My net worth shot up in the past 10 years not because I became a super saver or a great stock picker. In fact our net worth grew from the last place I expected: my house. I was surprised because I purchased my home during the housing bubble of 2006. According to an article by MSN Real Estate, homeowners tend to be significantly wealthier than renters. In fact, the median net worth of a homeowner in 2012 was a shocking 34.2 times higher than the net worth of a renter. According to the National Association of Realtors, the net worth of a homeowner was $174,500 compared to $5,100 for a renter. Even though my home went down in value after I first purchased it, the home values did eventually recover.
Being forced to save
Experts argue that a home is a forced savings account for middle-class people. I tend to agree since I rarely have enough money leftover at the end of the month to save for retirement or other long-term goals. I have a net worth of $200,000 thanks to the equity in my home. Before I purchased my home, I had a negative net worth. After I got out of credit-card debt and paid off student loans, I was able to start saving for retirement. However, my retirement account didn’t grow nearly as quickly as the equity in my home. I now have $110,000 of equity in my house.
Having an inexpensive mortgage
According to MSN, one of the reasons renters are happier than homeowners is because they don’t’ have a mortgage hanging over their heads. Although that might have been true in the past, I don’t think that applies anymore. It would cost me $1,500 a month in rent if I wanted to rent my own home. Because I refinanced at 2.75 percent, my mortgage is only $900 a month. I actually feel less stressed about my mortgage than I would about making sure I pay the landlord on time every month.
Overcoming my foreclosure fears
Although I was worried about going into foreclosure a few years ago, those fears started to wane as I paid down my mortgage. It’s a lot more intimidating to owe $150,000 on a mortgage compared to $90,000. The MSN article points out a Canadian study that showed a rise in psychological stress as a homeowner’s mortgage increased. Renters actually experienced the most stress, while owners who had paid off their mortgages had the least amount of stress. As a homeowner, at least I have the option to be mortgage free in the future.
Spending time with friends
Experts say there are social benefits of being a renter. I remember I had a much more active social life when I rented an apartment because I visited with friends at the tennis courts, swimming pool and hot tub. One survey found homeowners spend 4 to 6 percent less time with friends and neighbors. At the same time, I would imagine most homeowners spend more time with family.
Researchers have discovered other differences between homeowners and renters. Homeowners are often healthier and have higher self-esteem, but renters enjoy flexibility and mobility. I liked renting a luxury apartment at one stage of my life just as much as I like owning a home at this stage. I find my happiness increases as my mortgage balance decreases. When my home is paid off in 10 years, I’ll be a lot wealthier and a lot less stressed.
More from this contributor:
Student Loans Killed My Homeownership Dream
Losing a Job, But Not the House
Why I Should Buy Real Estate Like my Grandparents
