Have you been asking yourself “How can homeownership help me build wealth?” If there’s one thing that history has taught us, it’s that owning a home is one of the greatest ways to build wealth over time. It provides you with the financial stability you need to create your dream life and achieve your goals. In fact, a study conducted by Federal Reserve has revealed that people who own a home in the U.S. have 40 times more median net worth than renters. Let’s see how home ownership can help secure financial freedom faster than most other investments. At Mississippi Landsource we want all of our southwest MS homeowners in Pike, Walthall, Amite, Wilkinson, Lincoln, and other southern counties to get the full benefit of homeownership.
What Exactly Is Wealth?
In layman’s terms, wealth is the measurement of all the assets owned by a person, company, country, or community. So, your total wealth can be determined by taking the total value of all your financial and physical assets including your homes, bank accounts, cars, retirement accounts, etc, and then subtracting all debts from it.
It is safe to say that wealth can be created by anyone and not just the super-rich. All you need to have are more assets than your liabilities (debts). The lower your debt-to-asset ratio, the more financially secure you will become. When it comes to long-term financial goals, you should be able to accumulate enough wealth to easily meet the requirements of your education, family, travel, and other needs.
Building Wealth through Home Ownership
Homeownership comes with immense benefits that most people are oblivious about. Wealth creation is of these little advantages of owning a home. Let’s take a look at how a home can help you create more wealth.
1. Stable Payments
Home and apartment rents are rising constantly. This can bring a lot of unpredictability for people who don’t own a home. Generally, mortgage payments do not change much during the term of your loan unless there is a change in insurance costs or tax rates. So, the predictability that comes with homeownership can help you precisely determine how much can be invested in wealth creation avenues.
2. Increase in Home Value (Home Appreciation)
While it’s true that the housing and rental market is quite unpredictable, if you take into account the long-term results, they can deliver you a great return on investment. On average, it takes 10-20 years for most American homes to double in value. In fact, the value increases even faster in highly sought-after locations.
3. Tax Benefits
Itemized deductions can help you reduce your property tax and mortgage interest to a certain extent. You may also be able to lower your PMI (Private Mortgage Insurance). Furthermore, if you invest in energy-efficient improvements in your home or you are a first-time home buyer, you might be eligible for tax credits.
4. Combat Inflation
In simple terms, inflation can occur when prices rise due to higher manufacturing costs but wages are not keeping up. Inflation can increase the price of everything, and housing is not an exception. If you’ve purchased a home with a lock-in mortgage loan, you can have peace of mind knowing that increasing housing costs will not affect you. Secondly, a house is an appreciating asset, so its value will increase over time.
5. Build Equity in Your Home
Equity is calculated by subtracting what you owe on your mortgage from what your home is worth currently. In simpler terms, it is your ownership stake in your house. As mentioned before, the value of a house tends to go up over time (appreciation). This means that as you’re paying down your mortgage, your home equity is going up. This will deliver a huge return on investment when you sell your home.
If you consider the advantages above, you may realize the importance of financial planning and the advantages of paying yourself first. Building wealth can help secure your future and owning a home provides you with a solid structure to achieve precisely that. Reach out to Mississippi Landsource at 601-996-4657 to learn more!