Millionaire David Bach says, “Buying a home is an ‘escalator to wealth’,” according to an interview with CNBC.
He states in the CNBC article, “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”
He says that his three best investments were the three homes he bought, two of which he sold at a profit. He said it upped his net worth by millions. (That being said, there are no guarantees that a home’s value will rise.)
He makes the point that as a renter, if you pay $1500 per month, over 30 years (if you are comparing renting to a mortgage,) you will have paid $540,000 and own nothing. If you were to buy a house, and have a mortgage payment, you could potentially own that house free and clear at the end of 30 years, if you had a mortgage with amortization of 30 years (though some mortgages are 15 years or 20 or others, sometimes less, sometimes more, especially if you refinance.)
Bach has some very good recommendations – he doesn’t say just to jump into buying a house without doing some homework.
You will want to do your own math. I will add that you need to build in potential repairs and costs over the years. Over 30 years, most homes would need a new roof, multiple HVAC units and multiple appliances, as their life expectancies are often 10-15 years.
Bach also says that your mortgage payment should not be more than 30 percent of your take-home pay each month.
I will add that before you start looking at homes or seriously considering buying a home, it is a good idea to speak with a mortgage professional.
I work with a few local Baltimore mortgage lenders who can help guide you through the process, and can run numbers and help you figure out what programs may be best for you and your situation, and help you to decide if buying a home is the right decision for you.
To find out about buying a home in Towson or Baltimore or the surrounding areas, please contact me. I would love to help!