How Homeownership Boosts Family Wealth
America is heralded as a land of promise and potential. It is a land where anyone can become "someone," as long as they're willing to put in the dedicated time, energy, and effort required to do so.
Owning your own home has long been considered an integral part of the American Dream, and for good reason. Studies repeatedly demonstrate that homeownership is a powerful way to build household wealth. This week, Arrowhead Title, Inc. is here to take a closer look at the evidence and discuss how owning a house at the Lake of the Ozarks may help you boost your family's wealth.
Increasing Rent Prices
One of the most immediate ways that homeownership helps boost familial wealth is by enabling families to lock in mortgage rates that will remain consistent throughout the duration of the loan (often 15, 20, or 30 years). Conversely, lease agreements typically only last for 1-2 years, at which point a new contract will need to be signed if the tenants wish to remain on the property. Renewing the lease gives the landlords an opportunity to increase the rent price, and they often jump at this opportunity.
In addition to carving into a family's existing wealth, steadily rising rent prices can make it difficult to save for a future down payment on a home. See our previous blog post to learn more about the "renter's trap."
Forced Savings
Homeownership is a type of "forced savings." When you make your mortgage payment every month, the total balance is divided between three different entities: escrow for taxes and insurance, mortgage interest, and the principal balance on the loan. As you pay down the principal balance on your loan, you build equity in your home. "Equity" refers to the dollar amount of your home that you own outright. (This number can be figured by subtracting your outstanding loan amount from the home's total value.) Both rent and mortgage payments are non-negotiable, but unlike rent, a portion of your mortgage payment will come back to you if/when you decide to sell. Equity can also be used to take out a second mortgage to cover the costs of college, home improvements, or other big expenses.
Appreciating Home Values
Inflation is a fact of life in America. As businesses continuously strive to increase their bottom lines, cost of living inevitably rises. Fortunately, expenses aren't the only things that increase - the value of physical property, such as homes, often rises as well. If you maintain your home well for several years, chances are good that you will eventually be able to sell it for more than you originally paid for it.
Take Advantage Of Homeownership!
It's true that buying a house often requires an initial investment that is much more substantial than would be required to rent a comparable home, but the long-term financial benefits of homeownership often greatly outweigh the upfront costs.
By buying a house at the Lake of the Ozarks today, you may be able to better position your family for financial success in the future. If you are considering buying locally, we hope you'll choose Arrowhead Title, Inc. to provide your title services at the Lake of the Ozarks. To learn more about our title company in central Missouri, visit www.ArrowheadTitle.com.
The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!
Owning your own home has long been considered an integral part of the American Dream, and for good reason. Studies repeatedly demonstrate that homeownership is a powerful way to build household wealth. This week, Arrowhead Title, Inc. is here to take a closer look at the evidence and discuss how owning a house at the Lake of the Ozarks may help you boost your family's wealth.
Increasing Rent Prices
One of the most immediate ways that homeownership helps boost familial wealth is by enabling families to lock in mortgage rates that will remain consistent throughout the duration of the loan (often 15, 20, or 30 years). Conversely, lease agreements typically only last for 1-2 years, at which point a new contract will need to be signed if the tenants wish to remain on the property. Renewing the lease gives the landlords an opportunity to increase the rent price, and they often jump at this opportunity.
In addition to carving into a family's existing wealth, steadily rising rent prices can make it difficult to save for a future down payment on a home. See our previous blog post to learn more about the "renter's trap."
Homeownership is a type of "forced savings." When you make your mortgage payment every month, the total balance is divided between three different entities: escrow for taxes and insurance, mortgage interest, and the principal balance on the loan. As you pay down the principal balance on your loan, you build equity in your home. "Equity" refers to the dollar amount of your home that you own outright. (This number can be figured by subtracting your outstanding loan amount from the home's total value.) Both rent and mortgage payments are non-negotiable, but unlike rent, a portion of your mortgage payment will come back to you if/when you decide to sell. Equity can also be used to take out a second mortgage to cover the costs of college, home improvements, or other big expenses.
Appreciating Home Values
Inflation is a fact of life in America. As businesses continuously strive to increase their bottom lines, cost of living inevitably rises. Fortunately, expenses aren't the only things that increase - the value of physical property, such as homes, often rises as well. If you maintain your home well for several years, chances are good that you will eventually be able to sell it for more than you originally paid for it.
Take Advantage Of Homeownership!
It's true that buying a house often requires an initial investment that is much more substantial than would be required to rent a comparable home, but the long-term financial benefits of homeownership often greatly outweigh the upfront costs.
By buying a house at the Lake of the Ozarks today, you may be able to better position your family for financial success in the future. If you are considering buying locally, we hope you'll choose Arrowhead Title, Inc. to provide your title services at the Lake of the Ozarks. To learn more about our title company in central Missouri, visit www.ArrowheadTitle.com.
The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!
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