Does Buying a Home in 2020 Make Sense For You?

Is 2020 one of the best years to obtain a mortgage loan in recent history? As of October, Bankrate.com listed the average fixed-rate mortgage in America anywhere between 2.7%-3.2%. These are historic lows that date back decades in our country. If you don't believe so, take a look at the average fixed rates over the past 40 years. Over this period, mortgage rates have declined at a staggering number. According to FreddieMac.com, mortgage rates reached their all-time high in October 1981, where they averaged around 18.45%. This would mean that any person who wanted to finance a new home was paying close to 15% more in annual interest than they would in 2020. So the real question is, what is stopping you from buying your "Dream Home"? We all know that 2020 has been an unpredictable year. The COVID-19 Pandemic has affected everyone in some way or another, no matter your beliefs, race, or socioeconomic status. Maybe you are in between jobs, worried that you might not qualify, or are unsure if it is the right time to buy. If you fall into any of these categories, continue reading below about the different opportunities on why financing a new home in 2020 might make sense for you.

Tax Benefits

Owning your own home has many benefits that are unknown to most prospective buyers. We are all aware of the dreaded "Tax Season" that comes knocking on our door every year between January and April. It is a time where the majority of workers take their annual visit down to their local tax professionals to see what they owe the American government. While most Americans agree that paying taxes benefit our country by creating social programs, roads, and schools, it is equally important to ask one's self: "Wouldn't be nice to save a portion of that money?" MyFico.com calculates that the average homeowner will receive around $3,222 on tax benefits by writing off their annual interest on their mortgage. By saving money through tax benefits, homeowners will have an advantage against those who rent. One might be able to add toward their child's college fund, take a vacation, or save for a rainy day. The advantage of saving on your yearly tax bill is something prospective buyers should not overlook in 2020, where surprises are no longer shocking.

Investment Opportunity

Homeownership is recognized to be one of the most important data points toward building wealth in the United States. Dave Ramsey, financial coach and host of the nationally syndicated radio program, The Dave Ramsey Show, has cited on numerous occasions that long term homeownership is one of the most critical pathways to building wealth next to your income. While Ramsey is an avid believer in living debt-free, he recognizes that home mortgages do happen and should be paid off as soon as possible. When one obtains a mortgage, it creates a way of saving without putting money into a bank account. When the principal on a mortgage is paid down every month, the homeowner builds equity that can be used to their advantage. One may use their equity to make home improvements, move up in house, or borrow for a certain emergency (wedding, college, or unexpected life event). While renting should not be looked at as a "bad thing", it should not be a long term goal either. Becoming a homeowner will always be an investment opportunity for those wanting to build wealth and create opportunities for their future.

Something to Call Your Own

It is no secret that homeownership creates a sense of pride within the majority of Americans. We have all heard the famous saying, "home is where the heart is." What does this mean? Owning your own home creates a place of joy, relaxation, and peace. It is a place where we make the majority of our memories with our loved ones. A place where we have family and holiday gatherings. If you are a long-term renter in 2020, it is important to ask yourself, "do I want to pay someone else's mortgage?" When you are renting for an extended amount of time, you are paying the bills of your landlord. Why not have something to call your own? Coming home to your own house knowing that your monthly payment is going toward your future, rather than someone else's pocket, should be the motivation that you need to buy your first home today!