Planning on getting wealthy?
Buying your own home is one of the standard strategies recommended by many financial experts. In fact, recent studies of how people gain wealth show that folks that own their own home accrue more wealth in a lifetime than those who don't.
But it is enough? Will you be retiring comfortably on your home equity?
An
article on Yahoo Finance says no. Apparently, too many of us are relying on our homes as our sole investment for our golden years, and that's a mistake.
Why? Well, we are using our home equity to finance our current lifestyle! The tidal wave of
home refinancing and decline in equity say that not only are our homes not building wealth for us, we aren't saving anywhere else either. With foreclosures up and
problems galore in the lending market, we aren't even necessarily keeping the house we bought.
However, let's say that you are carefully paying off your mortgage, and living within your means. Your homes still isn't necessarily the best investment of your money. While homes are generally going to make money over your initial price if you stay in them long enough, the amount you pay for them (once you add up interest and other costs) far exceeds what you will get out of them.
The answer? Buy your house because you love it.
Pay off the mortgage as quickly as possible, in order to save thousands (if not hundreds of thousands) in interest and other charges. And finally, be sure to have other savings and investments, so that you can enjoy your retirement years.
Michael Chantrel