Is Buying a Home the Ticket to Financial Freedom?

This story originally aired May 19, 2006.

Financial expert and author of "The Automatic Millionaire: Homeowner" David Bach says home ownership is the key to personal wealth.

(ABC News)

Is buying a house the ticket to financial freedom? According to financial expert and author David Bach, home ownership is the key to personal wealth.

"You can't get rich if you're a renter. The American dream of home ownership has really separated the rich from the poor in this country. The average renter in America today is worth less than $5,000. The average homeowner is worth over $172,000," Bach said.

Bach is spreading that message in his best-seller "The Automatic Millionaire: Homeowner." He took that message on a bus tour, with the zeal of a gospel preacher.

"It's more than just the gospel of home ownership. It's the gospel of freedom," he said.

Nearly 10 Million Renters Could Afford a Home

Bach isn't opposed to other investment strategies, he's just convinced that homeownership is a sure bet. "I'm not against the stock market, but the simplest investment people will ever make that really performs well for them is their home. It's the ultimate retirement account," he said.

"There are nearly 10 million renters today that could actually afford to buy a home, to get a mortgage, but they don't know it," he said. "You don't need a big down payment. You don't have to have perfect credit."

"20/20" challenged Bach to help two families out of that 10 million realize the American dream of buying their first home.

Alison and Greg Kenyon, from the metro Detroit area, make nearly $60,000. Last year, they had a 2-year-old and a baby on the way and were quickly outgrowing their rental apartment but they admit they didn't know a thing about buying a home.

During a meeting with the Kenyons, Bach had surprising news for them: Their monthly payments might actually be less if they buy.

"Because you get a tax write-off for your mortgage, it will actually be less expensive for you to own than rent," he told them.

He told them that based on their strong credit history, they should have no trouble getting a $180,000 loan.