getting the house through a mortgage loan has a downside
Los Angeles-Long Beach, CA (PRWEB) July 26, 2014
Debt Consolidation USA explains in a recent article published last July 23, 2014 how getting a house is not always a good idea. The article titled “Here’s The Truth: Buying A House Is Not Always A Good Investment” shares some tips to know when consumers are getting way in over their head with a house purchase.
The article starts off by explaining how in general, acquiring a house is deemed as a good investment. This is because of the simple fact that land value appreciates over time. This transforms the monthly payments as an investment. But getting the house through a mortgage loan has a downside. The homeowner does not actually own the house just yet.
Home equity is a simple concept to understand. The article explains that it is the percentage of the house that is owned by the buyer through payments.If the consumer was able to make a 20% down payment on the house, that simply means that the buyer owns 20% of the house which can also be said as having 20% equity on the property.
The article shares some indicators that tells when purchasing a house may not work to the advantage of the buyer. The first of which is when the the house is worth less than what it is selling for. This is typically called mortgage underwater and was a common scenario during the housing crash in 2007. The value of the house should be at par with the selling price. Getting overpriced property will work against the main objective of getting an investment.
A bullish market can bring the interest rates way up than normal and can include mortgage rates. The article suggests that this is another indicator that the consumer should hold on and wait for the rates to go down. It is hard to be locked-in with a high rate when every other rates go down because of improving economy.
The article also discussed how having enough down payment can help a buyer lower down the monthly mortgage payment. The lenders usually require a 20% equity on the house and anything less than that automatically kicks in the private mortgage insurance or PMI. This is an insurance premium paid by the buyer to protect the lender in case the loan defaults.
To read the rest of the article, click on this link: http://www.debtconsolidationusa.com/personal-finance/heres-truth-buying-house-always-good-investment.html.