Interest rates have increased, but they are still at historic lows. Homeowners that purchased years ago with 6% and 9% interest rates should consider refinancing right now. Rents continue to rise, and now is a great time to invest in a home.
Home investment is a long the term choice for many Americans to generate wealth over time. Although that confidence was shaken during the economic turbulence of recent years, real estate is still proving to be a great long-term investment that builds equity monthly. Equity is the amount of money a home can sell for minus what is still owed. Every month when a mortgage payment is made, a portion of the payment reduces the amount that is owed. That reduction in the mortgage every month increases equity and is comparable to a forced savings plan.
Paying the mortgage every month reduces the amount of principal is like having a forced savings plan. That each month builds up more equity in the home. In the long term, it will save money and generate wealth as the interest portion of the mortgage payment decreases each year equity is built.
Home investment is America’s preferred investment choice and with interests rate still at historic lows buying a home seems to be the preferred way of generating wealth over time.