“For most families, their home is their largest financial asset.”
While growing up, we were taught by our parents and grandparents that owning a home is a financially savvy move. They explained how a mortgage is like a “forced savings plan.” When you pay rent, that money is lost forever. When you make a mortgage payment, much of that money accumulates as equity in the home. So, what exactly is equity?
The equity in your home is the amount of money you can sell it for minus what you still owe on the mortgage. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity.
A recent study by CoreLogic explained that homeowners gained substantial equity over the last twelve months, and are essentially sitting on large sums of cash in their homes. In the study, Frank Nothaft, Chief Economist for CoreLogic explained:
“The CoreLogic Home Price Index recorded a quickening of home price gains during the fourth quarter of 2019, helping to boost home equity wealth. The average family with a mortgage had a $7,300 gain in home equity during the past year, and a total of $177,000 in home equity wealth.”
For most families, their home is their largest financial asset. This increase in equity drives the net worth, or family wealth, of the homeowner. Renters are not earning that benefit. Instead, they’re building the net worth of their landlord.
Bottom Line
Home price growth will moderate during the pandemic. But once a cure is available, most experts agree that home values will again begin to appreciate at levels similar to what we’ve seen over the last several years. In the long run, our family elders will be proven correct: owning a home is a savvy financial move.
To view original article, visit Keeping Current Matters.
Why It May Be Time To Add Newly Built Homes to Your Search
If you’re willing to work with a trusted agent to consider a newly built home, you may have even more options than you realize.
Home Equity: A Source of Strength for Homeowners Today
If you’re facing difficulties yourself, it can help to understand your options. A real estate professional can help you!
Open House! 67 Hawkins Avenue, Center Moriches
Sunday, November 13, 2022
12PM – 2PM
The Majority of Americans Still View Homeownership as the American Dream
Buying a home is a powerful decision, and it remains a key part of the American Dream.
Key Factors Affecting Home Affordability Today
When you think about affordability, remember the full picture includes mortgage rates, home prices and wages.
Sell Your House Before the Holidays
A trusted real estate advisor can help you determine how much home equity you have and how you can use it to achieve your goal of making a move.