building Equity with Home ownership

How Owning a Home Builds Your Net Worth Owning a home is a major financial milestone and an achievement to take pride in. One major reason: the equity you build as a homeowner gives your net worth a big boost. And with high inflation right now, the link between owning your home and building your wealth is especially important. If you’re looking to increase your financial security, here’s why now could be a good time to start on your journey toward homeownership. Owning a Home Is a Key Ingredient for Financial Success A report from the National Association of Realtors (NAR) details several homeownership trends, including a significant gap in net worth between homeowners and renters. It finds: “. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.” To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter’s. This difference shows owning a home is a key step in achieving financial success. Equity Gains Can Substantially Boost a Homeowner’s Net Worth The net worth gap between owners and renters exists in large part because homeowners build equity. When you own a home, your equity grows as your home appreciates in value and you make your mortgage payments each month. As a renter, you don’t have that same opportunity. A recent article from CNET explains: “Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you're building equity in your home . . .When you rent, you aren't investing in your financial future the same way you are when you're paying off a mortgage.” But on top of that, your home equity grows even more as your home appreciates in value over time. That has a major impact on the wealth you build, as a recent article from Bankratenotes: “Building home equity can help you increase your wealth over time, . . . A home is one of the only assets that have the potential to appreciate in value as you pay it down.” In other words, when you own your home, you have the advantage of your mortgage payment acting as a contribution to a forced savings account that grows in value as your home does. And when you sell, any equity you’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month. Bottom Line Owning a home is an important part of building your net worth. If you’re ready to start on your journey to homeownership, let’s connect today.

Buy or Rent?

Should I Rent or Should I Buy? [INFOGRAPHIC] Some Highlights It’s worth considering the many benefits of homeownership before you make the decision to rent or buy a home. When you buy, you can stabilize your housing costs, own a tangible asset, and grow your net worth as you gain equity. When you rent, you face rising housing costs, won’t see a return on your investment, and limit your ability to save. If you want to learn more about the benefits of homeownership, let’s connect today.

How Much Down Payment?

You May Not Need as Much as You Think for Your Down Payment [INFOGRAPHIC] Some Highlights Many people believe you need to put down 20% of the purchase price when you buy a home. But recent homebuyers actually put down far less on their purchase. And with programs like FHA loans, VA loans, and USDA loans, some qualified buyers are able to put down as little as 0-3.5%. Let’s connect to make sure you have a trusted lender and can find out if you’re ready to buy a home sooner rather than later.

Dreaming of Home Ownership?

What You Want To Know If You’re Pursuing Your Dream of Homeownership If you’re a young adult, you may be thinking about your goals and priorities for the months and years ahead. And if homeownership ranks high on your goal sheet, you’re in good company. Many of your peers are also pursuing their dream of owning a home. The 2022 Millennial & Gen Z Borrower Sentiment Report from Maxwell says: “Many young adults have demonstrated their resolve to embark on the journey toward homeownership soon. More than half of millennials and Gen Zs plan to apply for a mortgage sometime within the next year.” Let’s take a look at why homeownership makes the top of so many young buyers’ to-do list and what you need to consider to achieve your goals if you’re one of them. Top Motivators To Buy a Home Before you start the homebuying process, it’s helpful to know why homeownership is so important to you. The survey mentioned above sheds light on some of the top reasons why younger generations are looking to buy a home. It finds: 95% believe the cost of renting is too high 35% think owing a home is an important wealth building tool 16% seek the sense of security owning a home provides 37% plan to use it as an investment property No matter which of these resonates the most with you, know there are many financial and non-financial reasons why you may want to buy a home. While your top motivator may be different than that of your friends, they’re all equally valid and worthwhile. Key Obstacles and How To Overcome Them Whether your homeownership goals come from the heart or are driven by financial aspirations (or both), it can still be hard to know where to start when you’re looking to buy a home. From understanding the homebuying process, to getting pre-approved, and exploring down payment options, it’s a lot to wrap your head around. The same Maxwell survey also reveals key challenges for potential buyers. Thankfully, the knowledge and guidance of a trusted real estate professional can help you overcome both. Here’s a look at two of the hurdles potential homebuyers say they face: 1. The Mortgage Process Can Be Intimidating In the Maxwell study, 33.37% said one of their obstacles was that the mortgage process is confusing or difficult to understand. An article by OwnUp helps explain why the mortgage process is so challenging for buyers: “There is a general lack of knowledge about home financing. Mortgages are a complicated topic with no one-size-fits-all answer. It’s difficult to understand the space, let alone determine what the right course of action is based on your unique financial picture.” While you may be tempted to do a quick search online to find instant answers to your questions, it may not get you the information you need to understand the full picture. Especially when it comes to financial advice, you want to lean on a true expert. Having trusted professionals on your side can help you to learn what it takes to achieve your dream of homeownership. Not to mention, an expert can give you advice specific to your situation, not generic advice like you’ll find online. 2. It’s Hard To Know How Much You Need To Save In the Maxwell study, 45.75% believe they don’t have enough saved to cover their down payment or closing cost expenses.  What you may not realize is that, today, there’s a growing number of down payment assistance programs available nationwide to help relieve this pressure. A report from Down Payment Resource says: “Our Q3 2022 HPI report revealed a 1.6% uptick in the number of homebuyer assistance programs available to help people finance homes, raising the number of programs to 2,309, a net increase of 36 over the previous quarter.” Additionally, as the housing market cools, buyers are regaining some negotiation power and more sellers are willing to work with buyers to help with closing costs.  Understanding what’s out there and the options available may help you achieve your dream of homeownership faster than you thought possible. Bottom Line If you’re serious about becoming a homeowner, know it may be more in reach than you think. Lean on trusted professionals to help you overcome challenges and prioritize your next steps.