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Charles Wilkins' Blog

By Charles Wilkins | Agent in 85020

Why Rent When You Can Buy, NAR's new brochure

I just downloaded a new National Association of Realtors (NAR) brochure which outlines that this may be the best time ever to buy a home. NAR says that over the past 10 years rents have increase by an average of 3.5% a year. If that trend continues, $1000 a month in rent today will be $1300 in ten years. If you rent for the next 10 years with an average increase of 3.5% your rent in 2020 will  be $1363 a month. Over that 10 year period you would have paid $140,777 in rent with no return on your investment.

Obviously, everyone knows that if you own a home, you get a tax savings by being able to deduct mortgage interest and the taxes you pay on the home, in essence an automatic pay raise. In the Brochure, NAR gives a great example of the value of home ownership. In the example, let's say you purchase a $200,000 home with a $10,000 down payment and 30 year fixed mortgage at 5.5% interest. In this example your P&I (principle and interest) payment would be $1079,  at a 1.25% real estate tax rate, you would be pay an additional $208 a month in taxes for a total payment of $1287. If you are in the 25% tax bracket, your mortgage interest tax deduction would be $216 a month with an additional $52 month deduction for property taxes.

Also, if you buy before April 30, 2010, first time and many repeat home buyers may receive a tax credit of $8000 and $6500 respectivlely.

NAR does a great of outlining how home ownership can build wealth. A home purchase today for $200,000 will be worth $288, 948 in 2020 at 4.5% appreciation rate. Assuming again that you purchased with a $10,000 down payment and a $190,000 mortgage, in 2020 your balance on the home would be $156,000. In 2020 your $200,000 home is now worth $288,948 , you only owe $156,000, and your net worth (equity) in the home is $130,000.

Homeoownership is the American Dream. Contact your local Real Estate Professional to make your dream a reality.


By Bob Alston,  Mon Feb 8 2010, 19:46
I like the brochure, NAR gives us a lot of tools to work with.

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