To buy, or to rent? The decision often isn’t a simple one for many people, with factors like income, future plans, expenses and many others playing a big role in which route you take.
One major advantage to homeownership that many people don’t spend enough time considering? Long-term financial benefits. Recent studies have shown a massive gap between homeowners and renters in terms of net worth and returns on investment, indicating that if you are able financially, owning a home is the far preferable option. At Altius Mortgage and our partners at Mortgage Ogden, we can help you toward your ultimate goal of homeownership. Let’s look at why this is a justified pursuit.
As of December 2013, the US Census Bureau pegged the median net worth of homeowners in the country at just short of $200,000 ($199,557 to be exact). In stark contrast, the median net worth of renting households was over 90 times less – just $2,208. Due to the way the economy has rebounded since it’s a fair assumption that this gap has grown even further.
Another study from the US Federal Reserve confirmed these findings, showing that between 2010 and 2013, the gap between homeowner and renter net worth grew by nearly $40,000, from $182,000 to over $220,000.
We have to take these results with at least some grains of salt, to be sure. We have to consider that many homeowners were wealthier in the first place, which is what allowed them to have the funds to purchase their home. On the flip side, though, consider that most homeowners are entering into their ownership situation with a mortgage loan as debt. This debt, however, is an investment, unlike rent or personal loans that renters more often take on.
Home prices continue to rise faster than interest on a standard mortgage, meaning homeowners can sell for a profit after they’ve paid down a loan. Even before this happens, they’re contributing positively to a tax-advantaged equity fund, which renters have no access to at all.
For more on how you can get out of a renting cycle and become a first-time homebuyer, or to learn about any of our mortgage services, speak to the pros at Altius Mortgage today.