How Owning a Home Builds Your Net Worth

Owning a home is a major financial milestone and an achievement to take pride in. [Owning a home](https://www.simplifyingthemarket.com/2022/08/15/the-u-s-homeownership-rate-is-growing/?a=713258-9a8342bcf821027012880bf1d7cccbf7) is a major financial milestone and an achievement to take pride in. One major reason: the [equity](https://www.simplifyingthemarket.com/2022/07/06/how-your-equity-can-grow-over-time/?a=713258-9a8342bcf821027012880bf1d7cccbf7) you build as a homeowner gives your net worth a big boost. And with high [inflation](https://www.simplifyingthemarket.com/2022/07/20/should-you-buy-a-home-with-inflation-this-high/?a=713258-9a8342bcf821027012880bf1d7cccbf7) 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](https://www.simplifyingthemarket.com/2022/08/25/why-you-may-want-to-start-your-home-search-today/?a=713258-9a8342bcf821027012880bf1d7cccbf7). #### Owning a Home Is a Key Ingredient for Financial Success A [report](https://cdn.nar.realtor/sites/default/files/documents/2022-snapshot-of-race-and-home-buying-in-the-us-report-02-23-2022_0.pdf) 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](https://www.simplifyingthemarket.com/2022/08/30/whats-actually-happening-with-home-prices-today/?a=713258-9a8342bcf821027012880bf1d7cccbf7) and you make your mortgage payments each month. As a [renter](https://www.simplifyingthemarket.com/2022/08/03/buying-a-home-may-make-more-financial-sense-than-renting-one/?a=713258-9a8342bcf821027012880bf1d7cccbf7), you don’t have that same opportunity. A recent article from _CNET_ [explains](https://www.cnet.com/personal-finance/mortgages/should-you-buy-a-home-in-2022-heres-what-you-need-to-know/): > ###### _“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](https://www.simplifyingthemarket.com/2022/08/11/what-does-the-rest-of-the-year-hold-for-home-prices/?a=713258-9a8342bcf821027012880bf1d7cccbf7) in value over time. That has a major impact on the wealth you build, as a recent article from _Bankrate_ [notes](https://www.bankrate.com/home-equity/how-to-build-equity-in-your-home/): > ###### _“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](https://www.simplifyingthemarket.com/2022/07/25/whats-causing-ongoing-home-price-appreciation/?a=713258-9a8342bcf821027012880bf1d7cccbf7) as your home does. And when you sell, any [equity](https://www.simplifyingthemarket.com/2022/07/08/why-growing-home-equity-is-great-news-if-you-plan-to-move-infographic/?a=713258-9a8342bcf821027012880bf1d7cccbf7) 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. ### 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. Posted by [Ryan Drowne](https://www.thedavidgreengroup.com/blog/author/ryandrowne/) on September 13th, 2022 Enjoy this blog post? 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