Home Ownership Builds Wealth
If you’re on the fence about buying a home, consider this: home ownership builds wealth. According to the Federal Reserve’s recent Survey of Consumer Finances, the average net worth of a homeowner is 36 times greater ($194,500) than that of a renter ($5,400).
The concept and possibility of a owning a home, and subsequently embarking on your way to a higher net worth, is somewhat simple. Savings. A New York Times blogger noted the study and pointed out that homeownership encourages savings (for a down payment) and is in itself a form of savings. As each mortgage payment is made, homeowners accrue more capital. The home should also appreciate in value through the years, thus furthering the return on investment.
While home prices have been rebounding in recent years, rents have also been on the rise, negating the potential immediate savings renters generally benefit from. Homeowners, unlike renters, can also take advantage of numerous tax breaks. The key to building that wealth is to plan ahead and waiting until you have your finances secure enough to make the investment, then holding on to your home for the long term, as that’s when the investment truly pays off and can be used to finance retirement, education, or for new investments.