Northwestern Mutual: How Owning a Home Affects Long-Term Finances

Homeownership offers buyers a chance to create a space that is uniquely their own while building financial stability for the future.

Whether someone is seeking a place to raise a family or a quiet retreat from the city, owning a home can be fulfilling and positively impact their life for years to come. It can also change financial priorities. Here are a few ways owning a home affects long-term finances.

Build equity

When it comes to long-term financial benefits, equity, the market value of a home minus any outstanding mortgages on the property, is one of the most tangible benefits for homeowners. Homeowners can build equity as they continue to pay their mortgage and reduce the principal, as the home’s value naturally increases over time, and as they make any improvements.

Homeowners can tap into their home equity with the help of a home equity loan (HEL) or home equity line of credit (HELOC). This allows them to enjoy more peace of mind knowing they can access additional funds when needed.

Stabilize housing costs

“While many renters face periodic rent increases, homeowners with fixed-rate mortgages could enjoy consistent monthly payments for the life of their loan outside of regular maintenance costs, taxes, and insurance,” said Aaron Channing, Chief Advancement Officer, Partner and Private Wealth Advisor with Fortivus Wealth Group, Northwestern Mutual in King of Prussia, Pennsylvania. “Over time, as inflation drives up the cost of living, these fixed mortgage payments can become more manageable and free up money for other financial goals, such as retirement savings or even converting term life insurance to a permanent policy like universal life insurance.”

Potential to increase in value

A home’s appreciation, or the increase in its value, can also positively affect a homeowners’ long-term financial plans. While it is important to note that property and home values can (and do) fluctuate based on market conditions, if a home increases in value, the homeowner can benefit if they decide to sell the property.

Leave a legacy

“There are plenty of ways to leave a lasting legacy—whether through leaving money, a whole life insurance policy, or other financial assets” added Channing. “A home can also be a significant part of that legacy. Once fully paid off, it becomes a valuable asset that can be passed down to future generations. This can help homeowners provide their children and loved ones with financial security by allowing them to inherit the property to sell it for additional support.”

Be realistic and keep long-term financial goals in mind

Owning a home is more than just securing a place to live; it’s an investment in a homeowner’s long-term financial stability and future. From building equity to controlling housing costs, homeownership provides numerous financial benefits that can positively impact a person’s life for years to come.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance
Company (NM) and its subsidiaries in Milwaukee, WI.

Source: Northwestern Mutual

Contact: Don Klein, 1-800-323-7033