The rising generation, those currently between the ages of eighteen and thirty-four are notoriously stingy and afraid of debt. It makes sense—a large portion of this generation came of age just as the economy was taking a swooping downturn. Many of them lost their college funds and nest eggs to the recent recession. They have the lowest rates of home ownership among past generations.
And while there’s nothing wrong with avoiding debt—this mentality comes along with a number of extremely sound practices, including paying cash, avoiding credit card debt, and living on a strict budget—but it can also make it impossible to achieve what has been a tenant of the “American Dream” since America’s inception: owning a home. It can take decades to save up enough money to pay for a house with cash and if you are renting an apartment or home in the meantime, there’s little chance you will ever be able to put enough away to get out from under the burden of rent without borrowing money.
Right now, however, is the very best time to borrow money, especially if you have very few or no other debts. Why? Because interest rates are still incredibly low. Our parents could only dream of these interest rates when they were buying their homes. This makes buying a home more affordable than ever.
Realizing that there is a big difference between taking out a mortgage to buy a home and racking up credit card debt is essential to getting over the fear of borrowing money. A house is an investment—it increases in value the longer you live in it. With projections from financial heavyweights like Goldman Sachs predicting that the housing market will rise at least 30% in the next ten years, buying a home on the cheap now means owning a much more valuable home in ten years, which can then be used as an asset or sold for profit.
Those who fear debt are perhaps the best suited for mortgages. Not only because they are more likely to choose a home and a mortgage that is well within their means, but because they are also more conscious of the seriousness of debt. Right now is the ideal time to buy a home—don’t wait five more years when home prices and interest rates will be higher!