Homeownership can be a pathway to building generational wealth — in fact, owning a home is so closely linked to long-term stability that it’s been one of the few life goals that’s just as common today as it was 50 or even 100 years ago.
But how does homeownership help families build wealth? What makes real estate a transgenerational tool to achieve financial security?
Numerous studies have shown that owning a home is not merely a personal goal, but a financial goal that can have a multigenerational impact. There’s more than one way that homeowning can benefit individuals and families when it comes to financial security:
Homeownership as an Investment: As property values increase, so does the value of the homeowner’s equity. This equity can be used for future investments or passed down to the next generation.
Forced Savings: Not only are mortgage costs typically less per square foot than rent, but they also help build your equity each month — in other words, you are making payments toward your future financial health.
Tax Benefits: Homeowners can leverage deductions for mortgage interest and property taxes. These deductions can reduce your taxable income, which can often result in a lower tax bill.
Stability: Owning a home can offer families a sense of permanence and belonging within a community, which can lead to better mental health and well-being.
Passing Down Wealth: As the value of a home appreciates, it can become a substantial asset that can be inherited by loved ones. It can be sold to fund other investments or continue as the family home where a new generation of memories can be made.
While a house can become a foundation for building generational wealth, it’s important to consider the potential challenges and financial barriers that can arise. Additionally, it’s important to weigh the pros and cons carefully and explore all your financing options.
Get in touch if you’d like to discuss your mortgage options or other loan opportunities.