Buying a home for your family and settling down is every American’s dream. Financially speaking, homeownership is a sign of well-being and security. A report released by Consumer Financial Protection Bureau defined financial well-being as “a state of being wherein a person can fully meet current and ongoing business and financial obligations, can feel secure in their financial future and is able to make choices that allow them to enjoy life.”
A person’s capability to afford a home itself signifies that he is at a better place in terms of well-being. A survey was conducted by Consumer Financial Protection Bureau (CFPB) in which people were asked to rate their well-being from zero to 100, with 100 being the highest. Homeowners averaged at a 58 while the average for renters was 49.
Affordability Is a Key Factor That Determines Well-Being
One of the major factors that enable a person to purchase a housing property is affordability. For example living in California is much costlier than living in Utah. In another survey by CFPB revealed that people who paid 50 per cent or more of their monthly income as mortgage showed an average well-being of 46.5 while those paying 30 per cent or lower averaged at 56.51.
People who invested in a property as a retirement plan averaged a well-being of 51, while those with a non-retirement plan averaged higher at 62.
Top Three Influencers of Financial Well-Being
Surprisingly, education, age, and physical health also greatly affect financial well-being. Every person at a certain age in life are at the right time to purchase a home. When a house isn’t bought at that time, it means the milestone isn’t achieved that then affects the financial well-being. People who had $2,000 saved for emergencies scored an average of 62, while those who didn’t has a very low average of 39. Subjects who went through a financial shock like buying a car after an accident or severe problem or home repair had an average of 52, while those with no financial shock averaged a good 57 of financial well-being.
The relation is surely complicated and varies from person to person. It provides you higher financial security therefore better well-being levels. However, an important part of it is home security to housing insurance. People often complain about not finding a good policy, but with good research, it won’t be a difficult task. For those who are thinking that searching a policy is difficult, it isn’t. Follow the rule of three and study policies from three different companies.
Always connect your insurance payments with your Escrow account, so that lender is also aware that you are making regular payment. Check the multiple levels of coverage your housing policy is giving you. To reduce the monthly or annual premium, pay a higher deductible, that is the amount you paid first before the premiums started. To even reduce the premium choose annual premium pay as it is a lot affordable than annual premium. If you like collecting antiques and expensive things, adding a rider to your policy will protect all those.