breaks. The U.S. Tax Code lets you deduct the interest you pay on your
mortgage, property taxes you pay, and some of the costs involved in buying
Between 1998 and 2002, national home prices increased at an average of 5.4
percent annually. And while there's no guarantee of appreciation, a 2001
study by the NATIONAL ASSOCIATION OF REALTORS
found that a typical homeowner has approximately $50,000 of unrealized
gain in a home.
Money paid for rent is money that you'll never see again, but mortgage
payments let you build equity ownership interest in your home.
Building equity in your home is a ready-made savings plan. And when you
sell, you can generally take up to $250,000 ($500,000 for a married
couple) as gain without owing any federal income tax.
Unlike rent, your mortgage payments don't go up over the years so your
housing costs may actually decline as you own the home longer. However,
keep in mind that property taxes and insurance costs will rise.
The home is yours. You can decorate any way you want and be able to
benefit from your investment for as long as you own the home.
Remaining in one neighborhood for several years gives you a chance to
participate in community activities, lets you and your family establish
lasting friendships, and offers your children the benefit of educational
To calculate whether renting or buying is the best financial
option for you, use this calculator courtesy of Ginnie Mae: