Mortgage interest and property tax deductions can mean significant tax savings, especially in the early years of the mortgage when interest makes up most of the monthly payment. Essentially the government is subsidizing your home purchase. After calculating your taxes, you may find it’s cheaper for you to buy than to rent.
As a general rule, real estate appreciates 4 or 5 percent a year on average, depending on the neighborhood and region. If you made a 20 percent down payment on a $400,000 house, your investment would be $80,000. At an appreciation rate of 5 percent annually, a $400,000 home would increase in value $20,000 during the first year.
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