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.
The average mortgage holder now has $185,000 in home equity
Download My KW App To Gain Insight Into The Neighborhood You Want To Live In!
My Goal Is For Everyone To Own Real Estate
Did You Know That State, County, City, and HUD Have Down Payment Assistance Programs?
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
Now Is A Good Time... It is much better than later....Homes Are Not Going To Get More Affordable
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 and you make your mortgage payments each month. As a renter, you don’t have that same opportunity. A recent article from CNETexplains:
“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 over time. That has a major impact on the wealth you build, as a recent article from Bankratenotes:
“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 equity you’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.
Owning a home is an important part of building your net worth. If you’re ready to start on your journey to homeownership, connect with a trusted real estate advisor today.