| The
Benefits of Owning Your Own
Home
The Best
Investment!
On an average
about 60% of a home owners financial wealth is their
home.
As a fairly
general rule, homes appreciate about five percent a
year. Some years will be more, some less. The figure
will vary from neighborhood to neighborhood, and region
to region.
Five percent
may not seem like that much at first. Stocks (at times)
appreciate much more, and you could earn over six
percent with the safest investment of all, treasury
bonds.
But take a
second look…
Presumably,
if you bought a $200,000 house, you did not pay cash for
the home. You got a mortgage, too. Suppose you put as
much as twenty percent down – that would be an
investment of $40,000.
At an
appreciation rate of 5% annually, a $200,000 home would
increase in value $10,000 during the first year. That
means you earned $10,000 with an investment of $40,000.
Your annual "return on investment" would be a whopping
twenty-five percent.
Of course,
you are making mortgage payments and paying property
taxes, along with a couple of other costs. However,
since the interest on your mortgage and your property
taxes are both tax deductible, the government is
essentially subsidizing your home purchase.
Your rate of
return when buying a home is higher than most any other
investment you could make.
If you are moving to a
home for the first time, you are going to be very
pleased with all the new space you have available. You
may have to even buy more "stuff."
Income Tax
Savings
Because of
income tax deductions, the government is basically
subsidizing your purchase of a home. All of the interest
and property taxes you pay in a given year can be
deducted from your gross income to reduce your taxable
income.
For example,
assume your initial loan balance is $150,000 with an
interest rate of eight percent. During the first year
you would pay $9969.27 in interest. If your first
payment is January 1st, your taxable income would be
almost $10,000 less – due to the IRS interest rate
deduction.
Property
taxes are deductible, too. Whatever property taxes you
pay in a given year may also be deducted from your gross
income, lowering your tax obligation.
Stable
Monthly Housing Costs
When you rent
a place to live, you can certainly expect your rent to
increase each year – or even more often. If you get a
fixed rate mortgage when you buy a home, you have the
same monthly payment amount for thirty years. Even if
you get an adjustable rate mortgage, your payment will
stay within a certain range for the entire life of the
mortgage – and interest rates aren’t as volatile now as
they were in the late seventies and early
eighties.
Imagine how
much rent might be ten, fifteen, or even thirty years
from now? Which makes more sense?
Forced
Savings
Some people
are just lousy at saving money, and a house is an
automatic savings account. You accumulate savings in two
ways. Every month, a portion of your payment goes toward
the principal. Admittedly, in the early years of the
mortgage, this is not much. Over time, however, it
accelerates.
Second, your home appreciates. Average
appreciation on a home is approximately five percent,
though it will vary from year to year, and in some years
may even depreciate.. Over time, history has shown that
owning a home is one of the very best financial
investments.
Freedom &
Individualism
When you
rent, you are normally limited on what you can do to
improve your home. You have to get permission to make
certain types of improvements. Nor does it make sense to
spend thousand of dollars painting, putting in carpet,
tile or window coverings when the main person who
benefits is the landlord and not you.
Since your
landlord wants to keep his expenses to a minimum, he or
she will probably not be spending much to improve the
place, either.
When you own a home, however, you can
do pretty much whatever you want. You get the benefits
of any improvements you make, plus you get to live in an
environment you have created, not some faceless
landlord.
More
Space
Both indoors
and outdoors, you will probably have more space if you
own your own home. Even moving to a condominium from an
apartment, you are likely to find you have much more
room available – your own laundry and storage area, and
bigger rooms. Apartment complexes are more interested in
creating the maximum number of income-producing units
than they are in creating space for each of the
tenants.
If you are moving to a home for the first
time, you are going to be very pleased with all the new
space you have available. You may have to even buy more
"stuff." | 
