Benefits of Owning Your Own Home

A Great Investment

As a fairly general rule, homes appreciate about fivepercent a year. Some years will be more, some less. The figure willvary from neighborhood to neighborhood, and region to region. Fivepercent may not seem like that much at first. But take a second look……

If you bought a $200,000 house, you did not pay cash forthe home. You got a mortgage, too. Suppose you put as much as twentypercent down – that would be an investment of $40,000.At anappreciation rate of 5% annually, a $200,000 home would increase invalue $10,000 during the first year. That means you earned $10,000 withan investment of $40,000. Your annual "return on investment" would be a whopping twenty-five percent.

Of course, you are making mortgage payments and payingproperty taxes, along with a couple of other costs. However, since theinterest on your mortgage and your property taxes are both taxdeductible, 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.

Income Tax Savings

Because of income tax deductions, the government isbasically subsidizing your purchase of a home. All of the interest andproperty taxes you pay in a given year can be deducted from your gross income to reduce your taxable income.

For example, assume your initial loan balance is$150,000 with an interest rate of eight percent. During the first year you would pay $9969.27 in interest. If your first payment is January 1^st, your taxable income would be almost $10,000 less – due to the IRS interest rate deduction.

Property taxes are deductible, too. Whatever propertytaxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.

Forced Savings

Some people are just lousy at saving money, and a houseis an automatic savings account. You accumulate savings in two ways.Every month, a portion of your payment goes toward the principal.Admittedly, in the early years of the mortgage, this is not much. Overtime, however, it accelerates. Second, your home appreciates. Averageappreciation on a home is approximately five percent, though it willvary from year to year, and in some years may even depreciate.. Overtime, history has shown that owning a home is one of the very bestfinancial investments Freedom & Individualism When you rent, youare normally limited on what you can do to improve your home. You haveto get permission to make certain types of improvements. Nor does itmake sense to spend thousand of dollars painting, putting in carpet,tile or window coverings when the main person who benefits is thelandlord and not you. Since your landlord wants to keep his expenses toa minimum, he or she will probably not be spending much to improve theplace, either. When you own a home, however, you can do pretty muchwhatever you want. You get the benefits of any improvements you make,plus you get to live in an environment you have created, not some faceless landlord.

More Space

Both indoors and outdoors, you willprobably have more space if you own your own home. Even moving to acondominium from an apartment, you are likely to find you have muchmore room available – your own laundry and storage area, andbigger rooms. Apartment complexes are more interested in creating themaximum number of income-producing units than they are in creating space for each of the tenants.

If you are moving to a home for thefirst time, you are going to be very pleased with all the new space you have available. You may have to even buy more "stuff."

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