Up until 1996, home values appreciated at about the rate of inflation. Then, the housing market changed. External factors caused homes to appreciate at exorbitant values. People began to believe that real estate had changed, that equity could be gained just by owning a home for a few months. That theory crashed quickly when the housing bubble popped.
Because of the recent housing bust, many potential home buyers are concerned that home prices will continue to drop. This may be true, but even if home prices do fall more over the next few years, this doesn’t mean it’s a bad thing to invest in real estate by means of purchasing a primary residence.
Real Estate purchases are usually looked at from the perspective of the monthly payment. Because thirty years is so far away, new homeowners don’t even realize that they actually have the potential of eliminating the housing payment.
There is a huge but often neglected benefit to buying a home. Eliminating the monthly housing payment. The house payment is the single biggest monthly expense for most Americans. If you didn’t have to make a mortgage payment, how much monthly income would you really need to have?
The fact is, you don’t have to make your mortgage term 30 years. With current interest rates as low as they are, you can probably actually afford to have a 15 year fixed loan. Right now 15 year fixed loans can be obtained for less than 4% interest.
Having a 15 year fixed loan term isn’t the only way to pay a home loan off early. By simply adding extra money to each payment, home loans can be paid off much more quickly. Another popular thing to do is make mortgage payments every four weeks, rather than once a month. This adds extra payments, and can reduce the life of a thirty year loan for about seven years.
Paying off your house, is the best way to actually get the benefits of home ownership. Paying off the house give you more freedom, and can allow for earlier retirement. But, you can’t pay off a home until you buy a home. So invest in a home with the intention of actually owning it one day.
It is currently a great time to make an investment in real estate as your home. To find real estate in Baltimore, go to Homes for Sale in Baltimore MD
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