The Benefits of Owning Your Own Home
The Best Investment You Can Make
You are going to love the feeling of a home that’s all yours. But there’s a much better
reason to own a home of your own in . It's also about the best investment you can make. As a
general rule, homes appreciate in value at about 5% or more every year. Recently, it has been considerably more than 5%. Some years the increase will be
more; some years less. The appreciation rate will vary from neighborhood to neighborhood. But as a rule, you can count on a 5%/year increase in value over the
long run.
At first glance, 5% per year may not seem like all that much. After all, stocks (in good times) appreciate more
than that. Over the long run, stocks have averaged an annual appreciation of closer to 8% or 9%. And you
can earn as much as 6% per year with the safest investment of all, U.S. treasury bonds. So why buy a home ?
Normally, when you buy a $200,000 house, you don't pay cash
for it. You get a mortgage. Let's assume your down payment is 20%, the maximum you'd be asked for. That would be an investment of $40,000 of your money. The
rest of your home's purchase price is "the bank's money." That's right. You bought a $200,000 asset by
committing only $40,000 of your money.
At an annual appreciation rate of 5%, your $200,000 home will increase in value by $10,000
on average annually. That means you earn $10,000 on an investment of $40,000. Your
annual "return on investment" is a whopping 25%. (The $10,000 increase in value of your investment divided by your investment
of $40,000.) Try finding a better investment. And, your family gets to live in a $200,000 home in beautiful .
There is a wealth of additional information on how to go about buying a home at Fannie Mae's
www.homebuyingguide.org/ website.
Of course, you are making mortgage payments, property taxes, and other maintenance costs.
But remember, you can deduct the interest expense and property taxes on your home
against your income taxes. U.S. Government is essentially subsidizing your home purchase. Why ?
The government wants you to own your own piece of the pie so it provides an incentive to do so.
And living in a rented home isn't cheap either and all you're collecting there are
rent receipts.
When you get ready to consider buying a home, think about the wonderful homes available in Sarasota golf course communities.
You'll be glad your did.
What's this all mean ? It means that the rate of return ( or return on investment) on buying a
a home in the home is higher than almost other investments. Even better than that, you participate in the "American Dream" --
owning a home of your own !
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