Why Buying a Home is still a good investment

A Great Investment

Typically homes appreciate about 4 or 5 percent per year. Some years will be more, some will be less. And this figure varies from neighborhood to neighborhood, State to state and region to region.

5 percent appreciation may not seem like that much at first look. Stocks (at times) appreciate much more, and you could easily earn over the same return with treasury bills or bonds.

But on second considerations

If you bought a $200,000 house and did not pay cash for the home. You got a mortgage loan. And assume you put as much as twenty percent down, that would be an investment of $40,000.

At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year only. That means you earned $10,000 with an investment of $40,000. Your yearly return on investment would be a massive twenty-five percent.

Naturally, you are making mortgage payments and paying property taxes, along with a couple of other costs involved in owning a home. But since the interest on your mortgage and your property taxes are both tax deductible, the government is in essence subsidizing the purchase of your home.

Obviously the rate of return when buying a home is historically higher than most any other investment you could make.

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