Measuring the Benefits of Homeownership
A number of factors motivate people to buy their own homes. Some people are driven by the pride of ownership, whereas others purchase because they are ready to break up with their landlords. Even though the reasons vary, a Housing Pulse Survey released by the National Association of Realtors revealed two specific reasons why Americans prefer owning over renting.
1. Build Equity and Wealth
The dream of homeownership remains alive, and for many people, ownership is attractive because of the opportunity to build equity and wealth. Equity is the difference between a home’s value and the amount owed to a mortgage lender. This difference belongs to you. So if an appraisal establishes a home value of $200,000 and you owe the mortgage lender $110,000, you have $90,000 worth of equity, which is a huge contributor to your net worth.
"We traditionally have been huge supporters of homeownership. We see it as a way to provide stability for households but also as an asset-building strategy. If you continue to be a renter, locked out of the homeownership arena, increasingly those things are further and further out of reach. They're joined at the hip. They perpetuate each other,” said John Taylor, CEO of the National Community Reinvestment Coalition,
2. Family Stability
In spite of the fact that you can raise and provide a comfortable home for your family just about anywhere—even as a renter, stability and homeownership often go hand-in-hand. Homeownership gives you better control over your personal finances and living situation.
Rent is unstable and can increase year after year. A 2015 Rent.com survey of property managers found “88% of property managers raised their rent in the previous 12 months, and there didn’t appear to be any signs of stopping.” Additionally, “68% of property managers predicted that rental rates would continue to rise in the next year by 8%.”
Since landlords can cancel rental leases, raise rental rates and make decisions about their properties, it can feel as if you're a stranger in your own home. As a homeowner, however, you know what to expect. A fixed-rate mortgage keeps monthly payments predictable, offering financial security and stability.
You can’t put a price tag on the ability to create wealth and enjoy stability Granted, ownership isn’t for everyone. But if you are ready to take the plunge and apply for a home loan, we can help. Discuss your real estate needs with a realtor, and then contact us to learn your mortgage financing options.