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Buying a Home is a Good Idea
Chicago area Real Estate...A Great Investment!
As
a fairly general rule, homes values for Chicago property appreciate
about four or five percent a year. Some years will be more, some less.
The figure will vary from Chicago neighborhood to Chicago neighborhood.
Five percent on Chicago real estate may not seem like that much at
first. Stocks appreciate much more, and you could easily earn over the
same return with a very safe investment in treasury bills or bonds. But
take a second look... If you bought a $200,000 condo in Chicago, you
did not pay cash for that condo; you took out a real estate mortgage
loan. 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 Chicago condo 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 real estate mortgage payments and paying Chicago property taxes, along with a couple of other costs. However, since the interest on your real estate mortgage and your Chicago property taxes are both tax deductible, the government is essentially subsidizing your home purchase. Your rate of return when buying a home in Chicago is higher than most any other investment you could make.
Income Tax Savings when buying a house in Chicago
Because
of income tax deductions, the government is subsidizing your purchase
of a home in Chicago. All of the interest and property taxes you pay in
a given year can be deducted from your gross income to reduce your
taxable income. So buying a condo in Chicago is a great way to reduce
your tax burden.
Assume your initial real estate mortgage balance is $150,000 with an interest rate of eight percent. During the first year after purchasing a home in Chicago you would pay $9969.27 in interest. If your first payment on your real estate mortgage loan is January 1st, your taxable income would be almost $10,000 less - due to the IRS interest rate deduction. Chicago Property taxes are deductible as well. Whatever Chicago property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation. Another benefit from buying a home in Chicago.
Stable Monthly Housing Costs in Chicago
When you rent a
place to live here in a Chicago neighborhood, you can certainly expect
your rent to increase each year - or even more often. If you get a
fixed real estate mortgage loan when you buy a home in Chicago, you
have the same monthly payment amount for thirty years. Even if you get
an adjustable rate real estate mortgage, your loan payments will stay
within a certain range for the entire life of the mortgage - and
interest rates aren't as volatile now as they were in the late
seventies and early eighties. Imagine how much rent in Chicago might
be ten, fifteen, or even thirty years from now? Which makes more sense?
Buying a Home in Chicago or renting a home in Chicago? - You know the answer.
Forced Savings...Another reason buying a home in Chicago is a great idea!
Some
people are just lousy at saving money, and buying a house in Chicago is
an automatic way to save money. You accumulate savings in two ways.
Every month, a portion of your payment goes toward the principal.
Admittedly, in the early years of the real estate mortgage loan, this
is not much. Over time, however, it accelerates.
Second, your Chicago home appreciates. Average appreciation on a home in Chicago is approximately five percent, though it will vary from year to year, and in some years may even depreciate but over time, history has shown that owning a home in Chicago is one of the very best financial investments.
