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READ Before You Buy a Home!



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By : Adam Florence    99 or more times read
Submitted 0000-00-00 00:00:00
People around the world feel proud to own a house as you aren't bound by any rules of the landlord and it's an asset too.

Merits of Owning A Home:
There are several merits of owning a home. The obvious one is that the home is yours; you can make all type of alterations and arrangements. You can add any kind of shelves, woodworks, put a garden on the roof top etc.

The next benefit that is to be considered is that some of your monthly mortgage payment comeback in the form of equity but The rent you pay while renting a house never comes back. The other obvious advantage is that the home is your asset and you can sell or place it under some mortgage and make use of that money to meet your expenses. If the home is bought under some kind of a loan then it would provide tax benefits.

Detriments of Owning A Home:
The major problem with owning a home is that you have to take care of maintenance activities. In case of a rented house you would you would just make a call to the landlord and he would solve the problem for you and this wont be the case in case of an own house.

The next thing to consider is the money that you may loose on the house; it's an extreme case and may happen if the real estate prices go down alarmingly. The final demerit is that since home is a long term proposition you can't keep changing your location as you may have done in a rented house.

Affordability:
The next thing to be considered while buying a home is to decide how much to invest in it as it may alter your spending pattern. A guideline is to use the debt-income-ratio. It shouldn't exceed 36% and your mortgage debt should be less than 28% of one's monthly income.

This is done as follows multiply your gross income by .36, the resultant value should be the maximum debt that you could afford per month. Irrespective of the guidelines the thing to consider is the level debt that you may be comfortable with and this comfort level varies from person to person.

Choosing an Appropriate Mortgage:
After deciding upon how much to invest in home the next thing to do is to determine what type of mortgage to choose. There are many mortgage plans available and choosing an apt mortgage plan is necessary as choosing a wrong one may cost you a lot of dollars on interest.
There are basically two type of mortgage plans fixed and adjustable interest rate loans.

Incase of fixed interest rates you can be sure about the amount that you need to pay each month for your loan. The benefit with fixed plan is that you may feel safe even when the interest rates go up but when the interest rates go down you may feel bad.

The thing with variable interest rates is that you may have to sacrifice some stability about the amount to be paid every month. It would be beneficial when the interest rates come down which is very unlikely in the current scenario.

The Down Payment:
In any mortgage some amount of down payment has to be made. In traditional system a down payment of 20% of total amount to be borrowed should be paid and the advantage of this 20% is that one need not worry about Private Mortgage Insurance amount that you may have to pay if the down payment percentage goes below 20%.

These are some of the basic things to be considered while buying a home and every person must make sure that he has applied these principles while buying a home.
Author Resource:- Adam has multiple apartment complexes, including: apartments
for rent in Red bank
, New Brunswick
Apartments
, and apartments in
Red Bank NJ
.
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