It’s called the power of leverage when you buy a home. Most American’s accumulated wealth is stored primarily in their home, over 26.1 Trillion according to a published report I just read.
Why should you buy a home instead of renting you ask? The average rent for a 944 square foot 2BR/2BA apartment in Mecklenburg county is $1,233.00. For simple math let’s say you rent this apartment for 5 years with no increase in rent, it costs you $78,980. What do you have to show for spending all this money on rent? A place to live with no return on your investment and nothing of value, no end asset.
Let’s look at buying a home as an investment as well as a place to live. The average median home price in Mecklenburg county is $237,400. Buying a home is the biggest single purchase most people make during their lifetime, but it will be worth the process. Home prices over the past five years in Mecklenburg county have appreciated dramatically.
If you buy a home today for $237,000, it may look something like this. You put down 3.5% or $8,295, pay closing costs of 1% or $2,370 and finance $228,705 for 30 years at a fixed rate of 4% APR. Your monthly payment would be $1,095. Your total investment would be around $10,665.
Now, for the best part of home ownership and wealth building. You purchased your home for $237,000. After five years at 6% appreciation, your home is now valued at $308,110, an increase of $71,110 equity on an asset that you now own. Factor in the tax benefit and you have basically lived in your home for free for five years and positioned yourself to upgrade or even get a jump on retirement!
Every situation is different Call or email Chris or Bob if you would like a personalized analysis of what using your power of leverage, and what it can do for you.
Chris Conlon firstname.lastname@example.org 704-609-5017
Bob Parm email@example.com 704-778-2603