One of the greatest benefits of home ownership is that you can leverage a small amount of money to purchase an asset and then watch the equity grow as the value of the asset appreciates. For example, if you purchase a $125,000 home with a 10% down payment then you have leveraged $12,500 to buy a home worth 10 times that amount.
Appreciation: Here is what really sweetens the deal; the rise in value of the property is appreciation. Consider the above scenario; the $125,000 home you purchased. If you live in the home for 5 years and the values increased by the average of 2.5% per year then your home would be worth over $140,000.
Equity: In addition to the 10% down payment you will also be making mortgage payments. Each payment reduces the principal balance owed on the home. Reducing the debt is how you build equity. Now if you sell the home you have a chance to recoup your $12,500 investment plus pay yourself back for the money you’ve put in over the years.
Appreciation and equity are two great benefits of homeownership that you do not enjoy when you pay rent. The rent payment is only good for one month or one rental period. 5 years of paying rent gets you occupancy only; 5 years of mortgage payments can mean so much more.
Mark Goedert of Goedert Real Estate has been serving customers in South East Michigan for over 50 years. Their offices are open 7 days a week, providing the most innovative technological services available to first-time homebuyers, real estate investors and people selling their homes. Mark Goedert of Goedert Real Estate has been in business for over 50 years, working with real estate professionals, agents, developers, investors, REO brokers and first-time home buyers in Battle Creek, Hillsdale, Lansing, Jackson, Grand Rapids, Adrian, Howell, Sterling Heights, Monroe, Farmington Hills, Ann Arbor, Detroit and neighboring cities and communities.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment