A Fresh Start Through Homeownership

A quick truth, then a fix. Sound good? The everyday hustle gets old fast- we all know this. It’s difficult to see the big picture when we are laser-focused on minutiae. Sometimes, it feels like we are running on a hamster wheel, with no off-ramp and no end in sight. The moment we zoom out, we clearly see the wood from the trees.

We’ve all heard that famous Einstein quote-"Insanity is doing the same thing over and over again and expecting different results." It’s true, no matter which way you slice it or dice it. The wrong approach invariably yields a poor result. Nowhere is this more evident than in a mindset that reinforces renting over homeownership. We are programmed to find the path of least resistance, often to our detriment.

Today, we will highlight the merits of homeownership and its long-term financial benefits. This new way of thinking warrants receptiveness to change and breaking bad habits. Many of the things we do daily are habitual. Often, we don’t think too much about our actions, routines, or mental processing.

We should take a long, hard look at many aspects of our lives. Scarcity is the universal problem, not merely an economic challenge. We face tough choices and sacrifices every day. But the time for change is now. For many Americans, buying a home is the ultimate antidote to the scarcity mindset.

A Homeownership Pathway Paved with Possibilities

Continuing with the parables, we can safely say that the night is darkest before the dawn. Nobody can keep pace on that hamster wheel of life without tiring and wanting to explore other options. Renting feels like an endless hamster wheel because you’re putting in all this effort month after month, year after year, and for what? A place to stay?

In truth, you can put in the same amount of effort, or less, and have a place to stay that is your own. There’s a big difference between the two. One is an expense item and the other is an investment. We are at a point in history where personal disposable income is lower than it has been in generations. People simply don’t have all that extra cash to throw around like they used to.

Mortgage brokers tend to follow a rule that an applicant’s mortgage payments should be no more than 30% – 40% of their total take-home pay. Nowadays, most people pay substantially more than that for their mortgage and utilities. Even if that is a stretch of the imagination, it certainly feels that way. To counter all this negativity, it’s important to change course and make your payments count.

A simple example puts things into perspective: Veterans and active-duty service members understand more than most what it means to be away from home. For them, homeownership is much more than a dream- it’s a deserved advantage. The VA loan benefits program empowers qualified borrowers with favourable terms that few conventional loans can match.

It's true; reputable VA loan providers offer competitive rates, often at parity with or lower than prevailing mortgage rates. More than that, veterans are not required to place a down payment to qualify for a mortgage. In fact, down payments are entirely optional. Another benefit of a VA home loan application is that credit scores and work history are less important than they are with a traditional mortgage.

This is made possible through partial government backing of VA home loans. No down payment means no PMI, and that reduces costs dramatically. Of course, there are origination fees and possible commissions associated with VA home loans. Viewed in perspective, these benefits are worth their weight in gold over time. Instead of paying rent that goes nowhere for 30 years, it’s much wiser to channel that same effort into a mortgage.

Building Stability One Mortgage Payment at a Time

Imagine paying $2,500- $3,500 in rent monthly for 10 years. Add in annual rent increases, and that figure quickly balloons into hundreds of thousands of dollars. Did you know that the average price of a home in the US today is between $400,000 and $450,000? You could essentially pay off the full principal value of your new home with your rental money in that timeframe. Every mortgage payment you make, starting from payment #1, contributes an ever-increasing amount towards paying down your home.

Once you break the back of interest-heavy payments between years 10 and 15 on a traditional 30-year mortgage, principal payoff continues at an increasing rate. This means that you now have a tangible fixed asset. Plus, you’ve got substantial equity and a springboard for future success. You can use a cash-out option, refinance, or HELOC, for example, to use your equity to further enhance your financial portfolio. It’s the opposite of a Pandora’s box– it’s a Goodie box that improves your life (and your family’s life) for generations to come.