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The costs of home ownership include ongoing maintenance (approximately 1% of the home value), property tax, and utility costs, which remain relatively constant regardless of whether a mortgage exists. Hence, the sole advantage of a paid-off mortgage comes down to cash flow and the absence of mortgage payments.
Selling, Renting, or Staying Put
If a homeowner decides to sell their home and rent instead, they should evaluate the potential for income from investments made with the sale proceeds. For example, selling a home valued at $327,500 and investing in municipal bonds could yield returns that would help cover the costs of rental payments while potentially avoiding more expenses associated with home ownership.