The decision to buy a house should not be taken lightly. If you own it, you are responsible for it. Now, that’s not to say you shouldn’t go for it, but it is to say that you need to look at both the short and long term effects of home ownership. Most of the benefits of home ownership play out over the long term, and one of the greatest long term benefits is the ability to borrow inexpensively later in life.

This ability to borrow is linked to the equity in your home, which you build over time. So, the longer you are in your new home, the more that you can borrow against it. And the benefit of this borrowing power is that you can protect yourself from the unknown in the future. If you have a major expense fall in your lap, you need to hope you either have enough in savings to cover it or you can get a loan to help you cover the expenses.

Unfortunately, when you really need a loan, you are not normally in a position to negotiate a great rate. This is where the borrowing power of your home helps you. Using your home as collateral, you can negotiate a lower rate on a loan.

If you have any other questions about the benefits of home ownership, specifically about how those benefits relate to borrowing power, please contact me. And if you have anything to add about the benefits of long term borrowing power, please leave a comment.