The question many of us ask ourselves is whether to mortgage or not to mortgage. I have come to know that there are good things about having a mortgage, especially if you have contacts for Mortgage Lenders. Many people don’t know the benefits of having a mortgage. This is because we tend to think that having a mortgage is having a bill. But that is not the case. Here are some of the benefits of having a mortgage.
1. The Ability to Buy a Home Without Cash
Many of us don’t have cash reserves to immediately buy a home. Depending on our family size, the area, and several other factors, it’s impossible to buy a home overnight. A mortgage is the best solution to buy a home even when we don’t have all the cash.
We have the chance to make monthly payments while still the value of the home increases. This allows us to make a profit on our home and create equity.
2. We Can Keep Our Cash Reserves
We all know that our financial situations will always be better when we have cash on hand. For example, if we get unexpected financial problems, it will be easier to solve the crisis with money in our banks than money invested in real estate. This is the advantage of a mortgage because we don’t use all our money.
Having a mortgage also gives us the ability to create an emergency fund. If a problem arises and our home is destroyed, having quick emergency funds means we can move out quickly and seek compensation from the insurance later. We wouldn’t be able to move so quickly if we had used all our money to buy a house for cash.
3. Mortgages Have Tax-Deductible Interest
When we have a mortgage, we are paying interest on it. Every year when we file our taxes, if we itemize, our interest is included in our deductions. By deducting our interest, we are earning more money in our mortgage as time goes by.
4. It’s an Investment
What we don’t realize is that purchasing a home through a mortgage is cheaper than renting. Many of us don’t like thinking that way, and that’s the reason why we rent out more than mortgage. Having a mortgage means that we are paying money for a property that is going to be ours in the future. All the money that you’re paying – regardless of whether it is to your lender or to the person or company they end up selling the mortgage note to (learn more here) – is all going towards a big, long-term investment for you and your family.
5. There is Tailored Borrowing
Unlike in renting, where we simply rent a home, there are different types of mortgages. We can choose the type of mortgage that we want according to our finances. There are fixed-rate, discount, and variable-rate mortgages. By doing my research, I have seen that fixed-rate mortgages are the most popular. However, it’s good that we do our research so that we can be sure of the type that we want.
6. Mortgages Are a Cost-Effective Way of Borrowing
By buying a mortgage, we realize that the interest rates tend to be lower than any other type of borrowing because the loan is secured against our property. This means that the bank has the security that if something goes wrong and we can’t repay our loan, there is still the property that has value. We can even decide to sell half the mortgage to pay back some of the loans. However, the best part of modern mortgages is that individuals no more need to worry about dealing with the complicated terms of banks while applying for a mortgage. Certified Mortgage Brokers (such as the ones found at CMB Etobicoke) can help with understanding the terms of a bank that can be quite complicated to deal with alone.
That said, another option worth looking into is MPI. Unfortunately, not many people have in-depth knowledge of MPI, which could be the reason why they often lose out on great opportunities. So, what is MPI? Mortgage Protection Insurance (MPI) is a policy obtained by a homeowner that can help cover the principal and interest of a mortgage and homeowner. Basically, if we can’t pay the monthly mortgage due to some illness or unemployment, the insurance will cover the payments for a specific amount of time.
I do not doubt that purchasing a home through a mortgage is the best decision that we can ever make in our homeownership journey. The interest is low, and we don’t get to use up all of our cash. The only problem is the misinformation that mortgages are expensive. This article will help us see the benefits of having a mortgage.
