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• 1 2022-12-02T05:30:29-08:00 Leverage: Turn a Little into Alot 6 plain 2022-12-09T09:28:45-08:00      Now that we’ve tackled appreciation, how does a owning a home enhance one’s leverage? What Hecht is describing here is the power of a home to leverage an initial investment into greater returns through the mechanism of appreciation. Simply put, what one invests in the form of a down payment can have significant returns because a home appreciates based on the entire value, not what you invested. Numerically speaking, if the average appreciation is 3.9% and a homeowner invested $10,000 on a down payment on a $100,000 home, this translates to a $3,900 return on investment (ROI) instead of a $390 return.
       Lastly, the concept of forced savings is pretty simple. Paying off a mortgage as savings? Sounds counterintuitive, but as a homeowner pays off the mortgage, they are building equity at the same time. When the mortgage is paid off a homeowner has something to show for it. A home that is payment free from that point on, but more importantly value that can be taken out against the home, or profit on the sale of the home. A home can be much more than a place to live, it is in essence a giant piggy bank. Now keep in mind all the factors listed that contribute to home ownership can work in the other direction. A home can depreciate in value as well.