Buying a home is a big deal – it’s one of the biggest and most emotional financial decisions you’ll make in your entire lifetime. Haven’t we all dreamt of the home we’d buy when we grow up?
When my wife and I neared the end of our medical training, discussions of where to live began to arise. Like most people, our first home felt like the payoff for years of study and hard work; time for the good life to begin.
Yes, your monthly housing payment is going toward the equity of the home rather than rent. That’s a good thing. However, your primary home can be considered an illiquid asset.
The absolute numbers are important, but what they mean in terms of clinical or real life significance is what makes those numbers powerful. Having an increasing net worth means that you’re increasing your assets versus your liabilities.
The thought is that you need to live somewhere and can’t easily liquidate or tap into the equity of your primary residence. However, I don’t fully agree with that.
Okay Now, Should Your Home Be Included in Your Net Worth?
You can liquidate by selling your home on the open market, and you can definitely sell it faster if you’re willing to price it under market. In my market, I see homes closing in 14 days all cash easily, depending on the price.