How Does Homeownership Increase Net Worth?

For many, a home may be their largest purchase and also their biggest financial asset. Homeownership is a major milestone financially, and a source of pride. As your  home’s value increases, so does your equity and your net worth. 

Homeownership is a great way to increase financial security. If you are considering purchasing a home, now is a good time to start your search and begin earning equity. Real estate agents at Expect Realty are some of the best on the Mississippi Gulf Coast, and are poised to help you find the perfect home in Gulfport, Biloxi, Ocean Springs or any of our coastal communities.  

According to a report from the National Association of Realtors (NAR), there is a substantial gap in the net worth of homeowners compared to that of renters. It found that in 2021, a homeowner’s net worth was approximately $300,000, compared to that of a renter at approximately $8,000 – roughly 40 times more! And those factors are likely higher in 2022.

This gap in net worth between owners and renters illustrates how the equity in a home boosts your overall wealth. As the value of your home increases, and your payment decreases with your monthly mortgage payments, your equity builds. As a renter, you’re not improving your financial position in the same way you would be with a mortgage payment. 

In addition, through equity, an investment in a home is one of the few assets that gain value as a loan is paid down. Consider the purchase of a vehicle, a loss of value over time is unavoidable. According to Kelly Blue Book, a  new vehicle depreciates about 20% or more during the first year, and about 60% of their original purchase price within the first five years. 

In essence, your monthly mortgage payments act as a forced savings account that comes to your benefit when you sell. As a renter, your monthly rental payments will never be a financial benefit to you.

Bottom Line
Owning your own home is a great way to build net worth through equity. If you’re ready to start building wealth through homeownership, contact one of the agents at Expect Realty today at 228.215.1861. They are experts in helping buyers on their journey to purchase a new home in Gulfport, Biloxi, Ocean Springs and any of the communities on the Mississippi Gulf Coast.