3 Reasons Homeownership Helps Build Wealth
I’m not a fan of “get rich quick” schemes, but I am supportive of “here is something tried and true over hundreds of years” strategies.
Here’s a quick introduction to why homeownership is so effective at building wealth.
1. Homeownership is a hedge against inflation.
Inflation refers to the idea that the dollar is worth less and less every year.
This is why stuff keeps costing more.
A certain level of inflation is helpful, as the “threat” of something costing more tomorrow than it costs today is what motivates people to spend money - which keeps the economy flowing.
The way to protect yourself against this is to own the stuff (e.g. a house) that is going up in cost because of inflation.
2. Your monthly payment is forced savings.
Saving money isn’t fun, at least not as much fun as spending it.
But when you “spend” on your house payment, a portion of that goes to “savings.”
Since everyone has to live somewhere, the discipline that comes with a monthly payment can be one of the most effective ways to save money.
That constant drip of paying down your mortgage is rarely a felt benefit, but given enough time, the consistency pays off and becomes a reliable pathway to wealth.
3. America incentivizes private property ownership.
Many countries in the world don’t offer a 30 year mortgage. It’s full cash for the property, or nothing.
Imagine the INSANITY that is the idea of locking in the purchase price of a home now but being given 30 years to pay it off.
AND THEN you can keep 100% the profit off the sale of the WHOLE asset, even if you just did a 5% or 10% down payment.
Welcome to America.
FURTHERMORE, the tax system allows people to keep the profit from the sale of their home up to $250,000 (or $500,000 for married couples) TAX FREE.*
It’s wild. Some might say it’s not fair, but it’s the values of our American financial system.
It’s to your benefit and mine to learn how to maximize the benefits wisely.
*I’m not a CPA. This is not tax advice. Do your homework and talk to a CPA.
If you have a desire to buy or sell in the coming year, let’s chat.
Life has a way of keeping us all moving, and I’d love to be your real estate agent.
Contact me here to set up your free and confidential consultation.
Kevin
