Increase Your Net Worth… As a Homeowner
Did you know you can increase your net worth by being homeowner?
If you’re renting, but have been thinking about buying, you might want to explore your options and consider taking the leap into homeownership.
Consider the True Cost of Renting
Unless you’re able to live somewhere rent free, the truth is you’re paying a mortgage either way. The difference lies in who benefits from that monthly payment. Ultimately your landlord benefits from the money you’re paying each month — whether they own that property or are paying down a mortgage, you are increasing their net worth. On the other hand, if you’re paying a mortgage toward your own property, it’s your net worth that will increase. Our friends at Keeping Matters Current refer to a mortgage payment as a ‘forced savings’, which we think is a brilliant way to help us look at the big picture of homeownership. Your monthly payment is going toward the equity of your home, which will inevitably increase over time and becomes a safety net you can rely on later in life.
Prediction: A Homeowner’s Net Worth Will Be 45x Higher Than a Renter’s
Every three years a survey is conducted by the Federal Reserve called the Survey of Consumer Finances. The data is gathered across all economic and social groups. In the latest 2010-2013 survey, it was reported that a homeowner’s net worth was 36 times greater than a renter. To give you a frame of reference, here are some numbers reported in that survey: $194,500 vs. $5,400. That’s a pretty significant difference. Jumping forward to the prediction for 2016, in a recent article in Forbes, the National Association of Realtors’ (NAR) Chief Economist, Lawrence Yun predicts that the homeowner vs. renter net worth divergence will be even further divided, up to 45 times greater than the most recent survey.
Below is a graph from Keeping Matters Current that offers some pretty telling data:
Many believe they’re either not in a position to buy, or have some issues committing to a mortgage. We understand this, but we urge you to reconsider. You may simply need to seek out the advice of a qualified real estate agent or mortgage specialist who can give you some honest, real advice. We see the ups and downs of the industry all the time, and advising our clients on how to navigate within realm of real estate is our top priority. If you’re on the fence, please find a reputable agent who can offer some valuable advisement. Increasing your net worth to secure your future is absolutely worth exploring.
For more of our perspective on this subject read our recent blog, “Millennials: Don’t Let Mid-range Fico Scores Prevent You From Buying a Home.”
Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Working with The Daniels Group will give you with the advantage of having local experts to ensure that you have a successful real estate transaction. From buying, selling and investing to financing options and more, we have the expertise and resources to help you achieve your goals. Call us today at (858) 361-5561 or email us anytime.