The Wealth Ladder of Homeownership
While savings such as retirement accounts and passbook savings build wealth, for many folks homeownership is the biggest builder of wealth. Thinking of wealth of homeownership as a ladder, you start at the bottom, but every month you rise a little higher on the rungs.
Step one - when you pay a mortgage each month your equity goes up and the balance owed down. If you are paying rent you are just paying off the landlord's property, helping them build wealth.
Step two - Most homes go up in value each year. With the exception of a few years homes have always increased in value. So a homeowner not only gets equity through paying down a loan, but the home increases in value.
Step three - You can increase value even more if you improve the property, especially with finished space or upgrading the amenities.
Step four - Are you interested in scaling up or down by selling your home and purchasing another? The equity you've gained by owning a home can be used for the purchase of a different home.
Step five - Do you need to leverage the equity in your home for college tuition, retirement, business investment, any number of reasons, owning a home can be a good source of funds.
Step six - Wealth for future generations, making it possible for the next generation to have a leg up on wealth by having assets for heirs.
Each step of the ladder brings wealth, creating financial strength and flexibility as well as future generational growth.
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