Who doesn’t want to build their net worth? It’s something that most everyone works towards and many search high and low for new ways to do so. What if I told you that you could do this just by paying your mortgage?
We’ve said it before, but today we’ll be mapping out exactly how homeownership can directly build wealth and how much investing today will pay off over the years.
A Look At The Next 5 Years
As we’ve mentioned in a previous article, home appreciation is at an all-time high. While we might see that drop a bit over the next few years, home prices will still continue to appreciate. Keeping Current Matters (KCM) predicts that appreciation remains at about 5% through 2022, and hovers around 3.5% through 2025.
If you’re wondering what this means for you, let’s take a look at an example of someone who purchased their home in January 2021 for $350k. Assuming the appreciation rates we discussed, this homeowner will end up increasing their net worth by over $93k by 2026. The infographic below from KCM illustrates how this works.
Additionally, Dr. Frank Nothaft, Chief Economist for CoreLogic, further explains that due to the record high home price index over the past year, the average amount of equity held by homeowners with a mortgage rose to $216,000 in 2021.
Bottom Line
Everyone loves getting something back for the money they spend. Maybe it’s a coupon in the mail to use on your next purchase as a store or a rebate for the latest appliance you picked out. When it comes to housing, you’re building equity with every mortgage payment you make. By purchasing a home today, you’re making an investment into something that is sure to give you a great return. Down the line, when you decide to make a move or upgrade your home, you’ll be able to cash in on this investment and take advantage of the wealth that you have built up over the year
If you have any questions about buying a home to capitalize on this wealth or if you’re looking to sell to cash in and purchase a home that better fits your needs, let us know! We’d be happy to help.