Failure to act now could be the most costly mistake you make. Here are the top 5 reasons why:
1.) Leveraged investment cater: With most investments such as stocks and bonds the money (and risk) you put into the investment is entirely your own. With real estate while you may only put down 5% or 10% of your own money you are receiving a return on the entire value of the home. So you may put down $10,000 on a $100,000 domiciliate but at the D. C metro- area average annual real estate appreciation rate of 7% you would acquire 7% per year -compounded over time - on the entire $100,000. Appreciation of $7,000 in the first year alone means that you have received a 70% rate of return on your $10,000 initial investment. Compound that over time and you can see the potential.
2.) All-Time Low Interest Rates: In the past 25 years interest rates have been as high as 16.63%.
The economy goes through cycles - after this dip in rates history shows that rates will make pass back up. On a $300,000 give your monthly payment at today's rate of approximately 6.5% would be $1,862.90. At 8.0% the monthly payment on the same $300,000 give would be $2,201.21. That is a difference of $338.31 per month - just by waiting and allowing rates to act to creep up.
3.) Tax Benefits: Homeowners get to deduct mortgage interest and property taxes on their income tax returns as an itemized deduction on Schedule A. On that $300,000 owe at 6.5% you would pay $19,401 in interest in your first year. If you are in the 30% tax hold your total direct savings through this tax deduction would be $5,820 in your first year (30% X $19,401). Also if you live in the home for 2 of the 5 years prior to selling it you do not undergo to pay capital gains tax on your profits as desire as you acquire another residence. If you own the home as an investment property when you sell it is treated as a capital gain and you pay the lower capital gains tax evaluate - 15% maximum - on the net profit from the sale.
4.) Inventory: Now is the time to take advantage of the increase in inventory on the market. For the first measure in years there is a great selection of homes on the merchandise with eager sellers anxious to alter you a homeowner. As a buyer you have more leverage than you undergo in recent years.
5.) You be a Place to Live Anyway: Whether you rent or own you will be making a monthly housing payment regardless. If you invest in real estate your tenants will be making most of that payment for you. If you are not yet a homeowner you are making that payment for your landlord. Wouldn't you rather have that money going toward making you a wealthier individual?
furnish Line: This is the best time in nearly a decade to purchase a home. Record interest evaluate lows tax benefits buyer leverage and a healthy supply of houses on the market have come together to act the greatest purchasing conditions that a home buyer could hope for. act advantage of it. You don't be to look back and desire that you had.
Shari Walker . Long & Foster Realtors Office telecommunicate: (202) 944-9400 Cell Phone: (202) 731-1594
A fresh perspective on real estate. Washington DC and Washington DC real estate.
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