Why do people buy houses they don’t plan to pay off? Most people don’t spend their entire lives paying off one house, so what is the financial benefit of getting a “starter home”? I’m new to the economics of real estate and I’ll take any wisdom offered.
In: Economics
The idea is that owning a property builds wealth because it goes up in value.
Over time you’ll be able to increase your net worth via equity in the home. So if you wanted to you could borrow against the equity in the home to pay off debt or make investments.
Additionally the cost to borrow against your home is cheaper than other lending alternatives because the expectation is that homes hold their value well and even appreciate in value. So there’s less risk for the lender.
Latest Answers