It is a fact that today a home often represents the most valuable asset that we have. Other investments simply do not provide the benefits that home ownership does. We all require shelter, a place to live. Owning that "place," provides additional benefits far beyond a roof over our heads.

One of the greatest financial benefits of buying a home is the ability to leverage your money. Leverage allows you to use a minimal amount of your funds, combined with lenders' money, to purchase a more valuable investment. For example, if you purchased a $250,000 home with 10% down, you leveraged the $25,000 down payment to purchase an asset worth 10 times that amount.

The benefits of leverage really become apparent with appreciation, or the rise in value of a property. Throughout our area, appreciation has exceeded 20% annually for several years. Let's assume for this example that the property values continue to rise conservatively at 10% per year, and that you are going to live in the home for five years. Your home would then be worth over $402,000. You have now leveraged your initial 10% down payment to a value of more than 16 times the original amount.

Current tax law allows us to reduce our taxes by deducting the interest payments made on money borrowed to purchase property. Additionally, if you occupy the property as your personal residence or second home, for two of the last five years preceding the sale of the property, up to $500,000 for married homeowners and $250,000 for single homeowners, of profit can be taken tax free. In our example, the entire amount ($402,000 minus $250,000 which equals $152,000) could be taken tax free.

Refinancing can provide an excellent solution in response to financial circumstances such as:

• Raising funds for family expenses (e.g. college tuition)
• Paying off high interest loans
• Making home improvements
• Converting an adjustable rate mortgage (ARM) to a fixed rate-mortgage
• Lowering monthly payments

However, you need to do your homework before making a decision. Compare the existing interest rate with the proposed rate, as an example. Also, consider the amount of time it will take to recover the costs of refinancing. Your specific circumstances are very important to consider in determining which loan program is tailored to serve you best. As an example, if you're planning to leave the area within the next two years, a 30 year fixed loan may not serve you as well as an adjustable rate mortgage with a two-year fixed period.