Many factors play a role in the choice of property a home shopper ultimately buys. The decision to purchase a home is both an emotional, and a practical decision. A buyer’s reasons may be based in part, for example, on the physical appearance of the property and the way it looks, or it’s location, and the house’s proximity to work or nearby schools.
All of these factors are valid reasons that play a part in buying a home. Yet, the practical side of buying a home as an investment is certainly just as important as the other considerations that a buyer must make.
Let’s take a look at the economic factors of homeownership, and why buying a house is a good investment decision. Here is my list of financial reasons to buy a home.
1. Real estate is a uniquely powerful investment medium. With real estate you have the ability to use leverage to own, and control a very expensive asset, with a relatively small initial capital outlay. This financial investment, your home, is also a necessity of life, and provides shelter and tangible benefits for you, and your family. It frequently increases in value over time, through appreciation. Equity in your home can be built up while you make monthly payments, and thereby pay down the mortgage principle, a form of “forced savings”.
2. Owning real estate can have tax benefits, since homeowners are allowed to deduct real estate taxes, and interest paid on their mortgages. (Refer to your tax consultant to see if the deductions available can apply to your particular situation).
3. Real estate can also serve as a hedge against inflation. Apartment unit rents will certainly increase during times of inflation, while a fixed rate mortgage, and some other types of mortgages, (including long-term ARMs), will not suffer the same payment increases.
4. Owning real estate can often be less expensive, and
a far better investment than renting. See Rent versus Owning Calculator
5. Real estate can out-perform other investments, namely stocks, over the short term. Over the very long-term (20-50 years) stocks can consistently out-perform real estate. The advantage of real estate as an investment over stocks appears to be in certain markets and over mid-length time frames (1-15 years). See Forbes Magazine analysis.
These are the primary financial factors that make buying real estate a great opportunity in almost every market and practically every person’s financial situation.
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Read this article, 5 Lousy Excuses for Not Buying a Home (from SmartMoney) and learn how not to trip yourself up when considering the purchase of a home.
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Contributed by by Christopher Sartorius, Carteret Mortgage
Please don’t hesitate to contact me with any questions you may have about purchasing a home or refinancing your existing property.
703-591-3918
chris.sartorius@carteretmortgage.com
Since learning of my previous company’s move from their office in the heart of Tyson’s Corner, to a new location in Vienna, (on the outskirts of my main business territory), I began to think that it might be time for a change.