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Homeowners pay more credit card interest than renters

For many Massachusetts residents, owning their own home is an important part of achieving the American Dream. However, a recent study from the consumer finance company NerdWallet suggests that house, apartment and condominium buyers run up far higher credit card bills than those who rent their homes. While homeowners are usually able to deduct mortgage interest and certain other expenses on their income tax returns, they also pay almost twice as much each year in revolving debt interest, according to the study.

The NerdWallet study places much of the blame for the higher revolving debt balances of homeowners on annual property maintenance and repair costs. These expenses typically amount to between 1 and 4 percent of a property's appraised value, but they can be much higher when major work, such as replacing a roof or repairing foundations, has to be done. It is the unanticipated nature of large repair costs that often prompt homeowners to turn to credit cards, according to NerdWallet.

Home buyers often expect to live in the houses they buy for a long time, and the NerdWallet study suggests that this may lead them to spend more than they can really afford. A report from Harvard University's Joint Center for Housing Studies indicates that 39 million American households allocate at least a third of their disposable income to paying for the roofs over their heads, and that figure rises to more than 50 percent for almost 1 in 5 families.

Property owners with unmanageable financial situations and spiraling credit card debt often fear that pursuing bankruptcy could cost them their homes. Attorneys with experience in this area could explain how filing a Chapter 13 bankruptcy allows individuals to keep assets like their homes and cars while paying down their obligations over a three- or five- year period.

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