There are many reasons people rent rather than become homeowners, and one of the most common is marshaling the financial resources necessary to make the transition from renter to owner.
Note that we’re only relaying information for prospective customers to consider. Deciding to rent or own is entirely a personal decision. But since we’ve built new custom Florida homes all over the state for 45 years, we know what it means for first-time homeowners to realize that dream.
Here’s hoping this info inspires future first-time owners to begin making their plan!
Key Takeaways
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Homeowners have nearly 40 times the median net worth of renters, making homeownership a powerful long-term financial investment.
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Every mortgage payment builds equity and increases your ownership stake, unlike rent, which builds no personal wealth.
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Owning a home creates opportunities for rollover equity, helping you step into your next home with built-in financial momentum.
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Making the leap from renting to owning starts with smart steps: reduce debt, create a budget, and begin saving for a down payment, even 20% isn’t always required.
Read on to discover why buying beats renting as a long-term investment.
A jumping-off point
A November 2024 study from the Aspen Institute’s Financial Security Program noted that renters in the United States, “have less than 3 percent of the wealth of homeowners, with a median net worth of $10,400 compared to nearly $400,000 for homeowners.”
This study utilized various U.S. Federal Reserve Board and U.S. Census Bureau surveys and statistics, as well as prior Aspen Institute studies.
It might sound a bit glum, yet shifting from renting to owning is possible with some homework and planning.
Homeownership investment benefits
Owning a home is the largest fixed asset that most of us hold. And since most of us buy our homes via mortgages (or home loans), we begin building equity (ownership and value) in our new custom Florida home with our very first monthly mortgage payment.
The longer we live in our home and the more we pay on our mortgage, the more of our home we own, which builds its worth as a long-term investment. That doesn’t happen with renting.
If we sell it due to space considerations, career or family moves, or other reasons, we can use the sale proceeds as rollover equity to buy our next home (after we pay off any remaining balance in our mortgage, if that exists).
How to get there
As with anything worth doing, sometimes the first steps are the most difficult or scary if you’re renter intent on becoming an owner. Here are some helpful first steps:
Pay off debt.
Mortgage lenders examine our financial health when we apply for a home loan and little or no debt is always a good thing.
Sketch out your future budget
Create a budget and include an estimated monthly mortgage payment, plus annual homeowners insurance and property tax costs.
Save for a down payment.
The industry standard is 20 percent of the price of your new custom Florida home. But a smaller down payment is possible. Talk to your mortgage lender and ICI Homes sales associate for more information.
Ready for your new custom Florida home? Talk to ICI Homes here.