It was not so long ago that one of the best performances of their own homes was home equity lines of credit could be obtained. In practice, this means a lot of fun for many people; new furniture and electronics, a pool, maybe even a new car or exotic vacation. And then ... POP!
As the real estate market crashed hear how many people are in their homes under water. But now, suggests statistics and anecdotal evidence also that more and more Americans for a completely different approach for the property, that have their own home strive search "free and clear."
Like any other financial decision is very personal and depends on the situation. But overall, if you are free and clear sounds your home as a financial strategy that could fit your own plans for large images have to, you must first weigh some pros and cons of the base.
Topping the list for most people in the category "Pro" is peace of mind. Plain and simple, it is not to have to take care of a mortgage payment, and to know that you are getting a roof over your head, if, for example, loses his job. For many people know that they do not pay their hard earned money in the bank at interest money is also a plus. But dropping a large mortgage payment also gives you greater financial flexibility to do other things. Take other ways that might leave work when the mood so moves you.
Disadvantages of tax cuts, such as the loan mortgage interest deduction is missing (the higher your tax bracket, the tax cut of any kind). And with interest rates at historically low rates, no one can say that when you self-discipline, time and know-how to spend money instead of paying a low interest rate loan might make sense to invest. But let's be honest, very few people have that kind of discipline, time and experience.
Finally, if you have a single penny free and clear of investing, you may be better off to be investing in several other places, in order to diversify and keep some cash on hand for emergencies. Your bank will not give you the money if you're in a bind!
The conclusion is that more and more people decide that the benefits outweigh the disadvantages. Studies show that almost 30% of Americans own their home free and clear. That's 20.6 million homes!
Can I afford my house?
Several factors predict who will or will not choose to be freely and clearly stated. First, the value of houses. Has a direct correlation between the way the houses are affordable in a given area, and to preserve the ability of people to pay for their free and clear mortgage. For example, one of the highest rates of free and clear property rights in the country - about 50% - is in McAllen and Hidalgo, Texas, is located where the average house value is $ 75,000. Contrast, the. According to Washington DC, for example, where the value of the average home is about $ 400,000, and only 8% of the homeowners are able to pay their mortgage
A second important factor that we see, Cuyo is the age of the borrower people. 65-85 age group in the list to be paid to be able to get your mortgage. Almost 40% of the owners of this group have free and clear. The reasons for this are the fact that the longer you live somewhere, the more time you to pay the mortgage, and the elderly has historically saved money for a down payment and pay their mortgages. Free and very clean is also a priority for these people as they approach retirement, but increasingly we see younger property of the people, free and transparent.
The latter is the credit score Nearly 45% of all people who have free and clear, a credit score in the range of 800 to 900 of this particular factor have can with the question. "What comes first, which are equated chicken or the egg ? "People with self-discipline to have probably self-discipline, paid to your mortgage a stellar credit rating. And people who manage to get your mortgage paid wind usually a higher credit score. The point is, it's good to be one of them!
If your goal is to be free and clear owner, any additional amount of money lying around that you can use to pay their mortgage bills. Also, if you make one extra payment per year, you can set the time it takes to pay significantly reduce your mortgage. Discover one of the online mortgage calculator to see how quickly the dollar could melt. Another way to do the same if your bank allows it, half of your mortgage to pay every two weeks. If you have not refinanced to take advantage of low prices, what are you waiting for? And if you apply for a mortgage instead of this 30-year mortgages, which we survive 15 seriously the holding of free elections and clear, then seriously!
Finally, check to obtain the expenditure of private households for other cost savings that can be used to mortgage are paid! For example, your property taxes reduced or to save money on insurance or utilities owner? These savings can be used to pay your mortgage.
Shari Olefson wrote the book FINANCIAL FRESH START: Your five-step plan to adapt and thrive in the new economy.
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