Songwriters have always celebrated the joys of having a home. Poets, too.
They are always talking about the blissful qualities of having a permanent base and that word permanent is an important one, because it denotes consistency and stability.
The only real way to achieve that state is to own your home, and that takes money. But what does it take to buy a house outright and is there any real benefit to doing so?
The Mortgage
Fortunately, somebody once had the brilliant idea that, even if most didn’t happen to have huge amounts of cash kicking around, banks did, and they could lend it to prospective owners in the form of a big, long-term loan called a mortgage.
Therein lies one of the great keys to happiness and prosperity. If you own a home, you’re on solid ground in more ways than one.
You’re regarded as a relatively good bet financially, because you’ve got all this money tied up in bricks and mortar.
For most, the mortgage is the most important loan they will ever have, and it can lead to other financial transactions.
While there are tips for applying for a mortgage and debt has to be entered into soberly and responsibly, and managed carefully, it is a fact of life and sometimes you’ve just got to bite the bullet, do the math, and take the plunge.
Of all the investment opportunities the world has to offer, in most countries’ property is the most dependable.
With occasional exceptions, property prices only go one way: up, and while that may not be good news at the buying stage, once you’re on that ladder, your investment just keeps growing.
That brings further opportunities, such as trading up: using the progress you have made so far to buy a bigger or better property.
Home Equity
The equity in your property is the difference between how much it is worth and how much you still owe, and the greater the equity, the more opportunities you have.
A home equity loan, for instance, can give you a lump sum to do what you like with, while you continue the process of paying the bank back.
Lenders are more willing to do this sort of thing than many people think, because the more they lend, the more they get back including the profit that interest brings them.
Reverse Mortgage
For older borrowers there exists the reverse mortgage, in which they can convert their equity into cash or a regular income.
Although this is not universally accepted as a good idea, it is certainly worth looking at if you are in your 60s.
In addition, there is the tax factor: mortgage interest payments can reduce the amount of federal taxes you pay, which is a very useful by-product of the arrangement.
HELOC
One area where owning a home can have a huge benefit is when college time comes around for the children.
We all want our kids to have the best education possible, and that eventually means college.
But college is expensive, and the fees are rising every year. If you’re looking to find a solution for tuition to pay for your child to go to college, the answer might lie in leveraging your property.
The solution to your college conundrum could be a HELOC: a home equity line of credit.
Banks are often keen to help in this way because, as a homeowner, you’re viewed as relatively low-risk, and if there is one thing they like, it is a reliable, responsible borrower who is going to stick to the terms and conditions.
In light of this perception of a trouble-free arrangement, banks also tend to offer manageable rates of interest for HELOCs, but it pays to shop around and see exactly what deals are available at the moment.
Research the terms and conditions that you’re being offered and seek financial advice if there is anything that you don’t understand.
Be sure to pay special attention to the interest rates and repayment terms before signing on the dotted line.
A HELOC could be a huge help to the next generation of your family, and getting your prospective college student involved in the process of looking for one and assessing the options can give them direct experience in the whole area of loans and personal finance.
So far in their life, it has all happened behind the scenes, but now they can see the reality and it can prepare them for their own financial life.
Understanding concepts such as credit scores can be extremely beneficial and if they can see you have handled your finances well and what benefits that has brought you, it can be a great example and set them off on the right foot, with a determination to live their life right too.
As a parent, if you can manage to instill this mindset into your child, you’ve done your job successfully.