Facts, Fiction, and the Fantasy of Real Estate

Hello, my name is Peter Gladkin and I am a real estate financial consultant for North County Home Loans. I wrote this because a lot of people renting do not believe they are in a position to buy a home. Of course there are some legitimate reasons for renting rather than buying, but if you are listening to this message, then you are considering what homeownership would accomplish for you and your family, and are looking for more information on the benefits of owning your own home rather than renting. Before I break down the many advantages, let me warn you that once you begin this process, you are going to get advice from just about everyone that you know. I am not suggesting that you ignore them, just keep in mind, often times they do not know what your goals are, so it is difficult for them to offer specific advice that you can use. Typically friends and family offer general advice, which may not apply to your actual situation, and fear of criticism stops you from taking action that can lead to not only you owning your own home, but financial security in the form of a substantial return on your investment.

The best way to begin describing the financial benefits of owning your own home is with an actual real life experience one of my past client’s had. I chose this particular example because it is conservative, and does not include profit from any other investments. Mrs. Jones, after renting for twelve years decided that she was tired of paying someone else’s mortgage and wanted a home of her own. She decided to purchase a lovely home for 500,000 dollars. Without any money available to her for a down payment she found 100 percent financing, and did not have to put any money down on the purchase. Her monthly rent at the time was 2,000 dollars. The monthly payment on the mortgage was 3,326.51, which included principle and interest payments for her home. After five years, she had made 154,898.51. Some of you may hear this number and think it is unrealistic – point in fact, many people recognize a larger profit than Mrs. Jones.

Let’s take a look and see how this was accomplished. Everyone knows that there are tax benefits to owning your own home. Of course you want to discuss any tax write offs with a certified tax preparer, but as a general rule you can write off the interest paid on a home loan. Mrs. Jones’ tax bracket was 35 percent, so she was able to write off 993.12 per month. If we subtract that from her payment she was spending 2,333.39 on her mortgage – only 333.39 more than what she was paying in rent. Out of that monthly payment 489.03 was paying down her principle on the mortgage she owed. If we subtract that 489.03 from 2,333.39, she was spending 1844.36 on interest after taxes, approximately 150 dollars less than the rent she was paying. In addition to the tax savings her home appreciated at an average of 5 percent a year. Compounded over that five year period her home was worth an additional 138,140.78. Bottom line, she made a 2,581.64 profit per month by purchasing this home, equaling 154,898.51 after five years, by taking legitimate tax deductions, and realizing appreciation.

Of course it is difficult to visualize this type of savings, and everyone is different, so it is important to discuss your situation with a professional to discover your potential.

If you are worried about financing, rest assured that here at North County home Loans, our home loan finder will search over 436 different loan programs available, so you are guaranteed the right loan that will fit your personal needs and financial goals.

The results of our formula speak for itself. Our commitment to our clients guarantees benefits that they recognize in the form of value. I have dozens of different loan plans that allow you to purchase a home just like Mrs. Jones with zero money down, I have home loans that allow you to pay off your home in much less time than you would expect, and loans that provide you with payment options in case your income fluctuates. Whatever your goals, I will work diligently to help you reach the financial security you and your family wants, so you can enjoy the comfort of a healthy lifestyle. – peter@approved-online.com