Thursday, October 11, 2012
Gena Bigler: Buying a home is not just a financial investment, but a life decision
Is a house a good investment? As the recent real estate market turmoil has shown us, a house or any real estate may not be a sound financial investment. A home however, is a good life investment. We often spend on things that are not good investments. A vacation is obviously not an investment, but few would question the value of getting away. Life coaches have built empires around teaching entrepreneurs the value of time away from work.
Good decisions can’t be made in a vacuum. People are complex, with complex needs and lives. Any serious decisions need to take the whole person and the whole life into consideration. Instead of looking at a house as an investment, as we have for decades, we should consider it a life expense. Like any other expense, it should fit comfortably into the family budget.
(Photo from Creative Commons)
Even in a poor market, there are things you can do to help prevent your home from being a financial drain. Refinancing your home mortgage when interest rates have a significant drop can save a considerable amount of money. Switching from the usual thirty year mortgage to the shorter fifteen year mortgage can save thousands and with very low interest rates, the monthly payment is still affordable for most families.
Not overbuying is vital in any budget, but not overbuying when purchasing your home is paramount to maintaining a healthy budget. On the whole, a home is the biggest purchase most families will make. Like any major purchase, it should be entered into with thought and consideration. Beyond the purchase price, a family needs to consider all the associated expenses that come with home ownership. There are normal upkeep expense; some like property taxes can be planned for, then there are larger expenses that pop up periodically like a new roof or HVAC systems that are often unexpected.
By planning ahead for emergencies you can avoid any financial damage. Creating a home ‘emergency’ fund can help you prepare for unexpected home emergencies. By making small regular payments to your home fund you can build a nest egg for emergencies or even help fund improvements to your home that will likely increase its value.
There are benefits to owning a home beyond the financial. Studies have shown that children from families who own their homes have higher test scores, are less likely to become pregnant as teens and are more likely to graduate. Home ownership provides a sense of security for families. A home ties a family to a community. When you own a home, you care about what is going on next door, down the block and around the corner. Home owners are more likely to be involved in charitable and civic activities.
Buying a home is an act of faith. The homebuyer is leaping into a long term contract not only with the mortgage holder, but in essence with the neighbors and the community. There are many good reasons to buy your own home. When I was a renter, I longed for a place of my own just so I could be surrounded by color. It wasn’t just about color, but about having the freedom to have a home that inspired comfort and happiness.
Deciding to buy a home is much more than a financial decision. It is a life decision. Buying a home is an investment in life; it impacts the quality of life for your family. While weighing the financial investment of home ownership, remember to weigh the social benefits as well. It’s been many years since I rented, but I still smile when I see my sunset orange living room. In financial decisions, personal happiness can be an important motivation.
Gena Bigler is passionate about public service and credits her time serving nonprofits in AmeriCorps and Volunteers in Service to America (V.I.S.T.A.) with teaching her extreme budgeting and bargain shopping. Gena is now CFO of McNay Settlement Group and serves on the board of the Lactation Improvement Network of Kentucky (L.I.N.K.). Gena would be happy to hear from you at email@example.com.