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Dream of Being a Homeowner
Do you want to own your own home? Although it’s always been the American
dream to own a home, with skyrocketing home prices and high loan qualification
requirements, many have just given up on the possibility. The American economy
has grown tremendously in the last ten years and it’s expected to continue
for some despite lulls in demand in some regions in the country. This is the greatest
economic expansion since the post war era. This is one of the best times to buy
a home with interest rates at a reasonable
rate, and recently, home prices have leveled off. Over the long term, a home
mortgage is a sound investment, even jumbo
home loans.
War veterans returning home had a much easier time in getting that new home
than we do. Their loan needs were simple and the term of the home
loans was much less that what we have available to us. They were stuck with
fixed rates and fixed loan periods for the most part, and had little choice from
what they were offered by the banks.
Today, the home values and interest rates are higher and that means there is
more room to save money. In fact, War veterans saw the home
loan strictly as a debt burden for a long time. They probably weren’t
under the illusion that those homes back then were going to be worth much 30 to
40 years down the road. They had a vision of permanency and that whatever it was
worth, they’d still be living in it. Today, in our mobile society, we won’t
likely be living in our mortgaged home later on. That means that our home really
is an investment that needs attention. Given the cost of a home, you need to look
at saving money every way you can over the long term. Paying monthly
mortgage payments at a fixed interest rate is not an advanced financial investment
strategy. Don’t fool yourself.
Here’s something you as a homeowner should consider carefully. Your home
may not appreciate in value as you may expect. It may appreciate far better than
inflation, but that might not be enough, given the mortgage rates you’re
paying to pay it off over a 30 year mortgage.
Now what if your mortgage could be turned into an investment product instead?
How would you rather be a real estate investor rather than a debt and angst ridden
borrower hoping your property maintains its value. What if the manufacturing plants
in your home town close down or the economy turns sour? Is the value
of your home by itself a safe long term investment that you can rely on in your
retirement years? These are issues you have to think about.
There’s been a lot of negative press said about adjustable
rate mortgages, but it’s mostly put out by banks and mortgage companies
who would prefer you just signed a long term fixed
rate mortgage and paid the regular monthly payments. Of course! That’s
what banks do because it works for them. It won’t work for you though. Massachusetts
banks don’t want you thinking like an entrepreneur or investor because
they don’t want competition for the profits. They’d rather just have
a direct feed into your bank account and let you live the outcome 30
years from now.
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