According to experts, the median home listing price in the United States is around $226,800. However, this price varies on a state basis. An example is how the median price is $179,500 in Arkansas while it’s close to $635,000 in Hawaii.
Real estate prices might hold you back, but buying a home is a great way to build generational wealth. This term refers to wealth that’s passed on to the next family generations. You might’ve been thinking twice about buying a home, but you can easily turn it into wealth for your future generations.
Don’t know how? We’ve got you covered. Here are the 4 steps you should follow to turn your home into your legacy.
1. Take Control of Your Debt
Lowering your debt is a must to build wealth. Homeowners and buyers alike should try their best to keep their income to debt ratio down by repaying their debt.
If you lower your debt, you can build a safety net fund or use your extra income to repay your home loan principal ahead of schedule. As a potential home buyer, you should also keep in mind a low debt to income ratio is vital to obtain approval on your home loan.
2. Find a Home That Meets Your Budget or Assess Your Property’s Value
If you’re a home buyer, it may be tempting to buy your dream home. However, you should stick to properties you can afford. A real estate agent can provide insight into the typical home loan approval requirements, costs of home buying and the house you can afford.
Homeowners often ask themselves, “How much is my house worth?” While there’s no easy answer, you can use online home value tools and request a comparative market analysis from a realtor to find out your home’s worth.
3. Pay Your Home Loan
For your home to become an asset you can pass on, it must be debt-free. If you take a home loan to buy it, you need to pay it off.
It may seem difficult at first, but you can pay your home loan if you develop a plan. Start by putting money aside on a savings account and setting a schedule to make payments to your loan principal to speed your repayment.
4. Consult a Financial Advisor or Attorney
When you pay off your home, it’s time to consult a financial advisor or attorney to plan how you’re going to pass on your property to future generations. A financial expert can provide options on how to build more wealth and even connect you with a realtor to grow your real estate portfolio.
You should also consider consulting an estate law attorney to learn how to pass on your property to family generations. Your lawyer may even help you set up a company to run real estate operations such as rentals and property sales.
Can You Build Generational Wealth to Pass On?
It may seem difficult to build generational wealth to pass on to the next family generations. However, it all comes down to harnessing the power of wealth-building strategies such as buying real estate, investing in the stock market, among others. You may do it yourself by learning about the different types of investment strategies.
However, you should consider consulting an expert. Depending on the type of investment, you may need to consult a realtor or financial advisor. You should also consult an attorney to make sure you protect your assets and distribute them according to your wishes after you pass away.
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