Why Buy A Home In Today's Market | ||
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Also, lenders are offering attractive rates and innovative financing, such as buy-downs and various adjustable loans.
Buyers who act today not only can take advantage of today's market, they also can benefit from the Big Four Wealth Builders of Home Ownership.
Four Wealth Builders
LeverageLeverage means using borrowed money (OPM: "Other People's Money") to control a property and receive its benefits. Here is how leverage works. Say you have acquired a $100,000 house with only a 10% down payment ($10,000). Suppose the property appreciates 10% in the first year and the house is worth $110,000. You have "earned" $10,000 on your investment of $10,000 - a profit of 100% in a year. (Financing costs would of course, lower the new yield). That's leverage - a big return by using borrowed money. If home prices rise only 3% a year for the next decade, the home you bought this year for $100,000 would be worth $134,392 in ten years. With $10,000 down, you would realize a 344% profit. If prises rise 5% a year, you would profit 629%; at 8% a year, you would profit 1,159% due to your leverage purchase.
Tax Breaks
You will also realize savings from the tax advantage of homeownership. A homeowner's taxable income is reduced by tax deductions (for interest payments, points and real estate taxes). Later, after living in the home for at least two years, any gain you realize at sale gets special treatment and is tax free up to $250,000 for single individuals and $500,000 for married couples. See your tax advisor for details and questions.
Savings
Mortgage principle payments go into your own pocket, not someone else's. You are saving and building equity as you pay for a home that is appreciating in value. (The amount of appreciation depends on inflation, the local economy and what ever home improvements you make). But there are fewer appreciation windfalls in today's market. You must buy wisely. Not all properties in all locations will give you the top dollar investment return you want. Our up to the minute market research will help you buy smart.
Owner Pride
The fourth pillar of home-owning involves, of course, many things besides keeping a roof over your head. You acquire, along with a structure, the responsibility for maintenancs and repair. Most homeowners find the benefits of owning far outweigh the upkeep efforts - and many homeowners enjoy the work. You also put down roots and become more involved in the community. In short, you own an investment that builds intangible riches while you lock in your housing costs and avoid unpredictable rent hikes.
Consult A Professional
There are more details involved in buying a home than we have room to outline here. If these basics seem appealing, let us help you understand the home buying process. Feel free to give us a call or send us an email.
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