Categories: Rev. Dr. Charles Butler,
As a child and even a young adult, I never completely understood the accomplishment of homeownership. This is primary because as a child I lived with my grandparents in a house my grandfather had purchased before I was born. Some of my friends lived in private homes, some lived in apartments and some lived in city housing. It was just where they lived. I had no idea of the vast economic differences associated with these residences.
There is a huge disparity between paying a monthly rent and a monthly mortgage. For example, paying a monthly rent your money goes to your landlord and there is no financial benefit to the tenant, except having a roof over your head. Seeing the number of homeless people in the city, a roof over your head cannot be taken for granted. To illustrate this point, let’s say you have been renting your apartment for ten years and you are paying $2500 per month. You would have paid your landlord approximately $300,000! Your money leaves your possession and will not come back.
But as a homeowner your money circles back to you through building equity and tax benefits. Your mortgage payment consists of principal, interest, taxes, and insurance. As you pay off your outstanding principal balance, you will begin to build equity on the property. Your equity is the difference between what you owe (remaining outstanding mortgage balance) and what you now own (amount of mortgage paid off) plus the current market value of the property. Also, a portion of your real estate interest and taxes are tax deductible. So, if your monthly mortgage is $3000 a month, $36,000 almost $15,000 – 18,000 will come back to you in the form of tax deductions and equity.
This means you will be owning property in New York City and paying far less than you are currently paying for rent. Plus, properties in the city continue to appreciate in market value. A home that was purchased in 2006 for example for $250,000 might be sold on the market today for roughly $2,000,000! Look at the return on your investment. However, I feel one of the major reasons for becoming a homeowner is having the opportunity to create intergenerational wealth through developing a legacy, having an inheritance for your dependents to allow them to build on the financial foundation you have laid.
This is why homeownership is critical for our community. Although I grew up in a home, my grandfather never taught me the value of homeownership. But he was able to accomplish this very difficult feat during a time of racial segregation, housing discrimination, illegal red lining policies, no homebuyer workshops, or first-time home buyer grant programs. So, you have no excuse. Just do it!
If you are interested in attending the workshop or have questions regarding the home buying process, contact Rev. Dr. Charles Butler at (212) 281 4887 ext. 231 or email at cbutler@hcci.org.
