Owning your own home offers many benefits ranging from increased stability and
security to investment and tax advantages.
Most homeowners find satisfaction and pride in owning their own home. In the same
survey, 76 percent of the homeowners and 66 percent of the renters interviewed
considered pride in ownership an important reason for buying.
The NAR survey revealed that almost 70 percent of homeowners and renters found
avoiding rent to be an important reason to buy a home. Since renting offers no
equity, no tax benefit, and no protection from regular rent increases, it's like
watching your hard-earned money float away. Think for a moment: if you're now paying
$600 per month for rent ($7200 per year) and your rent increases by 6 percent a
year, that means that next year you'll be paying $7632, in five years you'll be paying
$9054, and in ten years you'll be paying $12,164. After ten years, you will have spent
$94,856 on rent and have nothing to show for it.
Buying a home you can afford is generally a wise financial choice.
- Unlike renting, homeownership also offers the advantages of increasing
equity on your investment. Homeownership always has been, and continues to
be, the single largest source of savings for American households. Homeowners
build equity and can borrow against it. In 1993, home equity accounted for
44 percent of the nation's total net worth-far more than retirement accounts,
stock shares, rental properties, etc.
- Compared to the alternative of renting while investing in stocks, buying
a home wins over the long term. Consider this example: Two identical families
have $16,800 to invest. Family A uses the money for a down payment on a $140,000
home while Family B invests in stocks and rents a comparable home for $750 per
month, initially. After 10 years, the family that invested in a home is $34,660
ahead of the family that invested in stocks (based on national averages for home
and stock market appreciation and taxes paid). Furthermore, the homeowner has paid
about $5000 less for housing than the renter over the 10-year period (again,
based on national averages and assuming only a three percent rent increase annually).
- Homeownership also carries significant tax benefits since property taxes and
the interest paid on a mortgage are tax deductible. Profits earned on other
investments are subject to a 20 percent federal tax rate for most investors.
- Compared to other alternatives, a home is a relatively stable investment.
Homes tend to steadily increase in value while other investments may be extremely
volatile. For example, over the past 28 years, average stock values have
increased by as much as 35 percent in one year and dropped by as much as 24
percent. The average annual increase in the New York Stock Exchange Price
Index was 6.9 percent from 1969 to 1996. Average stock prices dropped in 8
of those 28 years. During the same 28 years, while home values experienced
ups and downs in individual housing markets, they remained stable and reliable
nationally, averaging a 6.5 percent increase each year. The largest annual
increase in the price of existing homes was 14 percent; the smallest, 2 percent.
- Over time, the return on your investment in your home can be substantial. For
example, a new home purchased in 1977 for $48,800 (the median price for new homes
at that time) was worth $150,707 in 1997. Assuming that values continue to
increase at the same rate, the home will be worth $264,844 in 2007. (This example
is based on national statistics; appreciation rates and economic conditions
vary in individual housing markets.)
- Additionally, the rate of return on a home is much greater than that of other
options. A stock investor, for example, must pay the entire purchase price up
front, while a homebuyer invests only the amount of the down payment. If a buyer
invests $10,000 in a down payment on a $100,000 home, and the home's value
increases by $5000 the first year, then the buyer has realized a 50 percent
return on his investment.
- Finally, once you own a home and have built up some equity, it is
easier to move up to a larger and/or nicer one-but you have to start
somewhere. Buying a home is a good investment in your future.
|
|
|
 |
I worked with Mark on the purchase of my first home and it was a pleasurable and informative experience. I have talked to multiple people who mentioned how stressful the house buying process was for them. I never felt any of that thanks to Mark’s professionalism. Any time I had questions about the processes involved in the purchase of the house, I could call and he would return my calls in a timely and knowledgeable fashion.
From the start, I already established the budget I wanted to work within. Mark took the time to listen to what I wanted in my first home from the size of the house to location of the house. When we started looking at the houses on the market, Mark would pre-sort through the list and show me houses that I would be interested in. I never felt like was wasting time and efforts in looking at house that I would never have been interested in.
When I finally narrowed my choices down to five potential houses I would purchase, Mark and I went to visit those houses. During that process, I felt like Mark was really looking out for my best interest. Not only would he point out things he saw that would be good points toward the house, but would also point out some more obvious bad points that I overlooked.
When I found the house that I would eventually purchase, and begun the negotiation and closing processes; Mark thoroughly explain everything to me in great detail. Because of that, I felt very comfortable, well informed, and well represented.
I love the house that Mark helped me to find. The house, location in town, within my budget, and Mark’s service was all great and I have no regrets. I will recommend Mark to any of my family and friends.
|