Home is where your heart – and your wealth – is. The benefits of homeownership are vast; there are numerous financial aspects, but the wealth creation is the most significant. Forming household wealth begins with homeownership. According to Freddie Mac, “Homeownership has cemented its role as a part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity… Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.” For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the largest positive factors of wealth creation.
Over the past twelve months, increased home equity has revealed the surge of wealth through:
- Mortgage-free homes account for roughly 38 percent of the total amount
- The average equity gain of mortgaged homes in the past year was $26,300
- More than $200,000 is the average equity of currently mortgaged homes
- Total homeowner equity accounted for a 16.9 percent increase
- Nearly $1.5 trillion represented homeowner equity
Increasing equity allows homeowners to better manage the challenges arising from the global pandemic. Frank Nothaft, Chief Economist for CoreLogic, said, “This equity growth has enabled many families to finance home remodeling, such as adding an office or study, further contributing to last year’s record level in home improvement spending.”
The growing bank of personal wealth from homeownership has been noticed by many. More people are affected by increasing wealth benefits beyond the scope of just homeowners.
The Rosen Consulting Group released a report outlining the benefits of homeownership. Inside, they explained what an increase in net worth (“the wealth effect”) means to the economy. “In economic literature, the wealth effect is a term used to describe the fact that individuals have a tendency to increase their spending habits when their actual or perceived wealth increases. For homeowners, the latent savings achieved by building equity in their home and the growth in home values over time both contribute to increased net worth. Through the wealth effect, this in-turn translates to households having a greater ability and willingness to spend money across a wide range of other types of goods and services that spur business activity and provide a positive multiplier effect that creates jobs and income throughout the economy,” the report stated.
To purchase a home of your own and create your wealth, contact the EB Mortgage experts today!
EB Mortgage is a locally-owned mortgage company with experts in new home purchase, refinancing, and commercial loans. Our wholesale rates can’t be beaten. We offer more products, more options, and more solutions. Our “3C” Process is simple: complete our pre-approval request, consider options based on your requirements, and choose the offer that suits your needs best. Call us at 866-246-0516 or e-mail firstname.lastname@example.org today.
Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.