Because of tax deductions, the government subsidizes the purchase of a house. All interest and property taxes you pay for a given year can be deducted from your gross income to reduce their taxable income.
For example, suppose your initial loan balance is $ 150,000 and an interest rate of eight percent. During the first year, you would pay $ 9969.27 in interest. If your first payment is January 1, your taxable income would be almost $ 10,000 less? due to the deduction of the interest rate the IRS.
Property taxes are deductible, too. Whatever property taxes you pay for a given year may also be deducted from your gross income, reducing your tax liability.
When you rent a place to live, we can certainly expect the rent to increase each year? or even more often. If you get a fixed rate mortgage when you buy a house, you have the same monthly payment amount for thirty years. Even if you get an adjustable rate loan mortgage payment will stay within a certain range for the duration of the mortgage? interest rates and do not? Not as volatile now as they were in the seventies and eighties.
Imagine how much rent might be ten, fifteen or thirty years? What makes more sense?
Some people are just a disaster for saving money, and a house is a savings account automatically. You accumulate savings in two ways. Each month, a portion of your payment goes to principal. Certainly in the early years of the mortgage, not much. Over time, however, is accelerating.
Second, your home appreciates. Average house is about five percent, but varies from year to year, and a few years to depreciate in May .. Over time, history has shown that owning a home is one of the best financial investments.