#1 Financial Benefit of Homeownership: Family WealthWhile growing up, we were taught by our parents and grandparents that owning a home would be a financially savvy move. They explained how a
Financial Benefits Of Homeownership In Florida
#1 Financial Benefit of Homeownership: Family Wealth
While growing up, we were taught by our parents and grandparents that owning a home would be a financially savvy move. They explained how a mortgage is like a “forced savings plan for your future.” When you pay rent, that money is not only lost forever, but paying off a home for your landlord. When you make a mortgage payment, much of that money accumulates as equity in the home. So, what exactly is equity?
The equity in your home is the amount of money you can sell it for minus what you still owe on the mortgage. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe on that mortgage. That reduction of your mortgage every month increases your equity.
Based on recent price appreciation in our market, homeowners in the Tampa Bay, Florida area gained substantial equity in their homes over the last 12 months, and are essentially sitting on large sums of cash in their homes. In the study, Frank Nothaft, Chief Economist for CoreLogic explained:
"The CoreLogic Home Price Index recorded a quickening of home price gains during the fourth quarter of 2019, helping to boost home equity wealth. The average family with a mortgage in the U.S. had a $7,300 gain in home equity during the past year, and a total of $177,000 in home equity wealth."
For most families, their home is their largest financial asset they'll ever own or invest in. This increase in equity drives the net worth, or family wealth, of the homeowner. Renters are not earning that benefit. Instead, they’re building the net worth of their landlord and potentially paying more rent every year their lease renews. When you get a fixed rate mortgage, your payment for that loan remains the same until it's paid off.
Home price growth in Florida and around the U.S. may be moderate during the pandemic. But most experts agree that home values will again begin to appreciate at levels similar to what we’ve seen over the last several years once the pandemic settles. In the long run, our family elders will be proven correct: owning a home in the Tampa Bay area of Florida is a savvy financial move.
Andrea is the Managing Partner of The Sandy Hartmann Group. Andrea was born and raised in the Tampa Bay area and is a licensed Realtor with over 15 years of Marketing and Finance experience, holding ....
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