Renting a home is great—it affords you a place to live without concern or worry of repairs and maintenance. However, when you pay your landlord rent each month, he in turn pays his own mortgage with that money. Every mortgage payment he makes is money in the bank for him and you are essentially buying a house for him and all you get to do is live there for a while. The money in the bank is called equity, and it is money that your landlord can borrow against at any time.
At the end of the day, renting leaves you with absolutely nothing except a place to live. Owning a home is an investment and the money that you spend can be recuperated when you sell your home or you can borrow against it with a home equity loan.
Rental Rates
Rental rates that your landlord sets usually include the cost of the mortgage on the property plus a margin of profit for the landlord to help him recuperate the cost of the down payment he paid to purchase the house, including fees and charges. Within a few years, your landlord has gotten back enough money to make up for the money he laid out for the house and has been gaining equity all along.
Saving Money
In most cases, you can actually save money by purchasing a home. Yes, there are repairs to worry about that will be yours to deal with, but if you saved some extra money each month, you will have enough money to do repairs. If major repairs are needed, you can always look at a home equity loan to help finance major repairs.
The most difficult part of obtaining a mortgage is sifting through the terminology and understanding the contract you are signing.
There are many different types of mortgages with different rates, charges and terms that can be applied to your situation so that you are getting the best product for you and your needs.
There are many factors that come into consideration when you are buying a home. The price of the home, closing costs of the mortgage, lender’s fees, interest rates and finding a lender that is willing to work with you to get the right mortgage at the right rate and term.
First, find a home that you are interested in that is within your budget, then, come to us and together we will find you a mortgage that will get you into the home of your dreams.
Types of Mortgages
There are three basic types of mortgages that are available are: fixed rate, adjustable rate and balloon. Fixed and adjustable rate mortgages are the most commonly used. However, there are some less common types and terms available than these three, so if one of these does not suit your needs, then talk to us and we can help you find a mortgage that does.
Adjustable rate: The interest rate is adjusted at certain points throughout the term of your mortgage and is based on the interest prime rate plus the lender’s points (interest percentage) charge.
Fixed rate: The interest rate stays the same throughout the term of the mortgage.
Balloon mortgage: At the end of the term of your mortgage, the balance owing is due to the lender and you either have to pay it or refinance with another mortgage.
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