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Owning a home can be a smart decision for a variety of reasons. For instance, when you own a home, you have more freedom to make modifications and make it "yours," And, owning a home allows you to build equity, which can be a valuable financial tool later on.

However, don't necessarily believe people who tell you that owning is cheaper than renting. While it's true that your mortgage payment is likely to be cheaper than your monthly rent on a comparable home, there are several other costs of homeownership that you need to be aware of. Keep in mind that not all of these costs will apply to everyone -- for example, if your down payment is 20% of the home's price, you'll avoid the mortgage insurance cost.

Don't get me wrong -- I'm not trying to talk anybody out of buying a home. In fact, I've written before that owning a home is a better choice than renting for the majority of people. Rather, my point is that before making any major financial decision like buying a home, it's important to know how much it really costs.

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