How Do I Start Building Wealth With My First Home
Home Ownership: The First Step to Generational Wealth
The first step building wealth that lasts for generations is to own your primary residence. Have you ever considered how much you pay in rent over an extended period? It is probably a lot more than you realize. The amount you spend on rent could be applied toward owning your primary residence, not only building equity in your own property, but also potentially taking advantage of tax benefits related to home ownership.
Equity and Appreciation
Most people make a monthly payment for opportunity to live in their primary residence. When you own your home, the portion of the monthly payment you make, in the form of mortgage payment, is used to pay down the principal on your loan. Each payment you make builds more equity contributes directly to your personal wealth. Conversely, payments you make in the form of Rent, are paid to the landlord, and you do not see any benefit in the form of equity in the home.
In addition, history has shown home values have appreciated approximately 4%. Homeowners benefit from the increasing value of the home, whereas renters do not.
As you can see from the illustration over the course of 30 years, the difference in wealth is staggering.
“They say the best time to plant a tree was 20 years ago. The next best time is NOW. So what are you waiting for?”
Other Advantages
Owning your primary residence has other advantages as well, including:
Tax Advantages:
Including deductions for mortgage interest and property taxes. *
Inflation Hedge:
Real assets, including real estate, tend to act as a hedge against inflation. As the cost of living rises, the value of real estate often increases, providing a safeguard against the eroding effects of inflation.
Generational Wealth Transfer:
Real estate can be passed down from one generation to the next, allowing wealth to accumulate over time. Through careful estate planning, families can ensure a smooth transfer of real estate assets, providing a solid foundation for the financial well-being of future generations.
*Please seek the advice of a qualified tax advisor or CPA (Certified Public Accountant).
