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Why Rent When You Can Own?

 

  • rentwhenown3Are you unsure about becoming a HOMEOWNER?

  • Thinking that you can’t afford to BUY a home?

  • Are you worried about whether home buying is a good INVESTMENT?

Buying a first home can be an intimidating process. But the first step is making those first decisions: I want to own my own home; I can afford to own my own home; owning my own home makes sense for me financially and emotionally. If you are still struggling with those first decisions, here are some facts that might help you make that first step towards becoming a homeowner.

You Can’t Afford NOT to Buy a Home!

Over the last ten years, the cost of rental housing in the U.S. has increased an average of 3 percent per year. That means that an apartment or home renting for $750 per month will cost more than $978 a month in ten years. If you rent the same home for ten years, the total amount you would pay for rent will equal $103,000! 

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Tax Advantages of Owning a Home Result in Savings

None of that $103,175 is returned to you, either through savings or as an investment. Homeownership, on the other hand, has tax advantages over renting a home, and those advantages can help you save money. Unlike your monthly rent, part of your monthly mortgage payment “comes back to you” in tax savings. Here’s an example:

You purchase a home that costs $110,000 (plus closing costs – expenses incurred to actually process the transaction). You finance the balance with a 30-year fixed rate mortgage at 6.5 percent interest. Your monthly payments (not including utilities, maintenance, insurance, etc.) are:

why_rent_when_buy2

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You actually save $195 a month by owning your own home. On a yearly basis, the savings is even more dramatic: 

Homeownership is a Good Investment

For the majority of Americans, their home is their largest financial asset and a major player in their investment portfolio. It’s a good thing, too, since stock market value has declined since 1998, while home price appreciation has increased. The NATIONAL ASSOCIATION OF REALTORS® estimates that home value rises, on average, by 4.5 percent a year. That’s a steady return on investment; one’s own home is a much less volatile asset than stocks, bonds or mutual funds.

why_rent_when_buy4

As an example, let’s look again at that $110,000 home. Unlike your rental unit, your home should appreciate over time. Assuming a 4.5 percent appreciation rate, your home will be worth $114,950 in the second year of ownership, $120,123 in the third year of your owning it, etc. After ten years, your $110,000 home will be worth $163,470. Not only do you earn a rate of return on your original purchase price, but you also get a return on any subsequent appreciation.

why_rent_when_buy5

Homeownership Builds Wealth for Households

The Federal Tax Reserve Board estimates that homeowners have a net worth almost 36 times more than that of renters. In 2001, the median net worth for homeowners was $171,700 compared to $4,800 for renters. How do you build up your net worth? Through those “appreciating returns” on your home.

We’ve already seen how your $110,000 home is worth $163,470 in ten years. In addition, you are paying down the principal on your mortgage. Remember that $100,000 you borrowed at 6.5 percent over 30 years – that debt amount is decreasing every month and every year.

why_rent_when_buy6

After the first year, you now only owe $98,786 on a home that is worth $114,950. You have “netted” a $4,950 increase in the value of your home, plus $1,116 a year that previously you owed as part of your mortgage debt. As your debt decreases and the home value increases, you accumulate wealth from the value of your home. In addition, over this ten-year period, you will have a significantly lower after-tax payment for housing. Each year as your home appreciates and you continue to pay down your mortgage debt, you increase your own net worth.

Homeownership – It’s NOT Just About Money

The “numbers tell the story” should ease your mind about the financial aspects of becoming a homeowner. But there are other, less monetary, benefits to homeownership. Several research studies indicate homeownership adds to the value of communities, has positive effects on children, and even contributes to increased voter participation rates.


 

Courtesy of: NATIONAL ASSOCIATION OF REALTORS®

Posted in: Buying Home, First Time Buyer, Real Estate Buying Tagged: buying real estate, home buyers

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sugar land neighborhoods guide

Guide to Sugar Land’s Best Neighborhoods
Free 170+ guidebook to find the best Sugar Land neighborhood for you! Contains helpful tables and data not available on this website. including school lists with current ratings.






 

If you are moving to Sugar Land TX and need help finding the perfect home, then you will want to download the Guide to Sugar Land’s Best Neighborhoods. This 200+ guide lists all of the best Sugar Land neighborhoods, and Sugar Land schools (with ratings), as well as information about the local area expert (Sugar Land real estate agent), Sheila Cox REALTOR. You can also read about Katy vs Sugar Land on my website and get Sugar Land Homes for Sale organized by neighborhood, high school, price, type, etc.

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PRIVACY POLICY: It’s simple…I will not sell or share your info with third-parties. I may email you useful Sugar Land-specific emails from time-to-time to help you, but you can easily unsubscribe from these emails at any time. I am a real estate agent and I may contact you if  you have requested me to do so via a Sugar Land Custom Home Search, a What’s My Sugar Land Home Worth, or one of my other free, no obligation services. If I am unavailable to meet your needs in a timely manner, I may ask you if I can have a respected colleague contact you instead.

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All information on this website is subject to change and should be independently verified...especially before making decisions based on this information. Please note that data on this website is derived from various sources and every effort is made to ensure the accuracy. However, Sheila Cox and Keller Williams assumes no liability or damages due to typos, errors or omissions. No representations or warranties, either expressed or implied, are made to the accuracy of the information herein, or with the respect to suitability, usability, feasibility, merchantability, or condition of any property or neighborhood herein. There is no official relationship between Sheila Cox and any properties or neighborhoods described herein (including but not limited to, owners, schools, management companies, HOAs, and associations) or visa versa.

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Agent: Sheila Cox, Realtor
Broker: Keller Williams Southwest
1650 Highway 6, #350 (Map)
Sugar Land , TX 77478
Phone: (832) 779-2890