FIN-1100 Chapter Notes - Chapter 5: Loan, Mortgage Insurance, Tax Shelter

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Owning a home offers physical and psychological as well as financial benefits. Among the physical benefits are shelter and security, while the psychological benefits include: A feeling of impermanence and a lack of control over one"s environment. Answer peace of mind and pride of ownership. Homes also provide financial benefits, including serving as a hedge against inflation and a shelter from taxes. The hedge against inflation occurs, because the price of houses generally increase at a rate equal to orgreater than the rate of inflation, while the tax shelter results from thetax deductibility of the: Insurance premiums paid to protect the home and your contents. This treatment on your federal and, in most states, state income taxes results in aincreased taxable income and tax obligation. However, to realize the full value of this benefit, you mustitemize your deductions . (increased should be reduced) Mortgage lenders vary in the types and characteristics of the mortgage loans offered.

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