Why Owning a Home is One of the Most Effective Saving Strategies

Over the past few months, we’ve talked a great deal about the benefits of owning a home—and why today’s market is one of the best windows to buy.

With a new set of numbers released on home equity, we’ve got another major reason why owning a home pays: it forces you to save, and in the process, those savings only appreciate.

It’s All About Equity

A jar of coins.

As you pay off your home, you start building up your equity—which is, in short, the difference between the current value of the home and what you still owe on the home. As your home appreciates in value and you chip away at the payments, your equity increases. Think of it as a “forced savings account.”

During the housing crisis and recession from 2006 to 2008, it was common for homeowners to dip into their equity and pull out money for other big ticket purchases, which ended up spelling major trouble for their personal finances.

Since your equity is technically an asset, it’s part of your net worth. The greater your equity, the greater your net worth, the better your chance of building future wealth.

The Latest Numbers

A person paying off their bills.

According to a recent report from CoreLogic, the average homeowner gained a staggering $65,000 in equity over the last 5 years. Not only that, but another study from the Urban Institute found that 37.1% of all homes in the country are totally mortgage-free. Of the remaining 63% of homes, about half of them have at least 50% equity—and that number is only going up.

Crunch the numbers, and you’ll find that just over 50% of all homes in the country have at least 50% equity. That means a whole lot of homeowners are continuing to pay into that “forced savings account” and are setting themselves up for major future wealth in the process.

The Importance of Equity

A house.

By building up your equity, you’re ensuring that you have a firm financial base to stand on in the future. It does, however, take time to accumulate. That’s why it’s important to take advantage of current market conditions, and begin your journey to increased equity.

Ready to Invest in Your Savings Account?

Buying a home now means building your equity sooner and ensuring a stable financial future. Now’s the time to jump in! If you’re ready to get started with the buying process, the Linda Craft & Team, REALTORS® is here to help. Take some time to browse our resources, use our specialized search tool to narrow down your options, and give us a call to get started.

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