Buying

Aside from the dream of home ownership, buying real estate is one of the best ways to build wealth. Almost everyone has a cost of housing of some kind or another, but most homeowners are also able to obtain additional benefits from their housing dollars spent. The portion of your housing cost that pays for mortgage interest and real estate taxes may be tax deductible, meaning that it can actually reduce the amount of state and federal income tax you pay on the same dollars of earned income (consult a licensed tax professional for advice about your own unique tax circumstances). Best of all, the principal portion of your house payment increases your “equity” position with every payment. Slowly at first—and then gradually faster over time—your housing dollars build wealth, like a savings account locked inside your home. At the conclusion of your mortgage period, your home is owned free and clear. This frees it up to be nearly-free housing for your golden years, or an income-generating rental property. If your budget permits, or if your desired retirement age is close at hand, consider a 15 year mortgage–in order to get there faster.