There’s a reason homeownership has long been a critical pillar of the American Dream—and it’s not just about the white picket fence. Many economists will tell you that buying a home is one of the savviest financial investments you can make. So does that mean wealth is the #1 benefit of homeownership?
Financial Wealth: The #1 Benefit of Homeownership
If you’ve done any reading about financial planning, investing, or buying a home, you might have heard that a mortgage is like a “forced savings plan” or that renting is like “throwing money away”. But if you’re still paying money every month, what’s the difference?
Homeownerhip builds equity
The biggest difference between paying rent and paying a mortgage is equity. Equity is the amount of money you could sell your home for minus the amount you still owe on your loan. Every month, the money you pay for your mortgage goes towards reducing the amount you owe on your loan. So in short, the more money you pay, the more equity you’ll have.
Equity builds more quickly than many realize
That monthly mortgage payment might seem like a drop in the bucket compared to the total amount you owe on your loan, but equity builds more quickly than you might think. In fact, a recent study by CoreLogic showed that, thanks to rising home prices, the average mortgage holder gained a total of $7,300 in equity in the past 12 months, for a total equity of $177,000.
The average renter, on the other hand, has $0 equity—but has still spent money every month paying for their housing.
Will the pandemic affect your equity?
Thanks to recent closures, restrictions, and soaring unemployment, many fear that the housing market will see a decline in the coming months. However, as many of these closures are temporary, most experts agree that the housing market will quickly rebound as life begins to return to normal.
Triangle Homeownership Has Its Own Perks
The Triangle real estate market has been particularly hot for the past few years, thanks to the area’s strong job market and rapidly growing population. For homeowners in the Triangle, this means equity that is constantly growing, despite economic downturn following the recent health crisis.
Eager to Learn More About Buying a Home in the Triangle?
If you’ve been thinking about buying a home in the Triangle, then now’s the time to make a move—while interest rates and competition are low. Concerned with how the ongoing health crisis might have affected your homeownership goals? Contact Linda Craft & Team today at 919-235-0007 and let us put our 350+ years of combined experience to work for you.