To own or not to own (a home)?

By Ernest Towle

For the longest time, people have been debating whether a home is an asset or a liability.

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Depending on which side of the divide you choose to stand on and through which set of eyes you view the argument, home ownership can be seen as either boon or bane!

Maslow’s theory of hierarchical needs places physiological and safety needs as the two most basic for humans. Without these two needs being met, it would be impossible for us to survive.

Photo by Ian Keefe on Unsplash

Photo by Ian Keefe on Unsplash.

Aside from food and nourishment, the ability to stay in a safe and secure environment ranks equally high. Nevertheless, ownership of the dwelling is not a necessity.

Thus you may ask why we should own when we can rent. Would home ownership offer any benefit over renting a property? The answer is… it depends.

Photo by Jon Flobrant on Unsplash

Photo by Jon Flobrant on Unsplash.

Historically, it has been shown that real estate, for the most part, appreciates in value over time. This value appreciation, though only accessible once the property is refinanced or sold, represents a locked resource that the owner can then use.

The key here is that a resource was accumulated with little effort on the part of the owner, save for the monthly repayment. And with access to the resource comes access to options when the opportunity or need arises.

Image by rawpixel from Pixabay

Image by rawpixel from Pixabay.

Renting, however, will not offer such an option because the renter is locked out of building wealth through home equity.

Having said that, the renter will have more disposable income to invest in other avenues, enjoy more mobility and not have to deal with real estate problems or potential tenants from hell.

So, there are many pros and cons for both home ownership and lifetime renting. Home ownership may not be everyone’s cup of tea but there will come a time when active income dwindles either by choice or circumstance.

Photo by Jude Beck on Unsplash

Photo by Jude Beck on Unsplash.

At that juncture, having a mortgage-free home will be most advantageous. Knowing that you have a roof over your head along with the option of converting it to cash for whatever reason is of great comfort. And having more than one roof will help generate passive income through good times and bad.


Are you prepared for home ownership? Get the 2019 edition of the First Time Home Buyer Guide to help you on your way.

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