Twenty years after “the American dream” was first coined, home ownership is still a meaningful goal for a large number of individuals and families.  As the years go by, you can build ownership interest, also known as home equity, which you may be able to borrow against for cash out or debt consolidation if you choose. In contrast to renters, most homeowners receive significant tax breaks, because interest paid on a mortgage loans is tax deductible in most cases. You will want to consult your tax adviser regarding deductibility of mortgage interest. And of course, most homeowners would tell you there is personal gratification of having a house you know is yours to share and enjoy with friends and family.

Owning a Home Can be More Cost Effective than Renting

Renting certainly has some advantages over owning. With FHA home loan financing is easier than you think.  FHA mortgage companies are more flexible with underwriting guidelines and credit and you only need 3 to 5% for a down-payment.  Many Americans assume that renting is less expensive than owning. A monthly mortgage payment may be lower than the monthly rent on a much smaller property.

Every month, the payment you make on your mortgage typically adds to the equity you have in your home and makes your home asset a more valuable part of your portfolio. Money paid for rent simply evaporates each month. Plus, research has shown that in the past real estate has proven to deliver a highly reliable increase in value compared to other types of investing. If you are renting, those returns are going into your landlord’s pocket, not yours.  When you add in the federal tax deductions for mortgage interest and real estate taxes, home ownership becomes an even more attractive idea.  Of course you should always consult your tax advisor for details.