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How Owning a Home Builds Your Net Worth
🎉 Have you ever wondered why owning a home is a financial achievement widely celebrated? The power of owning real estate lies in its growth potential; as the market grows, your net worth and financial security increases!
🏡 Home Ownership is a Major Element of Financial Success
A report from the National Association of Realtors (NAR) notates a vast difference in net worth between homeowners and renters, stating “. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.” That spread puts a homeowner's net worth around 40 times more than home renter's.
💰 What's better? As the Equity in your home goes ⬆️, your Net Worth also goes ⬆️
One of the biggest reasons homeowners have a significantly higher net worth is the property's ability to gain equity. The equity in your home increases as it appreciates in value and mortgage payments are paid. Renting a home does not give you that opportunity, as explained in an article recently written on CNET:
“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.”
What's even better is the equity in your home has the power to increase as the property appreciates in the market. Homeownership allows your worth to grow, as highlighted in a recent Bankrate:
“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.”
Owning your home allows you to use your mortgage payments as an active savings account, that grows in value as you pay it monthly; and when you go to sell your home, that money comes back to you! Sadly, renters never see a penny of return on monthly rent.
Bottom Line
Homeownership is a huge contributing factor to building your net worth. If you're interested in learning more about how real estate can impact your wealth and financial stability, please don't hesitate to let us know!