Let's plant two "money trees" and watch their growth.  We'll plant the first by placing $20,000 in a savings account earning 5% interest, and leave it there for five years.  After five years, we'll withdraw our initial investment ($20,000) plus the interest ($5,525).  We invested $20,000 and received back $25,525, a 5% yield.

Now, let's plant the second tree.  We'll buy a home for $100,000 and invest $20,000 (as the down payment).  For the sake of argument, we'll assume that the home appreciates at 5% each year, just as the savings account earned 5% interest.  At the end of five years, the home will be worth about $128,335, a $28,335 gain (that's at an annual rate of 5%).

We invested the same $20,000, and received back our $20,000 investment plus another $28,335 (the increase in value) for a total of $48,335. The rate of return is a sizable 19.3 percent!  By purchasing the home, we were able to earn 5% appreciation on the entire $100,000, whereas on the savings account we earned 5% only on the $20,000 investment.

Incidentally, if we had invested only $10,000 in the same $100,000 home ($10,000 down payment - $90,000 loan), we would have received the same $48,335 in return for only a $10,000 investment - a whopping 37.04 percent return!  Now you can see the obvious benefits of home ownership!

For specific market area details please visit www.MarkWatterson.com or call me 801.815.0411

Mark Watterson is a Principle Broker with Principle Realty Group, Inc and a licensed Senior Mortgage Loan Specialist with Envision Lending Group.