Here Is One Really Compelling Reason to Try to Buy a House

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Should this convince you to buy a home? 

If you’re on the fence about buying a house, there are a lot of advantages of homeownership that are worth considering.

You may have more choice as far as what type of home to live in and where you live when you are a homeowner rather than a renter. You have more control over what you do with the house as well. And you don’t have to worry about being evicted or priced out if a landlord decides to sell the building, raise rent, or simply move other tenants in.

Aside from these benefits, there’s also another really compelling reason to become a homeowner.

This could be a major advantage of homeownership

One huge reason for becoming a homeowner rather than continuing to rent is that you stand a good chance of ending up richer if you own your own place.

Investor and finance expert Graham Stephan recently sent out a tweet addressing the disparity in wealth between homeowners and renters. “Homeowners in the U.S. had a median net worth of $255,000, while renters had a net worth of just $6,300,” Stephan’s tweet read. “That’s a difference of 40x!”

As Stephan explained, this discrepancy is “staggering.” But it also makes sense for a few reasons.

First and foremost, people who are more financially stable are more inclined to purchase a home. Buying a house requires qualifying for a mortgage, which usually means having reasonable credit and making a down payment. People who are able to accomplish these tasks likely also have disposable income they can use for other things like saving for the future.

Second, homeownership itself also helps people grow their net worth. When you own a home, the monthly payments don’t just go into a landlord’s pocket without you acquiring anything other than a place to live for the time being. With each payment you make, you own a larger percentage of your home.

Your mortgage payments are, in a sense, forced savings because you acquire equity in the valuable asset that is your property. By the time your mortgage is paid off, you should have a house worth hundreds of thousands of dollars — or even millions of dollars. Renters, on the other hand, will just pay rent forever and not end up owning anything.

Third, your home value may also go up over time, as land and property prices generally appreciate. So your house will make you money by increasing in value even as you live in it. Your house will likely end up making up a huge portion of your net worth — especially if it ends up being worth hundreds of thousands of dollars more than you paid for it.

Homeownership still isn’t the right choice for everyone, though

The fact homeownership can help you build wealth is undoubtedly a compelling reason to buy a property. But on the other hand, if you are not financially ready, homeownership can destroy your wealth. That’s because if you can’t afford your monthly payments, you could end up getting foreclosed on and losing your property, which would also severely damage your credit.

So, while you may want to aspire toward property ownership someday, you should make sure you’ve got the money for a down payment, the financial credentials to qualify for an affordable mortgage loan, and a stable income that will allow you to make payments for decades to come. If you can do these things, becoming a homeowner could be the right path to ending up with a higher net worth.

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