One of the most significant purchases that most of us will ever make is our home. Even if you sell one home and move to another, you probably will have to arrange for another mortgage, unless of course you win the lottery.
Anything of real value in life takes time, in most cases many years. Careers do not blossom in a single year. Raises do not come in a day or two. Children do not become mature adults in a year or two. Your home is no different. In the long run, it may be worth a great deal of money and you will be sole owner, but it will not happen overnight. You need to ask yourself the question: “If we do not get started on our purchase of a home, where will we be in 25 years?”
The alternative to purchasing a home is to continue to pay rent and, at the same time, discipline yourself to save and invest in stocks, bonds, mutual funds or a savings account. Most of us do not have the self-discipline to maintain a consistent savings program over a long time span. There are just so many unexpected items that demand our immediate funds or “have-to-have” items that beg for the money that should be going in our savings account.
As a Mississauga Real Estate Agent with more than 25 years of experience, I have seen how real estate offers one of the best long term strategies for wealth management.
Some employers offer the perfect savings plan. They will deduct money from your paycheque and invest it in company stock. It’s the perfect savings plan: we never see the money, so of course we can’t spend it.
In some ways, a home is a forced savings plan. Once you commit yourself to a mortgage, there is no easy way out. You can’t miss even one mortgage payment, not even to buy that new stereo system that you just have to own, or even to take that winter vacation that you can’t do without.
Even when those unexpected costs crop up, you have no choice – the mortgage payment must be made!
It may be tough at times, but there are at least three advantages to your mortgage payments:
(1) It is a regular, enforced, no choice plan.
(2) Every deposit (mortgage payment), buys you a slightly larger piece of an asset that is probably appreciating in value.
(3) You cannot touch this “savings account.” There is no way to make a quick, easy withdrawal.
If you have the discipline to make regular deposits to a savings account or to some other investment program, then maybe you don’t need the demands of a regular mortgage payment. For most of us, regular mortgage payments are a guarantee that we will have some substantial savings down the road.