When Is It Wiser to Take Out a Home Mortgage?
View PDF | Print View
by: marciafreeman
Total views: 140
Word Count: 552
If youre currently a renter, the low interest rates available for a home mortgage in June 2009 may tempt you to consider buying a house. You may even have done the math with a rent vs. owning calculator and worked out that your home mortgage will come to less than your monthly rent. But does that mean its truly time for you to start going to open houses? Consider these variables before you make a decision.
* Who is responsible for paying for repairs? If your rental houses roof springs a leak, the landlord is the one in charge of arranging and paying for repairs. If your own houses roof springs a leak, you are the one responsible for fixing it, and you may need to shell out tens of thousands of dollars to do the job right. Can you afford to set aside money for large repairs, or will most of your money go into paying for the home mortgage?
* Who pays the taxes? When you rent, your landlord pays the tax for you. However, if you own your house, you are the one stuck with the bill. Property taxes can easily run into four figures per year, and even a simple repair like ripping out old carpets can raise the worth of your home and add thousands of dollars to your tax bill. Can you afford to pay taxes yourself?
* How large will the utility bills be? When you own a house, you are likely to face higher utility bills for two reasons. One, you are likely to buy a larger house than your previous rental, and you may be making the leap from an apartment to a house. A larger house means higher heat and air conditioning bills. Two, in many areas, landlords are required to pay certain utilities for their tenants, but homeowners must pay the bills themselves. For example, in Massachusetts, landlords pay water and sewer bills for their tenants. In practice, the money comes out of the rent and the tenants are charged slightly more to cover it, but this cost is invisible to tenants, so people who rent may forget to take these utility bills into account when they estimate how much they pay for utilities. Will you be able to cover the cost of a higher utility bill if you buy a house?
And, last but not least:
* Whom does your money benefit? When you pay rent, all of your rent money goes to the landlord. If you buy a house, the interest goes to the home mortgage lender, but the capital goes back into your pocket. You may even make a tidy profit if your house gains in value.
If you can afford all the extra costs of buying a house, then taking a home mortgage and becoming a homeowner is a wise choice. However, make a full accounting of all the hidden costs first. There are things that home mortgage calculators wont tell you. Before you take advantage of the low interest rates, make absolutely sure you know the real cost of a home mortgage. References Mortgage rate Equity loans Home mortgage Mortgage rate Mortgage payment calculator
About the Author
More sites related to home mortgage, see GetSmart.com.
Rating: Not yet rated