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Hidden Value Of Homeownership In Huntsville

By: Huntsville Real Estate Expert Mike Manosky On February 7, 2014

There are many great reasons to aspire to home ownership in Huntsville! Owning your home feels good, makes you a stable part of a community, and it can have financial benefits.

value of homeownershipBut, the Huntsville homeowner must have the “investment” in perspective. Why? Because having the right perspective will effect all the decisions made over time about your home.

First let’s discuss a myth about home ownership: “A home is your biggest and best investment”

Home ownership is not a true investment from the point of view that the purpose of an investment is to make a monetary return. That is done in two primary ways:

  1. regular cash flow coming in such as with a rental property
  2. appreciation in value over time that is realized as increased value when the investment is sold.

First, home ownership does not produce positive cash flow. That is because you, as the owner, are not receiving regular income such as rent. You are the occupant…period.

Second, appreciation is possible, but certainly not guaranteed. Therefore, as an “investment” it is risky. Why? The simple fact is that buyers, and other forces, in your market determine the value of your Huntsville home in the future when you sell. You have no control over market forces!

So, what can and should you do concerning the value of your home?

  1. Keep up with maintenance so the physical structures do not deteriorate and depreciate!
  2. If you add to, or improve, your home be very careful how you spend your money. A dollar into an improvement does not necessarily add a dollar to the value of the property. Ask the advice of your realtor about market value of additions and improvements.

Here is the Hidden Value of Homeownership: Building equity through paying down your mortgage. This is one of the things that you truly have control over. This turns home ownership into a giant savings account.

Maximize equity building by shortening the time over which you pay off the mortgage. Also, make extra payments of principal whenever you can to reduce the mortgage outstanding balance. Both of these strategies reduce the amount of interest you pay over time.

Finally, keep track of values in your market. Be ever mindful of keeping up with maintenance, be careful about money you put into the property, and work hard to build up the hidden value of your equity.

Huntsville Alabama Real Estate Real Estate Broker, Mike Manosky

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