Helping Consumers Achieve Financial Freedom Through Homeownership

As we celebrated our nation’s independence last weekend, I couldn’t help but think of the financial freedom that homeownership provides. For many low-to-moderate income first-time homebuyers, the current growth of home prices is pushing that dream further out of reach. However, it is still more affordable to purchase a home than to rent a comparable home in two-thirds of the U.S. housing markets, according to ATTOM Data Solutions for its 2021 Rental Affordability Report.

I’m sure you’ve seen the stat from the Survey of Consumer Finances that homeowners have more than 40 times the wealth of renters. While the current surge in home prices has significantly increased equity in recent years, significant wealth can be attained simply by being a homeowner rather than a renter. Even with 0% home appreciation, the automatic savings function triggered by paying down mortgage principal, which is an asset, rather than paying rent, which is an expense, remains advantageous.

This scenario provided by the Urban Institute illustrates the calculation: Assuming the home holds its value and does not depreciate, the buyer of a $205,000 home will have accumulated $21,121 in equity by year 5. By year 10, that nest egg more than doubles to $46,275. It more than doubles again by year 20 to $111,908 and reaches $205,000 in year 30. That’s $205,000 that would be lost when renting!

However, homes usually appreciate in value. The same homeowner who accumulated $205,000 in equity from paying down their mortgage principal would have accumulated $483,000 in total home wealth with a home appreciation rate of just 3% over their 30-year mortgage term.

Let’s give more people the opportunity to celebrate their financial freedom. Schedule A Demo to see how the enhanced features and intuitive design will help you attract more first-time homebuyers to your business and guide them towards mortgage readiness.

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