Homeownership remains one of the top wealth-building strategies in the United States. While the current climate continues to change as workplaces implement return-to-office plans, throughout the transition, you can be a guiding force for your sphere. Whether individuals are looking to buy or rushing to relocate, here’s what you can do to keep the dream of homeownership alive for your clients.
Building Equity: The Foundation of Wealth Creation
It’s the long-term factors that make real estate a solid investment. Making money in real estate comes one of two ways: By happening upon the right moment to purchase your home before its price appreciates, or holding it long enough over time so that appreciation makes your purchase investment right. Either way, the more of your home you own outright, the more equity you have to lay the foundation for financial stability.
How Equity Grows Over Time and Why It Matters
In simplest terms, home equity is determined by the percentage of your home you own versus your mortgage. If your home is fully paid off, you have 100% equity. While that is the ultimate goal for most homeowners, you don’t need full equity to reap the rewards of homeownership.
You can borrow against your home equity for almost any purpose. Say you have $100,000 in equity on a $500,000 home. That’s $100,000 you can borrow against for things like starting a business, making home renovations, or covering unexpected life expenses. As the amount of equity you can borrow against rises, so does your wealth. Below are some key ways to build equity ASAP:
Make the largest down payment you can reasonably afford.
Get the cheapest loan possible.
Try not to include closing costs in your mortgage loan calculations.
Put financial windfalls toward your mortgage whenever possible.
Make renovations that will increase your home value.
Keep an eye on interest rates for refinancing opportunities.
The Emotional and Psychological Benefits of Owning a Home
Anyone who has ever dealt with a landlord should understand the emotional and psychological benefits of owning a home. Between rent increases, cosmetic limitations, lengthy waits for repairs, and the threat that they can choose to stop renting their property at any moment, renting can be extremely stressful. The question is: Does renting fit your lifestyle better than homeownership?
Homeownership vs. Renting: Financial and Lifestyle Comparisons
The main difference between owning a home and renting boils down to stability versus flexibility. If your clients are the type of people who value establishing roots in both a property and community, homeownership is clearly the way to go.
As a homeowner, you get more freedom to make your space your own (with the exception of potential HOA stipulations). You can also engage in more long-term financial planning, since your mortgage is unlikely to change unless you decide to refinance.
As a renter, your freedom lies in the ability to relocate with less hassle than a homeowner (unless you’re locked into a long-term lease agreement). For people who like to explore not only different properties, but entirely new cities on an annual basis, renting may hold an advantage.
Strengthening Communities Through Homeownership
Another significant, but often overlooked, reason to embrace the dream of homeownership is the ability to make a difference. When you own a home, you’re not only investing in a property, you’re investing in a community. Homeowners have the power to make an impact on their own lives and on the lives of their neighbors.
Why Owning a Home Is an Investment in Your Family’s Future
You don’t have to hand down a fortune to create generational wealth. Passing down a piece of property to your children or grandchildren puts them at a financial advantage renters will never know. Whether beneficiaries decide to move into your property, lease it, or put it on the market, homeowners can rest assured they’ve made a positive impact on the younger branches of their family trees.
Between wealth generation, psychological benefits, and community enrichment, homeownership is a dream worth fighting for. If you have a potential client who’s losing their fighting spirit, these talking points could be just the pep talk they need to get back in the ring.
