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Understanding Why You Should Become a Homeowner
Owning a home is not for everyone. There, we said it. Unlike most lenders and real estate agents, we believe that the American Dream of homeownership should only be realized when you, the real customer in this process, understand everything about responsible home ownership. But for an overwhelming number of Americans, homeownership is probably the best financial decision they can make. Here are just a few reasons why:
- George S. Clason’s financial classic, The Richest Man in Babylon, is a book of simple, sound financial principles all Americans would be wise to adopt and follow. In Chapter 3 of the book, 7 Cures for a Lean Purse, the fifth cure is: “Make of thy dwelling a profitable investment.” As the lesson explains, “Paying exacting landlord’s liberal rents for rooms…” is not a path to financial prosperity. If you have to pay for shelter- you should work to create the opportunity to own your home, and build wealth in the process. When you pay rent, you are building your landlords wealth, not yours. You are paying off his mortgage, not yours. And here is a simple question: Do you think your landlord pays rent, or owns his own home? And why do you suppose that is?
- Homeowners have a higher net worth than renters. This is not an opinion- it’s a fact.
- Home ownership builds wealth in two ways: through the forced savings of paying down a mortgage, and through appreciation -- the rise in the homes value over time.
- Pride of Ownership. Face it - as a renter- you know it’s not “yours” even though you say “my” house or apartment. And it just feels better to own our home– we can paint the walls the color we want- we can upgrade it, we can make it our own. And if we do any of those things to a place we rent, we are only adding value to the asset that belongs to someone else. When we do these things for the home we own- not only do we get to enjoy the improvements — but we have increased its value – which means we increased our own net worth as well.
Average net worth of homeowners vs. renters |
Annual Income |
Owners
|
Renters |
$80,000 and up |
$451,200 |
$87,400 |
$50,000 - $70,000 |
$194,610 |
$25,000 |
$30,000 - $49,999 |
$126,500 |
$10,600 |
$16,000 - $29,999 |
$112,600 |
$4,240 |
Under $16,000 |
$73,000 |
$500.00 |
| Source: VIP Forum, Federal Reserve Board |
Bottom Line: You need to get on the path to homeownership as soon as possible!
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Why you must stop renting
