You might have been told - "owning your own home is an investment in your future". Owning a home does present you with many more opportunities than renting a home or apartment does.
By owning a home, you are basically giving yourself the opportunity to manage your debts, just like you would manage your other investments, like stocks, bonds, and mutual funds. The mortgage payments, that you make, are basically a "forced savings plan". Many experts agree that managing your debt is every bit as important as managing your assets.
While historically the price of a home in America has risen, which combined with your repayment of principal, allows for an increase in the equity of your home - there is more that you can do to maximize your ROI.
Keep in mind, as you read this, that everyone's situation is different. What makes sense for one person might not work for someone in a different situation. The purpose of this article is to get you thinking "out of the box" as they say.
Your first priority, when you begin looking for a new home, is to assemble a top-notch team of professionals to help you during this critical time. Having a highly qualified Realtor, like John Smith, and mortgage professional on your team will help you to make the crucial decisions that will allow you to be confident of achieving the results you desire, during one of the most important decisions you will ever make. Let John Smith assemble your Real Estate Team!
Many people take the traditional route of getting a 30 year fixed rate loan and then sit back and wait for the normal home appreciation & repayment of principal to increase the value of their "asset". This in fact might be the best plan, for you, if you are not comfortable with a certain level of risk or you think your work or income situation might not be the same, during the life of your mortgage. Also if you are of the opinion that interest rates will be rising during the time that you own your home, you might think twice about an ARM.
There is much more to it, though, than choosing between a 30 yr. Fixed rate and an adjustable rate mortgage. For a different approach, towards managing your debt, see my article - Beating the Bank! For most of us, our home mortgage is by far the largest portion of debt on our personal balance sheet. We should monitor our loans closely to minimize interest costs and maximize our return on investment and thus our net worth. Reducing 1% off of interest costs on your loan is the equivalent to increasing your investment returns from 9% to 10% in a year. You can double that savings if your mortgage is twice as large as your investment portfolio, which it very well might be. To analyze your mortgage like an investment you need to consider the following:
John Smith can introduce you to a highly qualified Mortgage Counselor who can analyze your information. After careful consideration you and your mortgage counselor can determine the most recommend mortgage loan(s) based on your personal situation in relation to the above criteria. This is the best way to insure that your mortgage choice fits in with the rest of your financial decisions.
In summary, it pays to spend some time, both up front, when buying your home, and monitoring your loan and treat your home mortgage as seriously as you do your assets. Since most of us have mortgage balances that are substantially greater than our portfolio of assets, the small investment of time spent doing this will provide you with a good return. Over the last few years there has been an explosion of new mortgage programs. Take the time to assemble your team, review your options, and make the right choice for your future.