The Financial Benefits of Owning a Home    The Best Investment

 

As a fairly general rule, homes appreciate about four or 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 easily earn over the same return with a very safe investment in treasury bills or 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.

 
Post is included in group: Ideal4Investors
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1 Comments on The Financial Benefits of Owning a Home

Homebuyers often forget all the ancilliary benefits of owning a home and just how much the government subsidizes our home purchase.  Great reminder!!

03/14/2008 09:18 PM by June Piper-Brandon, CRIS, ePro, Broker (Advance Realty Anne Arundel Inc.)


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