Owner

A recent question posted at one of my favorite sites, Answerbag, asked, “Is it better to own or rent a home? Why?”  Is it better to be a renter or an owner?

My answer:  Owner.

Why?  One word:  Equity.

Simply stated, equity is amount of profit a home owner builds over time.  This is achieved in two ways.  As you pay your mortgage, your debt load decreases by a certain amount.  That amount is rolled into the value of the house.  So the more you pay off on your loan, the more money you will be able to keep if and when you sell that house.

The other way equity is built is through the appreciation of the house and land.  In other words, the physical property increases in value over time.  That increased amount of money is also profit in your pocket if and when you decide to sell your house.

So the faster you pay off your mortgage and the longer you hang on to your house and property, the more equity you build and the greater your total wealth.

When you rent, you build no equity.  Zero!  Your landlord builds equity, but none of that is shared with you.

I’ve been a renter.  Sometimes in your life it cannot be helped.  Everyone has to start somewhere and that usually involves renting.  But your goal should always be to purchase a home.  Building equity is a great way to ensure the financial stability and security of your future.