Home value increases are adding to a homeowner’s wealth
As your real estate resource, Cervone, Deegan + Associates can tell you that one of the biggest benefits and draws to purchasing a home is the path to building financial wealth. As everybody needs a place to live, the purchase of a home as opposed to renting one will always be optimal as it can yield a return on your investment sometimes without you even being a aware of it.
The Urban Institute puts it best by stating, “The principal portion that reduces the loan balance builds the homeowner’s equity. In doing so, the principal payments behave like an automatic savings account. The principal payment is not money going out; it is money staying in.”
Your home equity isn’t just built by the payments towards your home loan’s principal that you make every month, it is also significantly powered by home price appreciation. In fact, a recent report issued by CoreLogic stated that the average equity gain of mortgaged homes in the past year was 6% at an average of $33,000.
In addition to the benefit of building wealth your equity can offer you some great flexibility. When the time comes to sell your home you will capitalize on this increase which may open more doors, literally, for both when and where you wish to live next. Your “home grown” equity along with historically low mortgage rates could make a move quite attractive these days.
CoreLogic’s President and CEO states, “Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”
Home equity has always been a popular wealth building tool and for many is a significant part of their retirement plan. Home appreciation will range per region but is up significantly across the board. Contact us today to better understand your position.