Getting a Home Mortgage for Your First Home
Very few sensible people will not resent the idea of handling over large sums of money monthly in form of rent. Even if the very idea of buying a home mortgage makes you scared, the fact is, over the long-term, building equity in your own house is far smarter than financing someone's else.
With mortgage providers breaking their back to sell mortgages, the market is awash with so many mortgage products to suit different needs. If you meet the minimum conditions.
For example, taking a fixed rate mortgage locks in your monthly rates, so that you will know your monthly payments for the tenure of the loan. Even with an adjustable rate mortgage, you will have a good sign of your monthly repayment, save for an extreme condition. Rent however, has the nasty habit of increasing every year. If you are already struggling to meet today's ridiculous rents, the situation may get worse in the next 10 or 15 years.
While buying a house is not always logical, it has a host of advantages. Probably, the best reason to consider buying a house is the monthly tax advantage. Buying a house on mortgage gives you tax relief during the term of the mortgage. In essence, the state assists you to acquire your own residence. However with rent, that is money down the drain.
Buying a house is a great savings investment. In the eyes of the banking community, owning a house is considered a major saving asset, which is why credit card and loan applications forms ask specifically if you rent or own. Owning a house enhances your credit worthiness and exposes you to banking favours.
Mortgage plans have been structured in such a way that a portion of every mortgage payment goes towards the principal. This increases every year, coming with equity appreciation. In addition, property values have generally been appreciating every year. While there is no guarantee in property appreciation, there is added bonus to property appreciation that makes the home owning process even more attractive. The appreciation is on the entire value of the house, yet the homeowner is only out-of-pocket for the down payment, which is a fraction of that.
So, the real rate of return on the investment compares well with other investments stocks. Mortgage dynamics make re-financing a house after about 7 years of mortgage payments great proposition, for the purposes of enjoying windfalls, especially in developed markets.
In general, buying a home is a solid investment because prices usually don't go down, unless you buy in an extremely fickle market, or next to a road reserve, or worse still, without consulting professionals who can advice on relevant planning regulations. The longer you put off Getting a home mortgage, the longer you will miss out on appreciation and opportunity to build equity instead of wasting money on rent. Of course this is informed by a host of economic dynamics like interest rates and inflation.
One hopes that interest rates remain mortgage friendly to make mortgages more accessible. It does not make sense to buy a house if the mortgage repayment is in excess of the rental income, despite the capital appreciation.
The advantages essential in buying a house, at least in the short-term are eroded if the rent and repayments are not competitive. For example, why would you want to buy a house whose mortgage repayment is $ 550, while the same house attracts rent of $ 300 despite the capital appreciation? If you have a tenant, you have to look for an extra $ 250 to meet your mortgage obligations. The converse makes great economic sense. which is why Governments and banks must come up with deliberate policies to make the mortgage interest rates competitive, so that more people can own homes. Governments must support initiatives by banks to secure long-term credit for purposes of mortgages.
Moving away from financials, owning a home brings choice to create your own personal space without restrictions from land-lords. Owning your house gives you the opportunity to do as you please, literally.