While growing up, we were taught by our parents and grandparents that owning a home is a financially savvy move. They explained how a mortgage is like a “forced savings plan.” When you pay rent, that money is lost forever. When you make a mortgage payment, much of that money accumulates as equity in the home. So, what exactly is equity?
The equity in your home is the amount of money you can sell it for minus what you still owe on the mortgage. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity.
A recent study by CoreLogic explained that homeowners gained substantial equity over the last twelve months, and are essentially sitting on large sums of cash in their homes. In the study, Frank Nothaft, Chief Economist for CoreLogic explained:
"The CoreLogic Home Price Index recorded a quickening of home price gains during the fourth quarter of 2019, helping to boost home equity wealth. The average family with a mortgage had a $7,300 gain in home equity during the past year, and a total of $177,000 in home equity wealth."
For most families, their home is their largest financial asset. This increase in equity drives the net worth, or family wealth, of the homeowner. Renters are not earning that benefit. Instead, they’re building the net worth of their landlord.
Home price growth will moderate during the pandemic. But once a cure is available, most experts agree that home values will again begin to appreciate at levels similar to what we’ve seen over the last several years. In the long run, our family elders will be proven correct: owning a home is a savvy financial move.
David Deem 714-997-3486 Dave@DeemTeam.com Whether you have moved into a brand-new house or to one that previously belonged to another family, you need to put some precautions in place. Here are several items that need your attention to keep you and your family safe. Change the locks The previous owners may have passed on spare keys to their neighbors, relatives or close friends. Even if it’s a brand-new house, the builder may have handed a key to a handyman or worker during the construction stage. To be safe, get all the locks changed and distribute spares only to those you trust. Install a security system Even in safe neighborhoods, a security system is a good precaution to take. You can decide whether you want a high-tech one with all the bells and whistles, or if you’re happy with a few cameras and security lights. Get to know your neighbors Neighbors are invaluable allies. Stop by for a chat and get to know them. They can easily keep an eye on your place but if
David Deem 714-997-3486 Dave@DeemTeam.com Many houses that were built before the 1980s contain asbestos. If asbestos is damaged or disturbed and fibers are released into the air, people can inhale them and eventually develop mesothelioma, a form of cancer, or other medical conditions. How Your Family May Be Exposed to Asbestos Asbestos fibers have been used in construction materials, such as flooring and ceiling tiles, insulation, pipes, paint, shingles and cement. Many applications were banned in the 1970s, but it is still legal to use asbestos in some building materials. Sawing, scraping, drilling and sanding materials that contain asbestos can release dangerous fibers into the air. If you attempt renovations yourself, you may disturb asbestos. Hire an Experienced Contractor If You’re Concerned About Possible Asbestos Before you decide to knock down walls or replace insulation, think about the age of your home and whether it may contain asbestos. Only certified professionals should
David Deem 714-997-3486 Dave@DeemTeam.com Are you looking to transfer property? If so, your property transfer may be exempt from reassessment for real estate property tax purposes. In California, the annual real estate tax on a parcel of property is limited to one percent of its assessed value (Proposition 13). The “assessed value” may not be increased by more than two percent per year unless the property has changed ownership. The following types of ownership transfers are not considered “changed ownership” and should not result in a reassessment. Please let your title or escrow officer know if one of the following exceptions applies to your transaction: Proposition 19 – The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act X Eligible homeowners who are 55 years and older, severely disabled, or victims of wildfires and natural disasters may transfer their tax assessments to a different home of the same or lesser market value,