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As a fairly general rule, homes appreciate about five percent
a year. Some years will be more, some less. The figure will vary from neighborhood
to neighborhood, and region to region. Five percent may not seem like that much at first. Stocks
(at times) appreciate much more, and you could earn over six percent with the
safest investment of all, treasury bonds. But take a second look
Presumably, if you bought a $200,000
house, you did not pay cash for the home. You got a mortgage, too. Suppose you
put as much as twenty percent down that would be an investment of $40,000. At an appreciation rate of 5% annually, a $200,000 home would
increase in value $10,000 during the first year. That means you earned $10,000
with an investment of $40,000. Your annual "return on investment"
would be a whopping twenty-five percent. Of course, you are making mortgage payments and paying property
taxes, along with a couple of other costs. However, since the interest on your
mortgage and your property taxes are both tax deductible, the government is
essentially subsidizing your home purchase. Your rate of return when buying a home is higher than most
any other investment you could make. If you are moving to a home for the first time, you
are going to be very pleased with all the new space you have available. You
may have to even buy more "stuff."
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