I see it stated a lot in social justice circles that the path to building ‘generational wealth’ is via home ownership, but having lived with homeowners, that doesn’t seem to make sense. From the outside it looks like something you throw money into for decades, and then die and the bank takes over. How does just having a mortgage start to accumulate wealth???
In: Economics
> then die and the bank takes over.
Then you didn’t own the house. The banks can only take your home if you have outstanding debt.
>How does just having a mortgage start to accumulate wealth???
It doesn’t, but paying into that loan does. Think of it like this. Every month you pay off your mortgage. The same way that you would have to to live anywhere else. The only alternative stable housing is either renting or finding a warm bridge. Then when you finish paying off that mortgage you get all that money back. In the form of a house. Lets say you get a 500k mortgage on a house and you “throw” money into every month, at the end of your life what do you leave your kids. You leave them a 500k dollar asset in the form of a house and the ability to not have to pay for housing outside of taxes. The price of that house is also going to rise with the market meaning its value is more resilient to inflation, and in many cases out out pace inflation. Its essentially a big investment fund that you can live in.
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