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.

For both homebuyers and homeowners, understanding how property liens work is important. In fact, they could impact your ability to buy a specific house or make a home cost more.

Fortunately, finding out if a property has a lien against it isn’t too hard — nor is settling a lien once one is in place.

Here are common questions and answers about property liens to help cover the important facts.

Q: What is a lien? 

A: A lien is a claim against a home or other asset (boat, car, etc.). It means the owner owes an entity money, and unless the debt is settled, the debtor can seize the asset to cover the unpaid balance. There can also be tax liens against the property when the owner doesn’t pay their taxes.

Q: Can you still buy a home if it has a lien? 

A: You can buy a home that has liens against it, but there are risks. Most importantly, a lender won’t give you a loan until the lien is settled.

Q: Should you avoid a home with a lien against it? 

A: If your dream house has a lien against it, you will need to settle the lien before buying it. You could pay the liens off yourself as part of the purchase or, in many cases, the seller can use the sale profits to settle them before closing.

Q: Are there ways to protect yourself? 

A: It’s a good idea to work with a title agency with buying a home. They will be able to do a title search and identify any liens against a home you’re interested in. You can also purchase title insurance, which protects you if any unknown liens surface later on.

There are other topics you’ll want to familiarize yourself with before becoming a homeowner. Get in touch today for more guidance.

Mortgage applications rose 2.2% last week compared with the previous week, prompted by a slight decline in interest rates, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinance applications, which are usually most sensitive to weekly rate moves, rose 2% for the week but were still 86% lower than the same week one year ago. Even with interest rates now back from their recent high of 7.16% a month ago, there are precious few who can still benefit from a refinance — just 220,000, according to real estate data firm Black Knight.

Mortgage applications to purchase a home rose 3% for the week, but they were down 41% from a year ago. Some potential buyers may now be venturing back in, hearing that there is less competition and more negotiating power, but there is still a shortage of homes for sale and prices have not come down significantly.

Rates are still twice what they were at the beginning of the year, but they eased somewhat last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67% from 6.90%, with points increasing to 0.68 from 0.56 (including the origination fee) for loans with a 20% down payment.

“The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, an MBA economist, said in a release. “With the decline in rates, the ARM share [adjustable-rate] of applications also decreased to 8.8% of loans last week, down from the range of 10% and 12% during the past two months.”

Mortgage rates haven’t moved at all this week, as the upcoming Thanksgiving holiday tends to weigh on volumes.

“It’s not that things aren’t moving. They just aren’t moving like normal,” said Matthew Graham, chief operating officer at Mortgage News Daily. “Expect things to get back closer to normal next week, but for the market to continue to wait until December 13 and 14 for the biggest moves.”

That’s when the government releases its next major report on inflation and the Federal Reserve announces its next move on interest rates.

Is there a difference between the right house for your current situation versus your ideal home for life?

There’s usually a big difference for most buyers, and it’s a good idea to consider both options carefully.

When deciding between a starter and a forever home, there’s a lot to think about beyond your budget. This quick breakdown can help you get started:

What are the main differences between a starter home and a forever home? 

Starter Homes:

• Have lower upfront costs. This means lower mortgage payments, but refers to upkeep and utilities costs as well.
• Require compromise. If you divide the features you’re looking for between “must have” and “would be nice,” a starter home lacks most “would be nice” features.
• Need less commitment. It’s easier to sell the home in less than 10 years should you need to.
• Are a stepping stone. They can be renovated to grow with you, become a rental property, or be sold to help finance a new home later.

Forever Homes:

• Cost more. You can expect higher home prices, mortgage payments and monthly living expenses.
• Check all your boxes. The home should have the features and space you’ll need long term.
• Are high-commitment. Selling in less than 10 years is more likely to result in financial losses, which can be limiting.
• Let you establish yourself. You’ll have more time to gain equity and plant firm roots in your community.

When is considering both options important?

Exploring both options is especially important if:

• You haven’t lived in the area for at least a year. You might want to remain flexible while you familiarize yourself.
• You’re at your budget’s limit. Could you comfortably cover your expenses for a few months if something disrupted your income? If you aren’t certain, a starter home might be worth exploring.
• Your future plans aren’t set in stone. Having a consistent vision of the future is important so you don’t end up paying for amenities and space you don’t need.

Still not sure what to do? Let’s discuss your thoughts and questions together.