It should, if you made any down payment on the house and your home hasn’t declined in value.
That down payment — whether it was from funds out of your own pocket or money secured elsewhere — represents equity in your house. Your equity in a home is defined as the market value of the property minus any mortgages or liens on the home.
So if you just bought a house worth $350,000, and you had a 10% down payment, your current mortgage balance is $315,000, which means you have $35,000 in equity in your house.
Knowing how to skillfully manage that equity — and properly maintain both your home and your finances so that you avoid financial loss or foreclosure — is part of the job of being a successful homeowner.
Why Your Home Is an “Asset” and Not a “Liability”
First, let’s take a look at why you should consider your home an asset — because not everyone views your primary residence as an asset. Some people say a home that you occupy isn’t really an asset because a home is constantly taking money out of your pocket with mortgage payments, insurance, taxes, and so forth.
For this reason, you might hear various assertions that a home is not really an asset, but a liability.
I agree with the obvious conclusion that owning a home entails ongoing out-of-pocket expenses. However, as I explain in my book, Your First Home, I don’t concur with the notion that just because something costs money, it doesn’t qualify as an asset.
Using that line of thinking, one could argue that the $250 sitting in your checking account isn’t an asset since having a low balance means your bank is going to charge you $10 or $20 a month for that account, or nickel-and-dime-you to death with service charges. (See my tips on how to avoid rising bank fees).
Although we know that getting nickel-and-dimed happens all too often, has anyone ever told you that your hard-earned cashed sitting in the bank is a “liability” instead of an “asset” simply because your checking account actually costs you money each month. That would be ludicrous, right?