| More than six out of every ten families live in a house they own. For many, homeownership represents personal and financial success. A home is also a valued investment which can have many financial advantages and tax benefits.
With proper planning and discipline, homeownership can be very attainable. Due to the tax deduction you can often finance a home for about the same amount per month.
Buying a home has many distinct advantages over renting:
- The freedom to live the way you want to. You can customize your home to your heart's delight. No need to worry about how to get around the landlord's rules.
- Instead of paying rent every month you can accumulate home equity. The opportunity to use the equity you have built up in your home is one of the benefits of homeownership. A home equity loan allows you to borrow money for various objectives (college education, a vacation or if you are just wanting to consolidate debt). Since
the interest on a mortgage is low, borrowing money against your home proves to be very sound. The interest on home equity loans is usually tax deductible, too.
- Stable monthly payments. While rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged for the entire repayment period.
- Probably the sweetest part of homeownership is tax deduction. The mortgage interest you pay on your home is tax deductible. Other expenses you may be able to deduct as a homeowner are fees charged by the lender, closing costs and real estate property taxes.
- Many home improvements will actually add to your home's value. And your home improvement costs may be used to reduce your capital gains tax when you sell.
- Houses typically increase in value over time.
Despite all advantages you may want to consider renting if you anticipate having to move again in three years or less. The reason is the costs associated with first buying and then selling a home.
Related Articles:
Deducting Your Mortgage Interest Under the Tax Code (MBA) Tax benefits of owning a home.
Using Equity to Your Advantage
Are You Ready to Buy a Home If you're not sure take this self test.
What homeownership means to Americans
Obstacles to homeownership 1996 Fannie Mae National Housing Survey.
Bureau of the Census Timely and accurate statistical data on the physical, social, and financial characteristics of the Nation's housing.
Who are owners? 1996 Fannie Mae National Housing Survey.
Who are renters? 1996 Fannie Mae National Housing Survey.
Calculators:
How much can I save in taxes? The calculator computes the amount of income taxes you might save due to the ability to deduct mortgage interest on a home loan.
Am I better off renting?
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