The Five Year Homeownership Rule
Posted Wednesday, January 24, 2018
Its important to take into consideration the Five Year Rule. Experts believe you need to own a home for 5 years in order to build enough equity in your home to profit. You will lose money if you own your home for less than five years:
1. You pay thousands of dollars in closing costs each time you buy property. That money does not build equity or increase the value of your home in any way.
2. In the first five years of your home loan, a much higher percentage of your monthly mortgage payment goes toward interest
than toward paying down the principal of the loan balance.Can you beat the five year rule?
1. Purchase a property, fix it up, rent it out at a rate equal to or higher than the mortgage payment.
2. Buy towards the lower end of what you can afford, and make extra payments to pay down the principal.Why own for five years minimum?
1. After five years the cost of owning a home equates to the cost of renting.
2. The five year mark is where you typically start to build equity in your home.
3. Rental prices continue to rise, eventually your mortgage payment could be less than a rent payment.
BY: THE SHARON FALCO GROUP
For more information contact us today (630) 307-2760 !