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Tax Advantages
The U.S. Government provides tax incentives that make it possible for many homeowners to exceed their
standard yearly deductions. For example, condo owners can take advantage of the tax deduction for annual interest paid on their mortgage.
This amount represents a large piece of your total mortgage payments during the first few years of your loan term. You can also deduct the
total amount of your annual property tax bill.
If you refinance to consolidate other debts, the interest on the home equity loan is
also tax deductible.
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Homeowners Have More Stable Living Costs
Monthly homeownership expenses can change if real estate taxes and insurance rates increase, but increases usually happen gradually. Rental fees are often more unpredictable.
Appreciation of Your Condo Investment
Historically, most real estate increases in value over time. If you are careful about your selection, and maintain your condo, it will likely be worth more in the future than it was the day you bought it.
Your initial cash investment may be as little as 5% (or less) of the condo's sales price, but you are the one who benefits from any appreciation in the unit's value.
Your Equity Grows Each Month
Even though interest makes up a good portion of your initial monthly mortgage payment, the amount paid toward the principal increases each month. Equity buildup is also affected by the type of mortgage product you select. Generally, the shorter the loan term, the quicker you build equity. |