Contrary to popular belief, the benefits of homeownership have not been overemphasized. A new study shows that it is still a good investment for low- and- moderate households as long as the lending process is done right, through responsible mortgage practices.

Michal Grinstein-Weiss and a team of researchers conducted a three-year study involving a group of homeowners who got standard loans at a time where everyone else in similar circumstances were pushed into the subprime market. Compared to a group of participants who remained renters, these standard borrowers reported a higher net worth.

The study also found that, between 2005 and 2008, new homeowners reported an average increase of $15,000 in total net worth, while renters reported gains of less than $11,000. The difference in net worth is due to an increase in new homeowners total assets of $20,000 while their total debt only grew a quarter of that. However, for renters, the total assets only grew by $15,000 and the total debt increased at about $4,500. The homeowner group also showed greater gains than the renters in total liquid assets and total non-housing net worth.

This may look like perfect timing to become a homeowner; however, not all homeownerships are favorable. Grinstein-Weis states, “Our findings do not argue that all homeownership is beneficial, but rather that lower-income homeowners who have access to mortgages that are carefully underwritten with responsible terms, and responsible mortgages can experience increased financial security and independence.”