Why Home Ownership is the Best Wealth Building

Owning a home, instead of renting, is the best form of wealth building as seen in the simple illustration below. Whether you hit upon bad times or not, the money you put into a home puts money into your pocket. Even if there is a mishap, where you are forced into insolvency, having a big amount of money in a home will fix your pain.

 

What I drew above are two scenarios. In the first bar, is the normal situation, when you buy a house and over time your debt to the mortgage lender shrinks, including Other Debts too, like from a small credit card.

In the second scenario, what happens when your property goes up in value, if you are to sell it, you make back the amount you own plus the new price.

What might happen, to a few people who are stricken by a life mishap, is that you can sell your home to pay expenses and all other debts and still come out on top, if your property has gone up in value but also if you have been paying your bills before the mishap.