Helping Women Build Assets through Successful Homeownership

by Laura Altomare, Chief Communications Officer, Homewise 

Homeownership is one of the most important ways that Americans create financial security. Homeownership helps build assets, which are critical to financial well-being and quality of life. According to the U.S. Census Bureau, the median net worth of a homeowner is $199,600 compared to $2,200 for renters, barely one percent of the homeowner’s rate. Asset building can be particularly critical for women. The Asset Funders Network reports that single women own just 32 cents for each dollar owned by single white men. Single black and Latino women own just one cent on the dollar. Homewise is working to interrupt this cycle by helping women, particularly those of low-to-moderate income, to build assets through successful and sustainable homeownership. Each year single women and single mothers make up 30 percent of new Homewise homeowners; that’s nearly 200 New Mexico women buying a home of their own and building financial stability and wellbeing every year.

The Wealth Building Power of Homeownership for Women

For most households, housing is the biggest monthly expense. Homeownership stabilizes that expense by locking in the principal and interest payment. Only a small portion of the payment, for taxes and insurance, can increase. With just two percent yearly inflation, a homeowner’s monthly payment would only be about $65 higher 10 years after buying their home. Meanwhile, a renter’s monthly payment would have increased by over $300 in that same time period. For homeowners, that’s hundreds of dollars every single month year after year that can be used to build savings, meet expenses, and invest in their businesses.

Homeownership also creates an automatic savings account by building equity. Each month, an increasing portion of a mortgage payment goes toward paying down principal. On a $250,000 mortgage, a homeowner would accumulate about $45,000 of equity in ten years simply from this principal pay-down. That doesn’t include any market appreciation, just the automatic savings effect of paying down a mortgage.

Appreciation can be difficult to predict but even with modest appreciation of only 2 percent per year, the owner of a $250,000 home would see over $50,000 in appreciation in ten years. Add that to the equity accumulated through the principal pay-down and the owner has about $100,000 of wealth to her name just by making her monthly housing payment.

Overcoming Financial Obstacles to Homeownership

Many low-to-moderate income women face financial obstacles that lock them out of the long-term economic benefits of homeownership. The challenges of excessive debt, poor credit, and lack of savings pose a risk to financial security and create barriers to achieving homeownership. Homewise helps to remove those obstacles through free financial literacy and homebuyer education to help people manage money, reduce debt, and build savings in order to build long-term financial wellbeing and support them on an affordable and sustainable path to successful homeownership.

The power of financial education as a tool for building financial resilience in preparation for successful homeownership can be seen in the results. In 2018, women who came to Homewise with financial obstacles and went on to successfully complete the steps in their financial action plan experienced an average 78 point increase in their credit score, a median decrease of $107 in their monthly debt, and a $3,100 increase in savings. 

Read Laura's full article including insights on having a Real Impact on Real Lives, and how to learn more about the successes Homewise has had like with Erika (pictured) that impacts three generations -  https://greenmoney.com/helping-women-build-assets-through-successful-homeownership 

========