Build Wealth with Homeownership
- July 28, 2017
- Murphy Team Voice
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One of the best ways to secure your financial future is through homeownership! Owning a home can build wealth thus providing you with greater financial freedom and stability. With independence comes numerous opportunities; just imagine the possibilities that await you!
Check out these ways that owning a home can help you build wealth over the long-term:
- STABLE, FIXED PAYMENTS. Anyone who has ever rented knows far too well the grief that comes with unstable price hikes. One benefit to homeownership is the possibility of a fixed mortgage. Knowing your stable, fixed payment won’t fluctuate throughout the loan’s timeline provides you with greater ease-of-mind.
- SAVINGS. You’re always saying you’ll put some money aside every month, but more often than not people fall by the wayside. Having a savings is one path towards financial freedom and homeownership can open the door for contributing more to your savings! A mortgage is beneficial for stability and is just as useful for planning. Knowing your monthly costs will enable you to shift your money towards investments and savings while keeping your overall costs down. Paying your mortgage contributes to your net worth, resulting in a ‘forced savings.’ At today’s interest rate over 23% of your payment goes to principal!
- NET WORTH. As your principal is paid down equity is built up and this will increase your net worth. As a homeowner, your net worth is far greater than a renter’s, about 45 times more! Every three years the Federal Reserve conducts a Survey of Consumer Finances. In 2013, homeowners had 36 times more net worth than a renter’s (a median net worth of $195,400 compared to $5,400). Based on these figures and projecting a 3% price growth in home prices, it is likely that the Fed may show a homeowner’s net worth to be between $225,000 to $230,000 and $5,000 for renters today.
- TAXES. Being a homeowner comes with some tax perks that will help reduce your taxable income: mortgage discount points, insurance, interest deductions, and property taxes. It goes without saying that this is a big plus towards your savings! Another benefit? The profit gained when selling your home cannot be taxed (with some limitations) compared to a capital gains tax, which is paid on any investment or property profit. Another win for your savings!
- VALUE. Are you noticing a pattern with homeownership, equity, and net worth? More often than not a home will appreciate in value, although there are no guarantees. But looking at the Federal Housing Finance Agency’s House Price Index, home values have seen an average of a 3.33% appreciation per year since 1991. This appreciation in value builds more equity, thus increasing your net worth!
Homeowners are at an advantage to steadily increase their wealth. Why don’t you contact us today to explore what your purchasing options are?
We hope this helps boost to your confidence on the choice of homeownership and why it is best for you. If you are interested in securing your financial future then we would definitely be open to chatting with you about how we can best help you. Let’s Talk!
The Murphy Team