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3 Important Moving Insurance Tips
Because of the many problems that can occur when you hire a moving company to transport your goods, the moving companies are required some basic insurance of your goods. Even with this basic insurance, purchasing additional coverage might be...
A Secret To Real Estate Profits – Follow The Builder
As the real estate market cools, the profit potential of home ownership has cooled as well. Here’s a strategy called "follow the builder."
It is relatively easy to make a profit when you sell your home if the market is rising sharply like it has...
Arizona Real Estate – A Good Buying Opportunity?
If you’re looking to move to a new state, Arizona real estate is definitely worth a look. Following is a primer of the state and the FSBO Arizona real estate market.
Phoenix
Phoenix is by far the largest city in Arizona and it is growing fast....
Is Now A Good Time To Sell Your Home?
If you own a home in a real estate boom market, you are probably richer now than you ever thought you could be–on paper. Even if your house is in a real estate market that's rising more modestly, you may still be feeling pretty flush–on paper. But...
South Carolina Real Estate – Past And Present Collide
With tons of history and modern development, South Carolina is a unique state. South Carolina real estate is also unique because prices are so low.
South Carolina
It would be an understatement to say South Carolina played a major role in the...
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Why buying home is a good idea
The Best Investment
As a fairly general rule, homes appreciate about four or five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region.
Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could easily earn over the same return with a very safe investment in treasury bills or bonds.
But take a second look...
Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose 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. That means you earned $10,000 with an investment of $40,000. Your annual "return on investment" would be a whopping twenty-five percent.
Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, 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 makeIncome Tax Savings
Because of income tax deductions, the government is subsidizing your purchase of a home. All of the interest and property 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 1st, your taxable
income would be almost $10,000 less - due to the IRS interest rate deduction.
Property taxes are deductible, too. Whatever property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.
Stable Monthly Housing Costs
When you rent a place to live, you can certainly expect your rent to increase each year - or even more often. If you get a fixed rate mortgage when you buy a home, you have the same monthly payment amount for thirty years. Even if you get an adjustable rate mortgage, your payment will stay within a certain range for the entire life of the mortgage - and interest rates aren't as volatile now as they were in the late seventies and early eighties.
Imagine how much rent might be ten, fifteen, or even thirty years from now? Which makes more sense?
Forced Savings
Some people are just lousy at saving money, and a house is 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. Over time, however, it accelerates.
Second, your home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate.. Over time, history has shown that owning a home is one of the very best financial investments
About the Author
Ajay Pats is a professional manager.He runs real estate broking site http://realestatebroker.nexuswebs.net/realestatebroker/index.html,community for home based business entrepreneurs http://groups.msn.com/venturecon and inspirational ezine http://www.topica.com/lists/venturemall .
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