QandAs: Loans

What are the benefits of financing our home?

Answer:
There are numerous benefits of financing your home.

Most people cannot afford to purchase a home without benefit of a home loan. Many of those who have the financial means to pay cash for their home choose to take out a mortgage loan any way. One of the primary reasons that people who don't necessarily need to finance their homes choose to do so is to enjoy the tax advantage of being able to write off interest on a mortgage.

With the exception of business expenses and standard deductions, interest spent on mortgage loan interest is one of the few ways that most people are able to reduce their taxable incomes, potentially lowering their tax brackets and reducing their year end tax liability. For example, if you have a loan on your car or are paying off credit card debt, none of the interest that you pay is tax deductible. If you are in this situation, it's likely that you would be better off financing your home and using your cash to pay off your car note or credit card bill.


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