There are many benefits to owning your own home, including the accumulation of equity, pride of ownership, and tax incentives. With the money spent on rent, you could be making a monthly mortgage payment and building equity in your home.

As the prices of homes go up, or appreciate, your investment grows. Let’s look at the table below:

In the example above, we’re assuming a rate of appreciation of 5% per year. After the first year, your home is worth $105,000. At the beginning of the fifth year, the value has grown to $127,339.

Now, while the value of the home is increasing, the amount of your mortgage debt is decreasing, if you have an amortizing mortgage. The difference between the value of the home and the amount of debt is your equity. Let’s review the numbers below:

The above example is using an interest rate of 7%, based on a 30 year mortgage, with a monthly principal and interest payment of $598.77. As your home appreciates and you pay down the mortgage debt, you are BUILDING WEALTH. The same is not true if you rent.

Assume you pay monthly rent of $1200, and that each year, your rent increases by $25. The table below shows how much you will have spent at the end of five years.

Contact us and we’ll help you convert those rental dollars into the wealth!

**The numbers outlined above are merely for demonstration purposes and are in no way to be construed as a guarantee of performance or investment return.