Question: Home ownership may be equal to a savings account in actual value, but how > about in liquidity? You can’t sell off chunks of your home when you want to > buy things.
Answer: Even as a homeowner, I may look at things a bit differently than some folks.
First, you have to do a little forecasting. When you consider your purchase, ask yourself (or your agent) “Is this house going to be worth at least twice as much in ten years as it is now”? Any answer other than ‘yes’, means you better look in another neighborhood. $100,000 spent now is $200,000 ten years from now.
I’m guessing that the average ‘good’ neighborhood with good services is gonna run (roughly) $2000 yearly in taxes. 10 yrs x $2000 = $20,000 just for taxes.
Repairs and upkeep for that 10 yrs are gonna run (roughly) the same as taxes, or $20,000. At this point you have $140,000 invested, and that doesn’t include interest on your home loan (if any) With any tax break you get for taxes or homestead exemptions, and/or in some cases, the interest on the loan, that may lower that $140,000 amount. That’s if you wanna figure that way.
This could go on forever, but I’m gonna stop here, and with this thought. You never own a house. It owns you.
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