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Your Home is Your Biggest Asset

Your Home - A Platform for Building Personal Wealth

If you're like most people, buying a home will be the largest purchase you will make in your life. A house can be more than a just place to live though, it can also be a significant financial asset - but only if used wisely.

To paraphrase David Bach from his book Start Late, Finish Rich, it's difficult to build wealth if you rent instead of own your home. Why? Actually, it's pretty simple. Buying your home provides you with financial benefits that aren't available to renters:

  • Tax Advantages - You can write off mortgage interest and property taxes on your federal income tax return.
  • Home Equity - As you pay off your mortgage, you (not your landlord) gain equity in your home.
  • Capital Appreciation - As your home value increases in value, so does your equity. If you rent, the only thing that might increase along with the property value is your monthly rent payment.
  • Stable Payments - If you get a fixed rate mortgage, your house payments will stay the same over time, unlike rent which increases with inflation.
  • Tax-free income - With certain restrictions, individuals can make up to $250,000 in tax-free profit every two years by selling their primary residence. Married couples can make up to $500,000 tax-free.
  • Low-cost Credit - Owning your home can give you access to a low interest Home Equity Line of Credit (HELOC).
  • Ownership - After 30 years (or less) of making payments on your home, you OWN it. After 30 years of paying rent, you still need to keep paying rent.

Some people like to point out that renters don't have to come up with a down payment, or claim that monthly expenses for renters are cheaper than for home owners. However, I believe the advantages of owning a home far outweigh any issues related to down payments and allegedly lower monthly payments. Used properly, the returns on the investment you make in your home can be the platform you need to build personal wealth and achieve financial independence.

The key, though, is to use it properly. If you use the return on your investment foolishly - buying toys and trinkets, incurring ever higher debt - you will never reap the windfall that will be possible if you reinvest the returns. I hope to show you how to use your returns wisely so you can reap the rewards. I'll show you how to find and buy the best home for your current situation, how maintain and protect your investment, how to use the returns on your investment, and how to maximize those returns. Your home is likely to be the biggest investment you make in your life time - make the most of it.