By Kim Buish

HOUSTON, TX – What is leverage? It’s something that gives the user a HUGE advantage regardless if it involves them using a lever or mechanism to lift a huge load in real life or in the world of Houston Real Estate.

Let’s say that you want to use leverage to buy a Houston Texas Home for sale, thanks to a high loan-to-value mortgage you will enjoy higher profits and a greater return than the money that you initially invested.

Leverage in Action

Okay, for this Real Estate example we’re going to assume that you want to buy a home in Houston Texas that costs roughly $250,000 and you plan on using an FHA mortgage loan that will require you to make a down payment of 3.5% or $8,750.

Did you know that if your home appreciates at a rate of 2% per year over the next 7 years your equity will grow to roughly $75,920 thanks to the appreciation and amortization of your mortgage? This is an astounding rate of return of over 36%!

A Perfect Example Of Why Buying Is Better Than Renting

Thanks to our example of leverage in Real Estate it’s easy to see why buying a home is better than renting since most homeowners these days have a net worth that’s up to 45 times higher than more renters and the bulk of their net worth is usually tied to their Real Estate investment.

Sadly, renters are at a disadvantage because they continue to invest money in their home every year without getting anything back while homeownership essentially works as a “forced” savings plan since the homeowner will also be paying off their mortgage with each monthly payment over the lifetime of their mortgage and this also means that homeownership is a financial stabilizing life event as well.

Learn More about Houston Real Estate

To get started with buying Houston Texas Real Estate, or to learn more about how leverage works in Real Estate contact me, Kim Buish, Realtor® by calling me at (713) 819-1642 or click here to connect with me online.