Owning
a home pays off
By
Lynne Schreiber / Special to The
It's
long been said that buying a home is a good investment. But why?
According
to realestateabc.com, a Web site that offers tips for home-buyers, "homes
appreciate about 4 or 5 percent each year."
While
figures vary between neighborhoods, regions and years, generally the value of
the property rises, making it a steadily increasing, relatively low-risk
investment.
But 4
or 5 percent doesn't sound like a huge return on investment, right?
Think
again, says Terry Light of realestateabc.com.
Let's
say a person puts down $40,000 for a $200,000 home and takes out a mortgage for
the rest of it.
In
that first year, at an annual appreciation rate of 5 percent, the home will gain
$10,000 in worth -- that means the owners earned $10,000 on a $40,000 investment
-- a 25 percent return on investment. Not bad.
Don't
forget, though, that homeowners make monthly mortgage payments and pay property
taxes along with other necessary costs. Yet mortgage interest and property taxes
are tax-deductible -- so "the government is essentially subsidizing your
home purchase," the Web site notes.
"Your rate of return when
buying a home is higher than most any other investment you could make."