Showing posts with label Reasons to Have a Mortgage. Show all posts
Showing posts with label Reasons to Have a Mortgage. Show all posts

5/25/2013

Renting vs. Buying a Home in California Today

Each region has it's own market, and here are some interesting comparisons around California for buying vs. renting.

Buying vs. Renting in CAA prospective homebuyer needs to think about total costs and expenses of owning a home--these include the principal and interest on the monthly mortgage payment, home insurance, property taxes, home improvements and repairs. Don't forget--tax deductions on mortgage interest and property taxes are among the savings that you will benefit from, plus other tax deductions as allowed in the owner's particular situation. Renters are basically concerned with costs of monthly rent and renter's insurance.

Is owning for everyone? Perhaps not, depending on the individual's desire to maintain a property, long term financial abilities, and short term or long term job relocation factors, and the fact that in some areas, renting may be a lower monthly expense.  But when the long-term view is taken, owning a home offers long-term security and financial return over time.  Whether you rent or own, you're paying for the home, but when you rent, you're buying it for your landlord--is that really what you want?

Today's interest rates are still low, around 3.75% for a conventional loan under $417,000 and even lower  for FHA loans.  In today's buyer's market, we're hearing lots of complaints about buyer competition especially in lower price ranges.  While each local market varies, so far this year, housing inventory is up compared to 2011 and 2012, so buyers need to "hang in there" and not give up, because this is still one of the best cycles in which to become a homeowner!

Do you want a more detailed explanation of your rent vs. buy scenario? Please contact me for a buyer's estimate sheet, and for additional market report information, go to my Market Trends page.

1/17/2013

People Still Want to Own Their Own Home


The majority of adults still think buying a home is the best long-term investment, and see homeownership as an important long-term financial goal. The majority of renters want to own in the future, and over half of first-time homebuyers bought because they were tired of renting. Over 90 percent of adults surveyed were happy with their decision to buy!
 
 

Are you ready to prepare for buying? Contact me, a Long Beach Realtor with 18 years' experience.

7/18/2011

Should You Pre-Pay Your Mortgage

Have you recently considered taking action involving one of the following mortgage issues?


  •  An increasing number of homeowners are opting for higher monthly mortgage payments on shorter loans, but with interest rates at record lows and property values still in flux, that may not always be the best decision. In other words, investigate the difference, for you, between a 15-year mortgage vs. a 30-year mortgage, or a 5-year fixed option if you plan to stay no more than 5-years.
  • Choosing to pay down a mortgage ahead of schedule by paying extra money at a refinancing or by choosing a shorter-term loan may not be enough to offset what the money could have earned if invested in the markets, according to financial advisers.
  •  Paying off a mortgage early, at the expense of other, more liquid savings and investments, could also stifle cash flow, especially in retirement. Once a house is paid off, in order to access its value, the owner would have to sell, get a line of credit, or take out a reverse mortgage to access the equity.
  • Financial advisers recommend that home owners only consider pre-paying their mortgages if they already have an emergency fund of at least six months to a year in cash, have other retirement savings, and plan to stay in the house for at least five to 10 years.

10/26/2010

Should You Pay All Cash or Should You Carry a Mortgage?

Should you be in a hurry to pay off a mortgage? Or should you never pay it off? What reasons would you have for carrying a mortgage instead of having total equity in your property? Why do we want to make a bigger down payment, get 15-year loans, pay more money every month? If you are trying to decide what to do, save a bigger down payment or pay all cash, or make a lesser down payment, take a look at this.

When the stock market crashed in 1929, the banks called (demanded immediate payment on ) home loans in the 1920's due to the run on banks, which led to homeowners losing their homes. This is when people starting believing it was bad to have a mortgage and that it was bad to be in debt. Then, mortgage loans could be called on a moment's notice, but today, due to a change in the rule,  the bank is prohibited from paying in full without prior notice, and can only demand this month's payment. People have been trained to think of debt elimination and being debt-free due to this history.
  • Mortgages don't affect home values--mortgage is not a debt, it is an asset class.
  • Equity is built whether or not there is a mortgage, it is built due to market growth in value.
  • A mortgage is the cheapest money you can borrow because it is secured by the property (unlike most debt which is unsecured and is given at much higher interest).
  • Mortgage interest is tax-deductible.
  • Mortgage interest is tax-favorable.
  • Mortgage payments get easier over time, the payment never grows, but your income does.
  • Mortgages allow you to sell without selling; owners have the opportunity to use the equity.
  • Mortgages enable you to create more wealth than you otherwise would.
  • Mortgages allow you to invest more money more quickly.
  • Mortgages give you greater liquidity and greater flexibility. The 30-year loan may actually give a better return than a 15-year loan--if you save and invest the difference.
 Many people carry a mortgage even though they have the money to pay it off because they have learned to use their mortgage to create wealth. A big mortgage is not an excuse to buy a big house--Buy the cheapest house you can buy, and get the biggest mortgage. See Ric Edelman, 10 Great reasons to Carry a Big Long Mortgage

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