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Top 7 Benefits of Home Ownership in Wichita Falls TX - Part 2

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Real Estate Agent with Keller Williams Realty

Top 7 Benefits of Home Ownership in Wichita Falls TX - Part 2

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In Part 1 of this article on the Top 7 Benefits of Home Ownership in Wichita Falls, we discussed the first two benefits of owning a home versus renting.  The last several years have been difficult for the Wichita Falls real estate market, and home buyers have had trouble obtaining financing, however the market is turning around.  Many people are still wondering if now is really a good time to buy a home or not.  Many other people want to buy a home, yet are stuck in the rent trap because of tightening lending standards we've experienced the last few years.  People we work with are finding pleasant surprises, simply assuming they could not qualify when they were actually closer than they assumed.  This series of articles discusses the Top 7 benefits of owning a home versus renting.

Click Here to read Part 1 of this article

In Part 1 we looked at the first two benefits of owning a home versus renting.  The first benefit we discussed is steady payments.  When you buy a home, you can lock in your payment and avoid the annual rent increases.  The other benefit discussed in the previous article are the great tax savings you can experience by buying a home rather than renting.  If you missed these benefits, click the link above to read Part 1.

3. Build Equity through Paying Down Mortgage.  Not only can you put more money in your pocket this year by deducting your interest payment from your current income, the principal portion of your payment each month pays down your mortgage balance building equity.  Equity in your home is very simply the difference between what your house is worth and what you owe to the bank.  Each month, a portion of your payment goes towards paying down Buy vs. Rent to Build Equitythe amount you owe, so it is kind of like a big savings account.  When you rent, you are still paying down a mortgage and building equity, the problem is your putting money into your landlord's equity by paying down the principal portion of his or her mortgage. 

We all work very hard for our money, especially today with the tough economy.  How do you feel about just giving your money away?  Would you just give your hard earned money to pay into another person's savings account each and every month?  Would you just flush your hard earned money down the toilet?  Well, that is exactly what you are doing when you rent.  The shift of paying rent to paying a bank, as we've seen so far, provides you three huge benefits.  First, you can stop the annual rent increase letters you get at the end of every lease from your landlord.  Second, you're able to get more money out of your paycheck right away by increasing your deductions.  And third, you're able to shift from paying into your landlord's equity to paying into your own.  And, in many cases, because of the historically low interest rates and high demand for rental property, you can actually pay less every month for a mortgage than you currently pay in rent for a comparable home.

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4.  Build Equity through Appreciation.  You may not be thinking there is any appreciation to be gained in a home by listening to the news over the last few years.  All they've been talking about is the huge declines in property values.  Well, it really depends on where you are.  Certainly on the east coast, the west coast and areas like Las Vegas which saw huge double-digit increases in home values also saw huge decreases when the financial crisis hit.  Many of these areas have seen housing prices come back up again since the market has turned back around.  However, in places like Wichita Falls and other north Texas communities, where we live, home prices have been a lot more stable.  Prices here didn't see the huge increases as other parts of the country, and we also didn't see the huge declines either.  Regardless of where you live, buyers are returning to the market, homes are selling and housing prices appear to have stabilized.  We can't really be sure where the bottom or top is of any market until enough time has gone by to look back, but price ups and downs mostly affect speculators who are trying to buy and sell quicly to get rich quick by guessing on timing the market.  This is not the focus of this article.  What we're talking about is buying a home for your family to live in, give you stability over the years with a 30-year fixed rate mortgage, and stay there for several years as you pay down the mortgage.  If you are in a home for the long run, and by that I mean 5 to 10 years, then you don't need to buy at the absolute bottom of the market.  There are many, many homes on the market right now for very reasonable prices, many cheaper than they were a few years ago.

As an example, the median price of a home in Wichita Falls TX in 1983 was $50,000, and by 2013, the median price of a home has increased to $120,000.  This appreciation didn't increase as much as many other parts of the country, but we didn't see the huge drop either.  The number didn't go straight up, there were ups and downs, and remember this is after the so called "mortgage crisis."  Therefore, if you had bought a $50,000 home in 1983, and kept it until 2013, you would have gained $70,000 in value.  Furthermore, putting this together with paying down the mortgage can really open your eyes to the benefit of owning versus renting.  Let's just say for the argument sake (because I have to pick a number), that you got a mortgage for 6% interest and borrowed the entire amount from the bank, so you had no money out of your pocket.  By 2013, you would have paid down the balance to just under $12,000.  So your equity build up from paying down your mortgage would be $50,000 - $12,000 or $38,000.  So, your total equity in the house is $70,000 + $38,000 = $108,000.  And, even if you are now living in a home worth $120,000, your monthly payment is still based on that original loan of $50,000, and so you're payments are still only around $500 per month.  Compare that to the rent you would pay for a $120,000 home today is around $1,100 per month.

So, I ask you.  How long would it take for you to save up $108,000 on your salary, living in a $120,000 home paying market rent which you would now have increased about $1,000 per month?  If you had bought, versus renting all this time, your monthly payment for your home would have stayed at about $500 every month rather than doubling over that time, and you would have built up $108,000.

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For More information about how you can escape the rent trap and purchase your own home cheaper than renting, Call or Text Tim Lockhart - Keller Williams Realty at 940-704-7058.

For your Free KW Real Estate App for Apple or Android Phones or Tablets simply Text KW6PW9U to 87778

Click to Read Part 3 of this Article

 

 

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