The link between financial security and homeownership is especially important today as inflation rises. But many people may not realize just how much owning a home contributes to your overall net worth. Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability. Here are just a few benefits of home ownership.
Home Ownership Builds Wealth
A recent NAR report details several homeownership trends and statistics, including the difference 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. 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 in rent every month. Homeownership has always been an important way to build wealth.
Stable Monthly Mortgage Payments
In many parts of the country, there are few limits on how much your landlord can increase rent. When you own your home and have a fixed rate mortgage, you shouldn’t need to worry about this. Your principal and interest will remain the same for the life of your loan, so your housing costs shouldn’t go up. As a homeowner, your equity grows as your home appreciates in value and you make your mortgage payments each month. In other words, when you own your home, you have the benefit of a stable mortgage payment acting as a contribution to a forced savings account.
Home Ownership Gives You Control
If your current place is under the control of a landlord, you’re essentially at the mercy of their decisions. Your landlord could sell the property, repurpose the property or even go into foreclosure. If you own your home, it’s less likely you’ll be forced to leave it. While that could happen if you become unable to make payments, owning a home will allow you to create stability. And with fixed housing costs, you’ll be able to create savings goals for various things like “emergency funds” that give you a little cushion should you lose a job.
The gap between a homeowner’s net worth and a renter’s shows how truly foundational homeownership is to wealth-building. If you’re ready to start on your journey to homeownership, talk with the Ultimate Lending Team today.