How Homeownership Builds Financial Stability 2023
One of the best things you can do to build financial stability and generational wealth is to become a homeowner. Understanding how this works and what you need to do to become a homeowner will help you build the financial life you want for yourself, and for your family.
Want to learn more about how homeownership builds financial stability? Keep reading.
Home Equity Passively Builds Your Net Worth
For homeowners, the large majority of their net worth comes from their home equity. This is because your home is passively building equity even when you are not investing anything extra into it. Your monthly mortgage payments continually increase the equity you have in the home, paying down the principle. In addition, your home will slowly increase in value as the market grows.
Even though the real estate market is bound to dip at moments along the way, the overall trajectory of home values is up. As you own a home for years or decades, your net worth will grow alongside it even without remodeling or improving it to increase its value.
The Longer You Own a Home, the Less it Costs
Consider how much you were paying for rent when you first moved out, or if it hasn't been too long ask your parents what they were paying for rent when they first moved out on their own. It doesn't take long to see that housing costs predictably increase, slowly but steadily becoming more costly over time. To maintain a somewhat balanced economy, wages will also increase alongside the price of housing and other goods.
When you own a home, your housing cost is more or less locked in at the time you purchase it. This means that the monthly mortgage payment you have now will be about the same in ten years, when you can reasonably expect that rent for a comparable home will have increased significantly. In many cases your income will also have increased during that time, so that the home you own is "costing you less" the longer you own it.
Homeownership Expands Financing Options
Another way homeownership builds financial stability is by the way it opens up your opens for financing other expenses. As your home builds equity, you will have opportunities to leverage that equity in various ways, like taking out a line of credit or doing a cash-out refinance.
With a home to leverage in these financing situations, you have expanded your options to fund things like starting a business, supporting an adult child, or investing in another real estate property to create an additional stream of income.
Future Generations will Benefit from Your Homeownership
Research shows the one of the most predictable ways to build generational wealth is to own a home. In addition to making you a more financially stable support system for your children, you will have a tangible and valuable asset to pass on to future generations.
To find out more about buying your first home in Calgary, contact us any time. We specialize in listing Calgary houses for sale and specifically Airdrie homes for sale and all Okotoks houses for sale.