The Benefits of Homeownership for First-time Homebuyers
June is National Homeownership Months, so our contributors have provided content that highlights the various benefits of homeownership and advice for using the content to connect with first-time homebuyers.
Jeff Walker, CEO and Co-Founder, CredEvolv
Brian Vieaux, President & COO, FinLocker
Paul Gigliotti, COO, Axis Lending Academy
Sue Buswell, Credit and Score Consultant, #sueknowsthescore
Ally Carty, National Account Executive, ActiveComply & #get2knowgenz
Scott Schang, CEO, Find My Way Home
Catalina Kaiyoorawongs, CEO & Co-Founder, LoanSense
Jacqui Cosgrove, Founder, Kore4Capital
Dan Smokoska, Founder of Loangendary Marketing
Doug Wilber, CEO of Denim Social
Tino Diaz, Managing Director, America’s Homeowner Alliance
Rob Chrane, CEO & Founder, Down Payment Resource
Jeremy Potter, Founder of Nesting
Brian Vieaux, President & COO, FinLocker
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Jeff Walker, CEO and Co-Founder, CredEvolv
June is National Homeownership Month and a great time for mortgage loan officers and realtors to refresh themselves on the benefits of homeownership for renters and future homebuyers. Let’s focus on three of the most impactful benefits.
First, building equity is one of the primary benefits of homeownership. As the value of a property increases, so does its equity.
According to the National Association of Realtors, the median home sale price in 2022 was $386,300, up 10.2% from 2021 and the highest on record.
Homeowners who bought a home 10 years ago have likely seen a significant increase in their equity. This equity can then be used to fund home improvements, pay off debt, finance a child’s education, or create generational wealth.
Second, buying a home is more affordable than many consumers believe. Studies from Fannie Mae show that consumers wrongly believe they must make a 20% down payment to qualify for a conventional mortgage.
In reality, 3% down payments are common, and access to down payment assistance resources can also help make homeownership more attainable for those buyers who may not have significant savings.
Third, good credit is essential to qualify for a mortgage. Generally, a 580+ FICO score is required for an FHA mortgage, and 620+ FICO is required for a conventional mortgage. But these are minimum qualifications, and these consumers pay higher rates than consumers with 680+ FICO scores. A conventional borrower with a qualifying FICO score of 680 can reduce their interest rate by half a percentage point or more, saving them more than $60,000 in interest over the life of a 30 year mortgage.
Importantly, better credit helps mortgage affordability across the entire FICO spectrum, not just on the low end.
With a little proactive planning and help from good partners, lenders and realtors can position themselves as value-added consultants and help their consumers become better homeowners.
Brian Vieaux, President & COO, FinLocker
Loan officers and real estate professionals play a crucial role in educating and assisting first-time homebuyers in understanding the advantages of homeownership. Today, first-time homebuyers are seeking resources to better comprehend the mortgage process and the financial implications of owning a home and obtaining a mortgage. Loan officers and real estate professionals in local markets and communities can be instrumental in providing this education.
My suggestion to mortgage loan officers and real estate professionals is to prioritize efforts towards educating potential homebuyers. While immediate transactions may not result from this educational focus, becoming a trusted resource for financial literacy and education, specifically related to successful homeownership, establishes a long-term pipeline of potential clients.
Investing in the community means being a reliable source for meaningful financial education. Provide financial literacy resources, digital tools, and guidance on credit management. Help aspiring homebuyers understand the significance of good credit, offer tools to monitor and improve credit, and educate them about various mortgage programs and down payment requirements. Empower them with digital financial tools that aid in tracking spending, creating budgets, and monitoring progress towards financial goals.
It’s essential to emphasize that homeownership involves more than just a mortgage. Utility payments, real estate taxes, homeowners insurance, and general maintenance expenses are additional financial aspects that prospective homeowners must consider. Qualifying for a mortgage is one aspect, but comprehending the total cost of homeownership and aligning it with personal budgeting is equally important.
Engaging with potential homebuyers at an early stage is crucial. The earlier mortgage and real estate professionals provide education, the more trust and relationship-building can occur. By assisting them for an extended period, whether it’s six months, a year, or more, you establish a trusted relationship that increases the likelihood of securing their business when they are ready to make their first home purchase.
Paul Gigliotti, COO, Axis Lending Academy
The benefits of homeownership are enormous. The home becomes part of your roots; it holds memories created with family and friends. A home supports great self-pride and can stretch you to learn and create by updating, fixing, and enhancing your home, all while supporting financial wealth. Not only does it support and build financial wealth, but it also provides a great sense of accomplishment and stability. It’s your home to create what you want. Owning a home is more than the American Dream, it’s a road map to financial wealth with all this greatness.
There is a whole population of people in the nation that don’t know the steps needed to be taken to homeownership, nor do they understand they have the ability to own a home. Per FLEX, 47% of renters have the ability, income, and credit to own a home – 47% is a large percentage! So what is stopping these individuals from owning a home? Do they not have the desire to own a home, do they come from a family (parents, etc.) that weren’t homeowners, or is it the lack of knowledge and understanding? As professionals in the industry, there is an untapped market, so don’t be afraid to support underserved communities in understanding the value and importance of homeownership. Knowledge is Power. Let’s put the power in the hands of the consumer.
Sue Buswell, Credit and Score Consultant, #sueknowsthescore
It’s 1998 and my soon to be husband and I are renting a home.
The landlords are work friends of mine, but the husband continually lets himself into our home to adjust the air conditioning during the afternoon. The power was part of our rent, so he was controlling his costs by trespassing.
Vegas in summer with the full Western Sun on the front of the home, and we come home from work with the house at 90.
And our Australian Shepard is panting. The landlords solution? He let’s our dog out in the yard to sit under the shade.
Yes, tenant protection laws today would have stopped that, but this was our WHY to buy our first home.
Control. Privacy. Independence.
The same three things that had us leaving our family homes to enter the grown-up world of renting were now the same motivators to become first time home buyers.
At that time we never thought of owning a home as a wealth builder. It was the next necessary step to exercise control over our household.
Renting no longer made sense – money every month paying off his mortgage? Not anymore.
Once we bought our first home, and in 2 years decided to buy another, we understood the value of equity.
We learned valuable lessons on how home ownership could fuel your buying power, how to maximize your equity thru smart upgrades to sell at a profit and use those funds to buy your next home.
Our second home was bigger and more expensive, but by investing our profit from the sale, the payment was less. With the lessons from our first purchase, we doubled our investment when we sold that home just 3 years later.
Control. Privacy. Independence. And now, financial security thru home ownership.
Creating content that communicates the benefits of homeownership to Gen Z
Ally Carty, National Account Executive, ActiveComply & #get2knowgenz
Over the past four months, I’ve been conducting interviews with Gen-Z men and women who either want to buy a home or recently bought their first home. This week, I wanted to share some of the most encouraging quotes from my recent interviews with First-Time Homebuyers/Current Renters that want to buy a home.
“My favorite Part 100% is being able to do whatever I want to the space. Like paint or redecorate, however and whenever! (The personal touch) It makes the property actually feel like my space and homey.”
– Jensen, a 24-year-old first-time homebuyer
One way to highlight the “personal touch” that comes with homeownership is by sharing quotes (like this one) on social media and helping prospective borrowers paint out the picture of their dream home in their heads. I’d love to see more LOs do Instagram story surveys and ask their followers, “Which image is the vibe you want in your first home” – this will encourage interaction with your content and get the borrower thinking about homeownership.
“1. Financial implications- rental income, cost of living, higher reportable taxable income, my rent will never go up again, utilities are dirt cheap, future cash flow, equity appreciation, etc.
2. Being able to do whatever you want and no one can tell you no.”
– Daniel, a 25-year-old first-time homebuyer
I’d suggest loan officers create content about the financial wins that borrowers experience with homeownership and highlight the criteria to qualify for a home.
“I’m spending almost $30,000 on rent a year. And when I see that…it makes me sick.”
-Charlee, a 24-year-old prospective first-time homebuyer
A great way to showcase the financial benefit would be using a tool/solution that could generate a “rent vs. own” financial comparison and share it with the borrower directly or post examples on social media.
How to use ChatGPT to build a pipeline of future homebuyers today
Scott Schang, CEO, Find My Way Home
Markets do what markets do, and there’s not a single thing we can do to change it. Spending even one minute worrying about things we cannot control is robbing you of the opportunity to build your pipeline today with the borrowers of tomorrow.
If deals aren’t rolling in, we can focus on building our prospecting pipeline with consumers who are just as frustrated in this market as we are. Today, we will talk about building a database of first-time homebuyers.
Step 1: Log into ChatGPT – chat.openai.com – You can use the free version or pay $20 a month for GPT-4, which I recommend if you want to use AI to assist you in content creation.
Step 2: Copy and paste this prompt into ChatGPT:
What are the top 10 things a first-time homebuyer should know about preparing to become a homeowner? Please provide actionable steps that can be taken today to prepare for the opportunity to buy in the future.
Step 3: Create video scripts for 5-minute videos for each of these 10 points. Copy and paste this prompt into ChatGPT:
Write me a 5-minute video script for each of these points. The audience is first-time homebuyers in [YOUR STATE]. This will be a series of videos posted on social media and YouTube. Tone – enthusiastic and hopeful. Write at a 9th-grade reading level. Please follow short-form video best practices and include a catchy title, compelling hook, and a call to action subscribe to get past and future tips about preparing to buy your first home.
Note: ChatGPT will stop after about 3 of these scripts. To continue, simply type “please continue” into the chat box, which will pick up where it left off.
Always remember, when using AI to assist with creating copy, you need to review it for accuracy and ensure it sounds like you. AI will do most of the heavy lifting, but you must still make it “your own.”
To get more tips on using AI in your marketing, you can visit my YouTube channel at https://Youtube.com/@SecondOpinionLoanOfficer
Help renters build their credit score by reporting rent to the credit bureaus
Steve Ely, COO, eCredable
How credit scores are built is a mystery to many people. But they’re just mathematical formulas that use data to create a score that a person or a computer can easily understand to make a credit related decision.
Where does the data come from to calculate your credit score? Your credit reports at the three national credit bureaus – Equifax, Experian and TransUnion are the most common sources you should be concerned about. Let’s look at the basic types of accounts that are included on your credit reports, and how adding your monthly rental payment might help you build a better credit score.
In order of the most valuable to the least valuable:
- Mortgage
- Auto Loan
- Personal Loan
- Credit Card
- Rent and Utility Accounts
The first two types of accounts are considered “secured”, which means they are secured by collateral that the lender can take if you don’t pay the loan back. The last three types of accounts are considered “unsecured”. If you buy a bunch of stuff on your credit card and you don’t pay the credit card issuer, they’re not coming to your house to repossess the merchandise you bought. They’re going to send your account to collections which will severely harm your credit score.
Rent and utility accounts have the exact same impact on your credit score. Rent will almost always be more valuable simply because the payment is more significant. (If you’re paying $2,000 a month for a cell phone, you need to shop around!).
Given that your rent payment has the least amount of impact on your credit score, is it worth reporting? If you have a “thin credit file” (which means you don’t have many accounts on your credit report), it can definitely be worth reporting. If you have a thick file (lots of accounts including a mortgage and car loan), the rental account may not impact your score very much.
Having said that, there are a lot of people who have good credit scores that don’t have a mortgage or car loan. Adding your rental payment history to your credit reports will demonstrate to a potential mortgage underwriter that you are a responsible renter who always pays a significant amount on time every month.
Homeownership provides more than financial benefits
Catalina Kaiyoorawongs, CEO & Co-Founder, LoanSense
Homeownership has emotional, mental, and psychological benefits in addition to financial benefits. Eighty-two percent of the average American’s retirement comes from the value of their home, so the financial benefits are strong and clear. Other financial benefits include:
- Lower cost of car insurance and other insurance products
- Vehicle to borrow from in the future when you are in a financial crunch
- Stable housing payments over time relative to rental rate increases
Financial stability leads to emotional financial stability; having control of your space is really important. From a psychological and emotional appeal, homeownership provides stability for families. That stability yields better educational outcomes for children who grow up in more stable environments. Not having to worry about non-renewal of a lease or the property transitioning ownership, which is also out of a renter’s control. Of course, there are benefits to not having your landlord tell you, “oh, rent this year is 30% higher than last year”. Mortgage payments tend to be much more stable over time, providing more stability.
The safety of the neighborhood with more homeowners comes as another huge benefit. Where more people own homes, more investment goes into the community, impacting safety and how the neighborhood looks and feels.
More homeownership, means more investment of public resources into policing, schooling and other resources that makes raising a healthy and financially stable family easier.
Increase your Value by Investing in Homeownership Education
Jacqui Cosgrove, Founder, Kore4Capital
June is a time to prepare, gather and celebrate the benefits that homeownership brings. For each home sold, each zip code impacted, and each consumer served our industry garners an economic, environmental and social impact indicator.
To help you add to the chorus of celebration during Homeownership Month, I’ve provided framework, policy and data partnerships that showcase the long-reaching value of your investment in Homeownership Education:
- Social ROI– A framework pioneered by the Minnesota Homeownership Center, homeownership education programs resulted in $2.98 total return to stakeholders for every $1 invested. See their innovative framework, here: Blog and Data Sheet.
- Household Wealth ROI: For middle-income consumers in America, Home Equity is the largest single financial asset representing 50-70% of household wealth. The Brookings Institute suggests early-education and automatic savings-plan partnerships as a way to shift incentives to better serve middle-income and underserved borrowers. See their work, here.
- Economic Multiplier ROI: Each home sold in America has an impact on the local and national economy. Check your state and local Economic Impact for each application approved and each home sold, here.
My favorite partnership preparation leading to JUNE is to research the homeownership event and education calendars. Be sure to check out your local, national and online education partnership opportunities and publications. Set a goal this month and all through the year, to participate and contribute your voice to how we can keep moving homeownership forward.
10 Campaign Ideas to Get the Conversation Started with First-time Homebuyers
Dan Smokoska, Founder of Loangendary Marketing
I’ve been in the mortgage marketing game for over 10 years now. One thing I’ve learned… people won’t read your content if you don’t give them a reason to.
Here are 10 campaign ideas to get the conversation started with first-time home buyers:
21 Questions – Homebuying Edition (blog or social series):
Offer up 21 of the most common questions borrowers may have before, during and after the home buying process. This will give you a week’s worth of strong content that will answer many of the most important questions home buyers may have.
What to Expect When You’re Expecting…to Buy: Highlight what borrowers can expect from the mortgage process, what they can expect working with an LO, what they can expect to see in a Closing Disclosure (CD), at the closing table, etc.
Smart Home Buying: Technology is taking over the process — from looking at homes to reviewing the CD to signing docs on smartphones/tablets — so it’s important to highlight the tools that make the entire process convenient.
Home Schooled: A series that’s dedicated to educating first-time home buyers. The title of an article could be “Home Schooled: The 20% Down Myth” — then you would break it down in an informative way for the reader to understand.
The First Home Stretch: The campaign could showcase how LOs help borrowers get across the finish line and into their new home. Use racing language to make the content more relatable and enjoyable.
Your Round Trip to Homeownership: Explain how you’re here to chart the path to homeownership for first-time home buyers. Use language like navigate, directions, steer, highway, etc., and detail how the process works in a way borrowers can understand.
Opportunity is Knocking. Own it.: Highlight all of the reasons why now is a great opportunity to buy.
First Home Feels: Capture the joy and excitement of first-time homebuyers. The focus could be on the many loan options available to help buyers secure their first home.
From Renter to Owner: Detail the transition from renting to owning, emphasizing the benefits and the sense of accomplishment that comes with homeownership.
Mortgage Myths Busted: A series that debunks common myths about the home buying process.
Insider Tips: A compilation of expert tips and advice from real estate agents and loan officers focusing on insider information that every first-time buyer should know.
(Bonus) Home Sweet Loan: This campaign could simplify the loan process, making it less intimidating for first-time homebuyers. The focus could be on the many loan options available to help buyers secure their first home.
The first thing first-time home buyers need is information. They’ll feel more confident jumping to homeownership when they’re more knowledgeable about the mortgage process.
Use these campaign ideas and make them your own. Have fun with them.
It could be a great way to build relationships and trust with potential buyers.
How to Use Social Selling to Succeed in a Competitive Market
Doug Wilber, CEO of Denim Social
It’s not easy out there right now. As you consider your marketing strategy, don’t underestimate the potential in social media. Investing in relationships matters more than ever. And today, that means loan officers need to be proactive and stay in touch via social media.
Considering 77% of borrowers move forward with the first lender they speak to when they’re looking for a loan, showing up in a prospect or existing clients’ social media feed can not only build trust, it can help you close more deals.
Remember these tips for social success:
Be an empathetic person, not a brand
Homebuying is inevitably emotional. This is why it’s so important that loan officers show up as humans on social media, not just logos. It’s about more than having a social media profile. It’s not enough to share brand content, loan officers need to post personalized content. In other words: be a real human on social.
Educate applicants
Use social media content as an opportunity to educate applicants about homeownership. Social selling can help establish loan officers as thought leaders. Remember to use plain, conversational language with the aim of educate followers.
Consistently be part of the conversation
Consistency has always been key for social media success. Algorithms favor those who post often and with consistency. That doesn’t mean you have to post every day or try to time the algorithms, but does mean you should stay active. It’s not a set it and forget it kind of thing.
Don’t be afraid to try something new
This season may be the perfect time for loan officers to adopt a new social media network, or try out new post formats. If you’re not seeing the desired results, try mixing it up.
Check out Denim Social’s newest social media guide for real estate pros.
Article adapted from MBA Newslink.
Homeownership Provides More Than Financial Benefits
Tino Diaz, Managing Director, America’s Homeowner Alliance
According to a 2019 survey by the Federal Reserve, homeowners have a net worth that is 40 times greater than that of renters. This significant difference underscores what many like to see as the true value of homeownership. However, the key factors contributing to this gap are having a home in a safe neighborhood, improved health outcomes, and the ability to invest in goods and services.
In major cities across America, where most people reside, mayors consistently point to areas with a high concentration of homeowners as the safest, healthiest, and offering the greatest access to goods and services. This highlights the importance of these factors in enhancing one’s overall quality of life.
While many view homeownership as a means to build wealth, it becomes meaningless if personal safety is compromised or if health concerns persist. Additionally, the value of net worth diminishes without the ability to enjoy and invest in desired products and services to enjoy and improve life.
When individuals purchase a home and finance it over time, alongside the appreciation of its value, they gradually build a nest egg. This financial asset can be utilized to enhance one’s lifestyle in retirement and acquire desired services and goods.
But the true wealth of America lies not just in financial prosperity but in the relative safety, health, and freedom to enjoy a diverse range of available goods and services. This freedom to pursue one’s preferences and improve life is the real value of homeownership.
Resources to Make Homeownership Attainable for First-time Homebuyers
Rob Chrane, CEO & Founder, Down Payment Resource
Homeownership remains the main engine for wealth building. According to a recent study by the St. Louis Federal Reserve, the median net worth of U.S. homeowners is $255,000, over 40x higher than the median net worth of renters. However, rising interest rates, home price appreciation and persistently low housing inventory have driven down housing affordability by double digits across the United States over the last year. The good news is there are opportunities available that can make homeownership attainable for more buyers. We’re receiving well over 475,000 queries about down payment assistance (DPA) every day, and that number continues to climb amid declining housing affordability.
Of the over 2,300 homebuyer assistance programs nationwide, 75% offer some form of down payment help, with 86% of these DPA programs offering a deferred repayment option and over half are completely forgivable. You may also be surprised to learn nearly 40% of all available homebuyer assistance programs do not have a first-time homebuyer requirement, allowing repeat homebuyers to get in on the action as well.
Research shows homebuyer assistance programs are the most promising pathway to homeownership for a sizable share of the homebuyer population. However, there are also targeted programs designed to assist specific groups, including first-generation homebuyers, minorities, indigenous people, non-Whites, veterans, community service employees, and more.
Almost 30% of programs offer assistance for multifamily properties, which presents unique opportunities for homebuyers. Think about the wealth building new homebuyers could enjoy by living in one unit and renting the others. Plus, the income anticipated from renting the other units can be used to qualify for their mortgage.
As the housing market continues its slow recovery in 2023, mortgage and real estate professionals should educate themselves and their clients about homebuyer assistance programs. By illustrating the role these programs can play in each prospective homebuyers’ wealth-building journey, housing industry players can grow their business while also expanding housing accessibility for the traditionally underserved.
Homeownership is a story
Jeremy Potter, Founder of Nesting
“Homeownership is the best financial decision of your life.” Whether it is those exact words or something almost identical, the common understanding of the American Dream is financial. I don’t think that was always the case – white picket fences and whatnot – but until recently, it felt like that was at least the belief for the last few decades. Best financial decision of your life. It is no longer true. Selling homeownership as purely a financial decision is missing the bulk of the benefits of homeownership.
Certainly, it is undeniable that homeownership is the best forced savings account. Solving for housing (i.e., a roof overhead) and, ideally, the home value returned (i.e., equity) and maybe some appreciation at the end of the 30 years. The best financial decision of your life? May or may not be true. Sure depends on a lot of variables. In fact, there are some influencers out there making the argument it’s a bad financial investment.
There are some commitments that remain true regardless of the variables.
The time commitment to a home is enormous. Property maintenance is real and expensive. The peace of mind is documented. The stability is real.
The decision, it turns out, is a lot financial, but it is entirely emotional. It is a hard thing to say, especially since so many families, especially in communities of color, have been left out of homeownership over the last 40 years. Telling someone without access to homeownership that it’s more emotional than financial might seem like trying to avoid the tough conversation about equity in society. I see it as leaning into the tough conversation. It sucks that potential homeowners need to have more commitment – both emotional and financial – than politicians. Comprehensive, fair housing policy is complex, no doubt, but the context is only getting more difficult for policymakers and renters alike.
That’s why homeownership is fundamentally about commitment at all levels. The reality is, though, the commitment (over a 30-year mortgage) is to a place, a community. The homeowner’s time commitment is not measured as a standalone metric. Imagine what it would be if it was factored into the financial measure. The joke among first-time home buyers is the first time “that thing” breaks, and you realize there is no one to call. The problem is yours. That thing is only the beginning. A house is a hobby. A house is a part-time job. A house is also home. Home is more than the roof overhead. It’s the street. It’s the community.
Place is a commitment.
Commitment to a place is both emotional and financial. The benefits of homeownership include the economic impact on the community. Homeowners spend money. That’s the irony of the best financial decision of your life: it’s pretty costly. Generational wealth is possible, no doubt. Selling generational wealth in 2023 (and beyond) is not as persuasive as selling the commitment to a place, to a feeling. The joke has been that millennials want to “change the world” in what we do. The best way for us to change the world is to contribute to our communities. Commitment to the community through homeownership delays the question of whether the house will appreciate 20 or 30 years from now. Commitment to a home means appreciation for the block, for the neighborhood, for the city.
That might seem like a more complicated sales pitch, but the emotional story is always stronger. We know that. The key here is tapping into the emotional benefits of homeownership that are changing. The idea that homeownership is more than the return on the house is deeply understood but rarely discussed (or rarely discussed well). The traditional ways of underwriting a house also crept into our understanding of the benefits of homeownership. One borrower’s income documents at a time, one mortgage at a time, one house often viewed in a vacuum. Everything. One. At. A. Time. We sold the benefit of homeownership one way for a long time.
The reality is homeownership, like the house, does not exist in a vacuum. We talk about helping families achieve the American Dream, which is made possible when the entire community is happy, healthy, and stable. Communities are not made of one house. The financial story is one about expense and risk. The emotional story is about people. The one about investing in families, in local businesses, and creating a story to tell each other. The funny part about the benefit of these types of stories is they appear to be less serious than financial facts and data, but they are much more compelling. To say, “the benefit of homeownership is the way I feel about it” is vague, hard to measure, and hard to explain to someone else. But the way I feel about something is a much deeper connection. The benefit of homeownership is fundamentally a story about who we are and who we want to be. Together.
Promote the Financial and Non-Financial Benefits of Homeownership on Social Media
Brian Vieaux, President & COO, FinLocker
One major financial benefit of homeownership is that when you pay rent, you are essentially paying a 100% interest rate because every dollar goes directly to the landlord. However, when you own a home and finance it with a mortgage, you pay a significantly lower interest rate, such as 6%, which is effectively 94% lower than a rental payment. By owning a home, you are creating an asset that you now own and are paying into as a type of savings account that can appreciate in value.
The second compounding financial benefit of homeownership is the opportunity to build equity which contribute to your personal wealth. When you buy a home and make mortgage payments, a portion of each payment goes towards building equity in the home. This can be seen as a form of forced savings, as you are investing in the equity of your property. Initially, a larger portion of your payment goes towards interest, but a portion is also used to pay down the principal balance of the mortgage. The difference between the value of the property and the outstanding balance on the mortgage is your equity, which is a net asset that adds to your personal wealth.
Homeownership also offers the potential for appreciation in the value of the property over time. While the extent of this appreciation varies by market and year, home values generally appreciate over the long term. This appreciation compounds the growth of your equity, further contributing to your wealth accumulation. Additionally, as a homeowner, you have the option to tap into your accumulated equity through refinancing or home equity loans, which can provide cash flow to reinvest in the property for home improvements or some other type of personal investment, such as attending college, which could lead to a higher paying job – another way to accumulate wealth. These financial opportunities are not available to renters and add to the advantages of homeownership.
Homeownership also offers several non-financial advantages that first-time homebuyers often overlook. One of these benefits is the sense of pride that comes with owning a home. When you own a home, you are more likely to feel motivated to make improvements, maintain the property, and create a pleasant environment, such as planting flowers and having well-maintained landscaping. This pride in your home can contribute to a greater sense of personal fulfillment.
Another overlooked benefit is the stability that comes with homeownership. For first-time homebuyers, owning a home is often seen as a significant step towards establishing a stable and secure future, especially when starting a family. Owning a home provides a sense of permanence and can offer a strong foundation for building a long-term life plan.
Homeownership also brings about an emotional benefit of being rooted in a community. When you own a home, you are more likely to be actively involved in your community, expanding your connections and fostering a sense of belonging. Over my personal experience of being a homeowner for over 30 years and owning three homes during that time, I have found that homeowners tend to engage with their neighbors and actively participate in their neighborhood communities, creating meaningful relationships and a sense of community spirit.