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- No inflation: If you rent an apartment for $1,800 a month and the inflation rate is about 3%, your monthly rent will increase to over $2,000 a month in just 5 years and you will have paid about $115,000 of your landlord’s mortgage in that time. When you own a home and have a fixed mortgage, your payment will not change.
- Personal wealth: When you rent, you are paying your landlord’s mortgage. When you own a home, your mortgage balance decreases while your property value goes up. If you treat your home like an investment, you can sell it when the market conditions are right and make a great profit.
- Both Federal and State tax savings: Under IRS code, interest from loans used to acquire, construct, or improve real estate is tax deductible up to a $1,000,000 mortgage. Interest on loans connected to real estate for any reason is deductible on up to a $100,000 mortgage.
- Diversified Assets: When you purchase a home, you can live in it while the investment grows unlike a 401(k) or IRA.
- Savings: When making payments on a mortgage, you lower the mortgage amount almost creating a forced savings account. With a mortgage of $1,800 a month, in 5 years you will have paid about $29,331 of the principal portion of your mortgage. If you were to sell your home at that point, that amount deducted from your principal would basically be put in your pocket.