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But there are far more options than this one
“Over time, equity can turn your mortgage debt into a sizeable asset.” Basically, the wealth you accumulate when you own a home has much to do with equity. As a homeowner, equity is built up as you pay down your loan and as home prices appreciate over time” (Metropolist, 2024).
Many believe buying a home is a solid way to build wealth. Is it? Or is that what we’re taught to believe? Should it take 30 years after buying a supposed asset to build wealth?
I think it’s fair to question this logic.
A person renting for 30 years could be in the same financial boat, if not better, than the person renting a home for thirty years, making their final mortgage payment, and finally owning it.
The person who didn’t own a home for 30 years had fewer financial responsibilities, so they might be able to accumulate more wealth without having to sell a property to access their wealth. There are many people who don’t own property who have a net worth larger than those who do.
And what about the people who struggle to make mortgage payments?
“Since buying, 43% of new homeowners have struggled to make mortgage payments on time, and 44% have taken on extra debt to maintain their lifestyles, according to a new survey from Clever Real Estate” (National Mortgage Professional, 2024).
Many people who “own” their homes can’t afford the mortgage payments. If you can’t afford your mortgage payments, you’re not building wealth; you’re trying to survive financially.
When Do Most People Buy Their First Home?
“Most first-time homebuyers make a purchase when they are 35. Buying a house at a young age can mean building equity and getting a home paid off sooner” (U.S. News Real Estate, 2024).
So, the average age of a first-time homeowner is 35, and then it takes 30 years to pay off the home. By age 65–70, they finally own one home IF they don’t move.
But what do they have in savings? And do they want to sell their property or keep it? If they sell the home, will it be enough for them to retire?
What percentage of the population owns a second home?
“As of 2020, second homes accounted for about 5.11% of the total U.S. housing stock, with an estimated total count of 7.15 million second homes (Fit Small Business, 2024).” This statistic is quite telling, which means most people aren’t using their equity or supposed wealth from their primary residences to buy more real estate.
Most people go into retirement house poor and cash poor, which is why so many people have to continuing working through their later years.
Most people also don’t own multiple properties, which is a tried-and-true way to build wealth. However, getting your hands on another property doesn’t always come naturally or easily to the average person.
Other Ways To Build Wealth
Investing
Investing in REITs
Business Ownership
Renting out the primary residence
Living with others in primary residence to pay down debt faster
Paying your mortgage every two weeks cuts down the mortgage by ten years
Do You Build Wealth Or Liabilities?
We usually do one more than the othermedium.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.