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Financial Benefits of Home Ownership

Posted By Wally Reule @ Dec 17th 2014 12:38pm In: Miscellaneous

I just read an interesting article stating that many potential first time home buyers are deciding to continue to rent because home appreciation is less than 10% per year. The author included the following chart, which shows very clearly that even with 4% appreciation over 5 years, the home owner would end up with a nice chunk of equity, especially compared to the goose egg with renting.

Date 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 1/1/2020
Purchase Price  $175,000  Future Value @ 4% Annual Appreciation $182,000 $189,280 $196,851 $204,725 $212,914
3.5% Down Payment  $    6,125  Beginning Loan Balance @ 4% Interest $166,153 $163,069 $159,858 $156,517 $153,039
Loan Amount  $168,875  Net Equity $15,847 $26,211 $36,993 $48,208 $59,875


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