Originally Posted by acroy
that said, the typical 3/2/2 on a small lot ain't all that great an "investment", since historically property values go up at 6-8% average per year (some areas higher, some lower) vs. the broad market return of ~13%.
to help build wealth, i quit paying ahead on my house. it appreciates slowly if at all in my area. it is a 30-yr loan at 5.75%, close to free money. the extra few hundered a month are better off invested in an equity fund. heck, even a hi-yeild muni bond fund (tax free returns) average about 8%.
cheers
I agree a home is a poor investment if only used as an investment. However, if you are living there you need to include the housing value, or the potential rental income, and subtract expenses. I figure the gain to be 7-12% on my house (in a declining market).
Also agree 100% on the paying extra every month. The 5.75% is also deductible on your income taxes saving 27-34%, bringing the interest rate to 4.025% (my average figures).