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Property Appreciation
Most people who rent a home
are probably paying less each month for housing than they would pay for a
mortgage on a similar home. Why are people willing to pay more each month to own
their own home?
A home grows in value over the years. The rate of
appreciation depends on many factors--the location, interest rates, and the
general economic climate in the community. If you purchase a property for
$100,000 which grows in value at the rate of 5 percent each year, it will be
worth approximately $121,000 at the end of five years. At a 10 percent annual
rate of growth, the value of your investment will go up to $146,000. As rent
increases for those who lease a home, your payments (with a fixed-rate mortgage)
will remain constant for the life of your mortgage, and the value of your home
increases as you build up equity.
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