4 Benefits of Getting A Mortgage
In the 1930s, you had to have at least 50% down payment to buy a house, and you had to pay your loan in five years. Because of this President Roosevelt created an agency called the Federal Housing Administration (FHA) which allowed a 20 years fixed rate loan with low down payments. It greatly helped the people own houses and pay their loans.
Nowadays, the FHA provides 30-year loans with the help of insurance and only requires 3% down. The FHA loans then resulted in the popularity of mortgages. From a census back in 2000, more than 66% of homes had mortgages. The elderlies owned a lot of the homes without mortgages.
If you are still in doubt of getting Mortgage Loans El Paso, TX, here are four benefits that you can have from getting one.
When you are paying off your mortgage, you might have a sense of security. But there is also security in having the cash in the bank because you used a mortgage when you bought your house instead of paying it all in cash.
When an earthquake strikes, you can build your home back assuming you took earthquake insurance but what of those costs that you have to pay while you are living in your house?
What if an emergency comes up? When you have a mortgage, the bank shares the risk to your house. When a catastrophe strikes, you still have your money in the bank. Life has a lot of rainy days and you have to be prepared for these as each one of them is costly.
Leverage is probably one of every mortgage’s primary advantage. Let’s say you decided to buy a $500,000 house with a down payment of $100,000 while the rest is from your loan. In a year, the house appreciates 10%, then you would have around 50% profit on this investment alone.
If you bought the house in cash, the return you would get would be the same as your 10% appreciation rate. All in all, leverage lets you make money from the mortgage of the bank to you. Generally, it increases the effective appreciate rate by as much as 500%.
Mortgage Interest Deduction
Your mortgage interest is deductible from your tax return but on a certain limit. The amount to be deducted will depend on the interest amount and your tax bracket. Let’s say you have a yearly mortgage interest of about $30,000 and you are in the tax bracket of 28%, then the number of deductions would be as much as $8,400.
Often, there are once-in-a-lifetime opportunities that happen overnight. One of this is real estate. You might be thinking that you save a lot of money when you avoid the mortgage interest, so you don’t want to take advantage of it. You usually have two choices, your money might go to the purchase of the property without any mortgage, or it goes to paying off your mortgage.
If you don’t have enough money at the moment, get a mortgage and make a business venture out of it, so you don’t have to worry about losing any money from paying your mortgage interests.