Pros and cons of an appreciation

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Pros and cons of an appreciation

Should You Buy a House? But for most people, owning real estate is still one of the best ways to build long term wealth. Here are 6 major pros and 6 major cons of owning a home, so you can evaluate whether you should buy a house: Buying an affordable home with a reasonable mortgage can actually cost less on a monthly basis, depending on where you live.

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Affordability

However, renting is less expensive in a few large cities, such as New York, San Francisco, and Seattle. The best way to make a comparison is to analyze the monthly numbers for comparable properties. Try using a Rent vs. Build equity— When you have a mortgage that amortizes, you can build equity with each monthly payment.

Amortization means that each payment is made up of a principal and interest portion. Principal pays down your original loan amount and interest is the price you pay for having borrowed the money. For a fixed-rate mortgage, the monthly payment stays the same, but the amount of principal and interest changes each month.

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In the early years of a fixed-rate mortgage, payments are mostly interest—but as your loan balance gets smaller, so does the amount of interest you owe. As you build equity in a home, it makes the long-term cost of ownership less expensive than renting a comparable property.

Get appreciation— If you sold a home in oryou probably took advantage of the highest real estate values the U. As you know, values have declined significantly since that time in many areas. Since having a place to live is a basic human need, owning real estate will always be a good long-term investment when handled judiciously.

No matter what happens to the economy or to interest rates, a fixed-rate mortgage payment never changes. Reduce taxes— You can claim a tax deduction for the interest you pay on a mortgage for your first or second home up to a certain amount.

This valuable benefit is available regardless of your income as long as you itemize deductions on your tax return.

Another unique tax benefit occurs every time you sell your home. Have flexibility — When you own a home, it comes with lots of flexibility that you might not have if you rent a home or apartment. You can remodel the interior, do landscaping, create a garden, or have pets, for instance.

You generally have more room to spread out and store more stuff. You also get a pride of ownership and the ability to put down roots, which many homeowners enjoy.

Spend more— Though spending less is one of the pros of owning a home, it can also be a drain on your finances, depending on your property. And unexpected repairs and maintenance always seem to pop up when you can least afford it.

Not to mention the cost of your time that it takes to deal with the insurance company, merchants, and repair crews. Experience depreciation— Appreciation is a benefit of being a homeowner when you plan on keeping the home for the long-term. However, selling it when the value is down, means that you might have to bail for less than the original purchase price and lose money.

Make a down payment— A lender will offer you a mortgage only if you make a substantial upfront down payment. Renters only have to come up with a maximum of a month or two of rent plus a security deposit.

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Pros and cons of an appreciation

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