Wealth & The House

“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”  – Theodore Roosevelt


Real estate appreciation has played the greatest role in shaping most Americans net worth.  The most recent Federal Reserve Data shows roughly $19.0 trillion in house values across the country.  Compare this to the estimated $9.4 trillion of mortgage debt outstanding against those houses.  This means there is approximately $9.6 trillion dollars of home equity, or what we call, House Wealth, in existence.

Your House Wealth

How is wealth determined for an individual house owner?  The wealth in a house is its current value minus any liabilities against the house:

House Value – House Liabilities = House Wealth

For most Americans, your house-related wealth may now be your largest single asset.   But think about this:  do you manage your house wealth as carefully as you manage your other investments?

At its core, a house is meant to meet our physical needs for safety and shelter, as well as our social needs of family and community.  But if it stopped there, most of us would live in a very simple rectangular structure with a roof, or possibly even rent a house without the long-term commitment that comes with owning.

Yet, housing surveys by Fannie Mae and the National Association of Realtors continue to show that American’s number one reason for buying a home is the long-term financial investment.

The House as a Wealth Creation Tool

Increasingly, the house is a key building block for wealth creation.  Many people cite “buying a first house” as the reason they began saving for the first time.  But if owning a house can play such a vital role in a person’s ability to achieve financial freedom, what should a new buyer know?  Or for that matter, how should an existing homeowner learn to better manage the wealth already inside their house?

Critical questions should be asked and researched, to ensure maximum return-on-investment when it comes to buying and owning real estate.

  • How much of a down payment should I make to optimize my investment?
  • What role does the interest rate really play in obtaining a home loan?
  • Should I pay “points” to get a lower interest rate, or keep my fees lower and choose a slightly higher rate?
  • Should I wait to save up more money to make a larger down payment or buy as soon as I am financially able to?

We will answer these, and many more questions for you.  Do keep in mind that only the top mortgage advisors in the nation are thoroughly trained and prepared with the right planning tools to help you make the right decisions and achieve your goals of building House Wealth.  Choose carefully, since how you borrow and repay the mortgage on your home will have a far-reaching impact on virtually every other aspect of your personal finances.


About Trevor Hammond

Trevor Hammond, NMLS# 74846 Division Vice President, Neo Home Loans 📞 (503) 680-5360 📧 Trevor.Hammond@neohomeloans.com 📍 4380 S Macadam Ave, #150, Portland, OR 97239 🌐 www.trevorhammond.com Connect with me on LinkedIn: www.linkedin.com/in/trevorhammond
This entry was posted in Blind Spot 2: Increasing Fiscal Literacy, Blind Spot 3: Storing Money Efficiently, Uncategorized. Bookmark the permalink.

Leave a Reply