Real Estate Beats The Stock Market!
The importance of your home equity to your financial future may be more than you realize. According to a report from Harvard University's Joint Center for Housing Studies, it has been noted that despite the booming stock market prices in the 1990's, 59 percent of American home owners who also own stock still derive more of their net wealth from their homes than from their investment in stocks and bonds.
The Facts... Investment Vehicles By Income Level
Did you know that the amount of equity versus stock holdings most often is directly related to your income?
Among owners with incomes between $2,000 and $49,000 a year, more than 70 percent have more equity in their homes than they have in stocks.
Among homeowners with $50,000 to $99,000 a year, more than half have greater real estate equity than stock.
When your income exceeds $100,000, you are more apt to have higher asset value in stocks than in home equity. However, about 40 percent of home owners in this income bracket and higher have a larger home real estate equity than the value of their stock investment portfolios.
Rent Or Own - Which Is Best For You?
During the period from 1995 to 1998, homeowners saw their property values jump upwards of 20 percent, leading to a disparity between the asset accumulation of home owners versus asset accumulation of renters. In the late 1990's, for home owners 55 and older, this contrast is especially sharp. Within this age group, owning a home in the United States equated to a median net worth of $177,400 and average home equity of $80,000. Renters in the same category have a median net worth of just $5,500 with $0 equity.
To quote Harvard Joint Center Executive Director Eric Belsky, "If you're a renter in this country and you don't get on the ladder of homeownership at some point, you stand a good chance of never being well off."
If you've been putting off your dream of home ownership because you think it's beyond your budget, you may be interested in knowing that owning your own home can actually save you money and help build your financial future.
Reasons To Buy Now! Three Good Ones - There Are Many More
Tax Advantages - One of the biggest advantages of owning your own home comes at tax time. That's because home loan interest and property taxes are two of the few Federal income tax deductions still available to the average taxpayer.
Equity Building - Equity is the difference between the appraised value of your home and your loan balance. It increases with a portion of each mortgage payment you make. Don't think of your home loan as just one more bill to pay. Think of it as a savings account into which you make monthly deposits. You can use your equity for a home equity credit line or for a second mortgage if you need cash for some reason.
Increased Value - You can typically expect your home to increase in value with each passing year. For example, let's say you purchased a home with an appraised value of $100,000. Assuming annual appreciation of four percent, your home's market value will increase to $104,000 in just one year - that's a $4,000 equity gain for you.
Interest Rates - Don't Miss Out On The Low Rates
It's in the news everyday. Interest rates are still low. However, they won't stay there forever.
Many experts estimate that within the next 6 months rates will rise. This means that now is the best time to take advantage of current rates before this incredible window of opportunity closes and could be gone forever.
Analysts predict that rates will climb; delaying a home purchase could cost you thousands of dollars. Act now to take advantage of the low rates while they last.
If you don't want to move or refinance, think about purchasing an investment property. It's another way to build equity and gain tax advantages. When you own more than one property, your total equity can grow even faster!
Foreclosure Explained - Don't Fall Into The Trap
The number of homeowners falling behind on their house payments expanding and so is the percentage of mortgages that are in the foreclosure process. If you are overextended financially through maxed credit cards or other spending, don't fall into the trap.
Many homeowners think that they can take an extended period of time to catch up on payments. However getting behind on house payments is much more serious than getting behind on other types of bills. In fact, lenders can foreclose if only one house payment is missed.
One misconception concerns mortgage redemption. In some states the foreclosure sale is final. There is no redemption right after a foreclosure. Learn your state's rules on foreclosure.
For homeowners facing foreclosure, there is one word: Communicate. If you're having difficulty making mortgage payments, communicate with your lender right away. Lenders are more likely to work with borrowers who contact them.