Unlike renters, home owners who secure a fixed-rate loan can lock in their monthly housing costs and make prudent investment plans knowing these expenses will not increase substantially. Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end investment. However, such returns depend on home-price appreciation. It does, however, have a price. The authors recommend that prospective buyers spend a few months investigating a community.
Many people make the mistake of buying in the wrong area.
The mortgage interest deduction entitles you to completely deduct the interest on your home loan for the year in which you paid it. You must itemize deductions in order to do this, which means your total deductions must exceed the IRS's standard deduction. That's why paying extra on your principal every year can help you pay off your loan early. Today a vacation home can be purchased for investment purposes as well as enjoyment. And yes, there are tax benefits.