Does purchasing a home make sense in today’s economy? The case for homeownership remains strong for a number of reasons.*
A real estate investment is unique in that it allows you to place a small down payment on a large investment. You could never offer 10% down on, say, $200,000 worth of solid, blue chip stock and reap the rewards 30 years later. Moreover, interest payments are tax deductible in the U.S, which is especially beneficial during the beginning stages of repayment, when the vast majority of your monthly payments go toward interest.
Eventually, you’ll build equity as you pay down your principle balance. While inflation drives up the price of most things over the long haul (including your home), monthly payments remain the same based on the original price. Meanwhile, U.S. renters may incur (on average) a 5% increase in rent every year, building no equity and receiving no deductions. This makes ownership, in most cases, the obvious choice.
* Consult a financial adviser for guidance on your personal situation.
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