you’ll be allowing a valuable asset to depreciate more rapidly than is necessary.
That means making repairs fast and staying on top of seasonal maintenance tasks. Act fast if your home needs care, and don’t fall behind on maintenance. Deferred maintenance tends to be pricier (because problems with a home only get worse — and more expensive to fix — over time) than timely work, and it will also depreciate the value of your home. That’s a real lose-lose.
Keeping up with home maintenance also means taking care of cleaning. Chores such as pressure washing a home are not strictly cosmetic, experts explain. Proper cleaning, repainting, and other seemingly cosmetic chores can actually extend the life of everything from your deck to your wooden siding.
Care for a home properly, and buying a real estate property can make a whole lot more financial sense in the long term.