Homeownership Builds Wealth on the Path to Financial Freedom

iStock 473167952 July4 PICNIC sm - Homeownership Builds Wealth on the Path to Financial FreedomAs we celebrate our nation’s freedom this July 4th, it is a good time to offer a toast to the pursuit of happiness and offer thanks for our personal freedom. Americans today have many opportunities for achieving the best in life for ourselves and our families.

Financial stability and financial freedom are two keys to securing the future we’ve always dreamed of. The basics of creating a good financial foundation include establishing an emergency savings and paying down credit card debt. Creating financial freedom is all about investment, retirement savings, and homeownership.

Let’s take a look at how homeownership builds wealth and financial freedom.

  • An Asset that Appreciates over Time: No home is guaranteed to increase in value; however, homeownership can be a wise investment. According to the Federal Housing Finance Agency, home prices rose in 49 states and the District of Columbia (excluding only Mississippi) between the fourth quarter of 2016 and the fourth quarter of 2017.
  • Equity is a form of Savings: As you pay your mortgage down each month, you build equity in your home. Unlike rent payments, every time you pay down the principal on your loan, your net wealth increases.
  • Mortgage Payments are Predictable: As demand for housing grows, rental rates can be counted on to rise. According to RentCafe’s Apartment Market Report, 89% of the nations largest cities have seen rent increases this year, while the nation’s smaller cities recorded the greatest level of increase. Home mortgage payments offer the security of constancy unless changes are initiated.
  • Homes Offer Tax Benefits: One of the major benefits of homeownership is the ability to deduct your mortgage interest from your tax payment liability. In 2018, annual interest is deductible for mortgages up to $750,000. You can also can deduct state and local property taxes up to the newly capped limit of $10,000

As homeownership rates continued to rise throughout 2017, new homeowners outpaced new renters. According to the Census Homeownership and Vacancy Survey released earlier this year, the number of new owner households increased by over 1.5 million from a year ago. Meanwhile, renters lost 75,000 households. This marks four consecutive quarters of owner households outpacing renter households.  Much of last year’s homeownership increase came from 18 to 44-year-olds, signaling that the homeownership fears engendered by the Great Recession are at last beginning to fade.

It’s true, homeowners achieve greater net worth than renters.  The latest Federal Reserve Survey of Consumer Finances shows that the median net worth of homeowners is over 44X greater than that of renters.

Contact us today to talk with one of our trusted Loan Advisors about the advantages and possibilities of homeownership for you!

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Matt Gentile

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