Financial independence means a lot more than just fiscal stability. For many North Carolinians, financial independence can mean freedom, a secure or even early retirement and living life without a dependence on others for financial support. Financial independence is a dream for most of us, and home ownership is a key tool to get there. Read on to learn how.
Home Ownership Can Be More Affordable
In many cases, buying a home means stable housing payments that only increase minimally, if at all, over time, depending on tax rates and insurance costs That means homeowners don’t have to worry about the principal and interest portion of their mortgage payment increasing as long as they have secured a fixed-rate mortgage. In addition to more stable payments, homeowners have more say about changes in and around the home than renters. Homeowners can choose to install energy-saving appliances to cut down their energy costs and can participate in their homeowner’s association to determine where their dues go. Over time, home ownership can be much more affordable than renting, especially if the homeowner plans to stay in the home for several years.
Down Payments Can Put You in a Saving Frame of Mind
Before they purchase their first home in North Carolina, many citizens find their biggest hurdle is the dreaded down payment. However, the days of a required 20% down payment are gone, and many North Carolinians can purchase a home with as little as 5% down, especially using loans like the NC Home Advantage Mortgage™ which offers down payment assistance up to 5% of the loan amount. For home buyers, saving up for a down payment takes time, effort and dedication, putting the buyer in a frame of mind where savings is rewarded. Many homeowners carry this idea with them even after they purchase their home, setting themselves up for future financial success.
Equity in a Home Can Build Wealth
For renters, their monthly rent payment doesn’t do anything but go into the pockets of their landlord. However, when homeowners pay their monthly mortgage, their payment is going toward an asset that they will one day own. Each time a payment is made, the homeowner builds equity in the home—or increases the portion of the home that they own outright. Monthly payments reduce what you owe on your loan while increasing what you own, creating a type of forced savings account. According to Earnest Guide, the percent difference in total assets between homeowners and renters is +29% for adults 18–27, +48% for adults 28–35 and +57% for adults age 36+.
Over Time, You Can Eliminate Your Housing Costs
A good rule of thumb is your housing costs should never exceed 30% of your total income, but for many North Carolinians, that number is still quite a bit of money. When you purchase a home and plan to stay long-term, eventually you can pay off your home loan completely. That means you will no longer have a monthly mortgage payment and will no longer have to pay into an escrow account. For many homeowners, this means a substantial amount of money each year that stays in their pockets, while they now own a piece of real estate outright. This equity in the home and the substantial reduction in expenses means that many homeowners can find financial independence and comfortably retire, able to afford their expenses for the future.
If you want to learn more about how what assistance is available to help you become a homeowner and start down the path to your financial independence, visit HousingBuildsNC.com.