From an investment standpoint, this is particularly attractive. As financial guru Suze Orman frequently reminds her fans, most homes appreciate at 3-4% per year and are purchased with 20% down. A $100,000 house, for example, would appreciate $3,000 to $4,000 per year, or nearly 20% on the $20,000 cash investment (the down payment.) There is no other investment in the world that is practical, generates a comparable return, and diversifies one’s asset allocation into real estate at the same time.
Additional Costs of Becoming a Homeowner
The costs of becoming a homeowner are significantly more than the basic mortgage payment. Costs that you need to consider include:
- Private mortgage insurance (for down payments less than 20% of the property value)
- Homeowner insurance
- Utility bills
- Home repairs (broken furnace, appliances, etc.)
- Lawn care (if you’re living outside of a major city)
- Property tax
