We created House Numbers to help homeowners gain more financial independence. It’s something both personal and meaningful to tens of millions of Americans. What that looks like for you will be different than for someone else, depending on your unique goals and circumstances. We’re striving to build something to empower every homeowner and take into account these differences.
Your home is an expensive and complicated asset
As most homeowners will tell you, their home is their most important asset. It’s true. In the U.S., there are more than 90 million owner-occupied homes, and the home is the most common appreciating asset, other than bank accounts. Home equity – your home value less the amount owed on your mortgage – represents 70% of a homeowner’s total net worth, on average. Home ownership is also part of the path to wealth creation. As of the most recent data in 2019, homeowners have an average net worth of $255,000, compared to just $6,300 for everyone else.
The home is a complicated asset, too, and that complexity has only increased in recent years. It’s always been a challenge to understand more traditional aspects of home ownership, like mortgage refinance (APR, closing costs, points, etc), loan modification, home equity loans and lines of credit, property tax assessments, home insurance, mortgage insurance (PMI), reverse mortgages, how to level up to a better home, or how to create and manage a rental property. But, more recently, it’s become even more complicated. It now also includes home equity investments, whether to install solar panels, battery storage or energy-efficient heating/cooling systems, generating extra income on Airbnb, adding an accessory dwelling unit (ADU) in your backyard, relocating to work remotely, and even reducing energy usage to earn cash.
How to make the best decisions
To really make the best financial decisions about your home, you need to keep tabs on many types of frequently changing information. Prevailing interest rates, lender qualification requirements, your credit score, your outstanding loan amount, interest rate and loan type, your debt, income and savings, energy costs, tax incentives, government subsidies, and more. Then, you need to interpret all this information in light of your financial goals and personal plans. The right decision is very different for someone who wants to minimize monthly debt payments, compared to someone who wants to maximize the total return on their investments.
Where do homeowners go for this type of guidance today? When you look at other assets, like stocks, bonds, mutual funds, ETFs and life insurance, more than 260,000 personal financial advisors make up a large industry, mostly helping the rich and ultra-rich build wealth. These folks usually are fiduciaries who make money based on the value of assets they manage and the profits they generate, which is aligned with building a long-term relationship with their clients.
So, what about those of us whose home is our largest asset? 62% of households have home equity, compared to just 25% for stocks and mutual funds. Yes, there are real estate agents, mortgage loan officers, insurance agents, and contractors who are specialists in their areas. However, we’ve found it’s extremely rare to meet a homeowner who feels well-served by these professionals when it comes to building financial independence. These relationships are, by definition, often transactional. None of these professionals look at the whole financial picture. Financial incentives can be misaligned, which rightfully leaves homeowners feeling like there’s no one to trust.
The road ahead
The bottom line: too many homeowners are missing opportunities to increase financial independence. They are unable to manage their home as the valuable, complicated, dynamic asset that it is. We know this is a tough problem to solve, and it’s even tougher to do in an incorruptible, trustworthy manner, with each homeowner’s best interest first. But, we’re committed to doing just this. We believe it’s work worth doing. It’s why we created House Numbers.