Tag: home ownership

Owning vs. Renting | The Hard Facts

March 4, 2024 / Tom Bonetto

Imagine turning your monthly expenses into a growing investment, something that could multiply your net worth exponentially.

Not a lot of people know this, but the average homeowner’s net worth is 40 times that of a renter.

Owning a home offers numerous advantages over renting, making it a seriously smarter long-term financial decision for many.

Building Equity

Firstly, homeownership builds equity, whereas renting does not. Each mortgage payment contributes to ownership of the property, gradually increasing the homeowner’s stake in the home.

Over time, this equity can be leveraged for various purposes, such as home improvements, education expenses, or retirement funding.

In contrast, renting provides no return on investment, with monthly payments essentially going towards the landlord’s profit.

Stability and Security

Secondly, owning a home provides homeowners with fantastic stability and security.

Renters, on the other hand, are subject to the whims of landlords and rental market fluctuations, with the risk of rent increases, lease terminations, or changes in rental terms.

Homeownership offers predictability and control over housing costs, particularly with a fixed-rate mortgage where monthly payments remain constant over the loan term.

Furthermore, homeownership helps people to establish roots within a community and create a space that reflects their personal preferences and lifestyle.

Tax Benefits

Another serious advantage of owning a home is the potential for tax benefits.

Homeowners can deduct mortgage interest, property taxes, and certain home-related expenses from their taxable income, reducing their overall tax burden.

Renters do not enjoy these tax advantages, missing out on opportunities to reduce their tax liabilities through housing-related deductions.

Building Long-Term Wealth

Finally, homeownership provides a unique pathway to long-term wealth accumulation and financial security. As mentioned earlier, the average homeowner’s net worth is 40 times that of a renter!

Real estate historically appreciates in value over time, building equity and wealth for homeowners. More on that here…

For example, Case-Shiller recently reported that home prices rose 5.5% last year, with national home values 46% higher since 2019! And prices are forecasted to rise this year due to ongoing high demand and tight supply.

In contrast, renting does not offer the opportunity to build wealth through property appreciation, leaving renters without a tangible asset to show for their housing expenses.

In Conclusion

Switching from renter to homeowner is simpler than you might think. It’s a strategic move towards securing your financial future, as owning a home offers numerous advantages over renting!

Do reach out to me for more, as it would be my pleasure to help you put together a plan to become a homeowner as well as long-term wealth-building strategy.

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Make a Real Estate Purchase Your 2024 Resolution

January 3, 2024 / Tom Bonetto

With 2024 upon us, many of us start thinking about setting resolutions.

Make buying a home or an investment property your New Year’s resolution. It can be a substantial, rewarding, and life changing goal for multiple reasons!

First and foremost, home ownership is a foundation of building the American Dream.

Per Forbes magazine: “Home ownership has long been accepted as a core component of the American dream, as it confers several economic benefits on homeowners, including the ability to accumulate wealth by accessing credit, building equity and reducing housing costs.”

Building Wealth

Instead of spending money on rent (which contributes to the equity of others), purchasing a home allows individuals to build equity over time. This equity can serve as a form of savings and investment, as real estate almost always appreciates in value and providing a secure financial foundation for the future.

Laying Down Roots

The stability that home ownership offers can contribute to a sense of security and well-being for individuals and their families.

Furthermore, owning a home offers stability and a sense of belonging. It provides a place to create lasting memories, build relationships, and establish roots within a community.

Serious Tax Advantages

Additionally, owning a home can offer some nice tax benefits. Deductions for mortgage interest and property taxes can significantly reduce taxable income, providing potential financial advantages for homeowners. These tax benefits can contribute to long-term financial planning and savings…and talk to your financial professional for the specifics.

Financial Independence and Long Term Investment

Moreover, purchasing a home can be a step towards financial independence and building generational wealth. Property ownership can lead to increased net worth over time and serve as a valuable asset to pass down to future generations, providing stability and opportunities for family members.

Finally, buying a house as a New Year resolution signifies a commitment to a long-term investment in oneself and one’s future. It requires planning, discipline, and financial responsibility, instilling valuable habits that can benefit individuals well beyond the purchase of the home.

Contact Tom For More

Please do reach out to m e to discuss how you might be able to make home ownership a reality in 2024, as it would be my pleasure to help!

To Buy or To Rent?

September 14, 2021 / Tom Bonetto

Coins Stacked Next to Small Wooden House

Deciding between buying or renting your next home? It’s true that home values have gone up quite a bit, but so have rents.

In fact, the largest landlord in the US, Invitation homes, said that rents have gone up 14% since last year.

And that’s not all – they forecast that rents will continue to go up about 6% annually

So, while it’s true that initially purchasing a home will be more expensive, your mortgage payment will remain relatively stable into the future. Whereas your rental payments will likely rise significantly in the years to come.

There are other amazing benefits that come with buying a home, including pride of ownership, more freedom in renovating and design, and of course building equity.

And because of increasing demand and tight supply, it looks as if home values will be well supported, and many are forecasting home prices to move higher.

I can give you a complete analysis with statistics for your specific zip code so you can make accurate comparisons and see which choice is best for you. Give me a call today to learn more.

Why Home Ownership Matters – A 2019 Resolution

January 5, 2019 / Tom Bonetto

Is a home purchase on your 2019 “to do” list?

If so, now is a great time to do it, as market conditions are quite good!

Homeownership has traditionally been an important way to build wealth and the financial returns on homeownership have been more far more beneficial than renting for most homeowners.

Your home is likely the biggest investment you will make in your life, which brings with it some fear and anxiety. Don’t let it! While home ownership may seem a bit scary, buying your home should be an exciting time.

Enjoy the process and engage the right people.

“Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”
Mark Twain

Why Home Ownership is Important

According to a Trulia report, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.”

That may have some thinking about buying a home instead of signing another lease extension, but does that make sense from a financial perspective?

In the report, Ralph McLaughlin, Trulia’s Chief Economist explains:

“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”

The report listed five reasons why owning a home makes financial sense:

Mortgage payments can be fixed while rents go up.
Equity in your home can be a financial resource later.
You can build wealth without paying capital gains.
A mortgage can act as a forced savings account.
Overall, homeowners can enjoy greater wealth growth than renters.

More Statistics

87% of people said owning a home is part of their American dream
A typical homeowner’s net worth was $195,400 while a renter’s was $5,400
Academic studies have shown that homeowners are healthier. This result arises from a better sense of self-control and self-worth among homeowners versus renters
Owning a home is good for the economy. With each home sale there are expenditures related to lawn care, home remodeling, new furniture, mortgage origination, moving, and an inducement to build new homes

Infographic courtesy of Trinity Homes

Other Benefits

Homeownership benefits the homeowner’s family and their surrounding community. This includes improved health and school performance for children, increased civic engagement and volunteering, reduced crime, and higher lifetime wealth.

When taking a look at the lessons learned from the last housing crisis, the Bipartisan Policy Center’s Housing Commission noted that homeownership can “produce powerful economic, social, and civic benefits that serve the individual homeowner, the larger community, and the nation.”

The reason is fairly simple: economics. When someone owns an asset, they are more likely to engage in behavior that ensures its future value. You can find out more here from US News and World Reports….

Unlike stocks and bonds, a home’s value is determined by both the physical quality of the structure as well as the general character of its neighborhood.

That means homeowners are more likely to spend their limited time and resources engaged in improving their neighborhood, if for no other reason than to protect the value of their investment.

Bottom Line

Before you sign another lease, perhaps you should sit with a mortgage professional and real estate agent in your area to better understand all your options.

Let 2019 be the year you make the move into your own home!