How Owning a Home Builds Your Net Worth

By
Real Estate Agent with PHP Houses SL3302417

Owning a home is a major financial milestone and an achievement to take pride in. One major reason: the equity you build as a homeowner gives your net worth a big boost. And with high inflation right now, the link between owning your home and building your wealth is especially important.

If you’re looking to increase your financial security, here’s why now could be a good time to start on your journey toward homeownership.

Owning a Home Is a Key Ingredient for Financial Success

A report from the National Association of Realtors (NAR) details several homeownership trends, including a significant gap in net worth between homeowners and renters. It finds:

“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”

To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter’s. This difference shows owning a home is a key step in achieving financial success.

Equity Gains Can Substantially Boost a Homeowner’s Net Worth

The net worth gap between owners and renters exists in large part because homeowners build equity. When you own a home, your equity grows as your home appreciates in value and you make your mortgage payments each month. As a renter, you don’t have that same opportunity. A recent article from CNET explains:

“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home . . . When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.”

But on top of that, your home equity grows even more as your home appreciates in value over time. That has a major impact on the wealth you build, as a recent article from Bankrate notes:

“Building home equity can help you increase your wealth over time, . . . A home is one of the only assets that have the potential to appreciate in value as you pay it down.”

In other words, when you own your home, you have the advantage of your mortgage payment acting as a contribution to a forced savings account that grows in value as your home does. And when you sell, any equityyou’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month.

Bottom Line

Owning a home is an important part of building your net worth. If you’re ready to start on your journey to homeownership, let’s connect today.

Contact us:
PHP Houses
142 W Lakeview Ave
Unit 1030
Lake Mary, FL 32746
Ph: (407) 519-0719
Fax: (407) 205-1951
email: info@phphouses.com

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The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. The author does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. The author will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

 

 

Comments (5)

Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Walter and thank you for the great information to share with us here in the rain.  Make it a great day!

 

Sep 06, 2022 09:16 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Walter DiLoreto owning your own home is one of the best investments anyone can make for multiple reason, of which the growth in equity is very much one of them.  The equity gain in the last 3 years alone is amazing.

Sep 06, 2022 01:59 PM
Fred Sweezer Sr. CMI, LLC.
Hud Certified 203K Consultant - Long Beach, CA
HUD 203k Consultant

Thanks, your post is about the American Dream, and it is well said.

Sep 06, 2022 09:42 PM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Thank you for sharing this valuable information about how owning a home builds net worth!  Your points are well taken.  Wishing you the Best!

Sep 08, 2022 08:44 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great information.   Thanks for sharing and enjoy your day!

Sep 12, 2022 07:03 AM