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Should An Individual Buy A House on Mortgage?

There are a lot of people in the USA, who are thinking about buying a house because they believe that saving money is a good idea but investing it in real estate can give them a boost. Instead of investing in the stocks or trades, spending on the housing is a good idea?

That is the questions many are asking because many are considering to buy a house on the loan or mortgage than renting it to cover the mortgage expenses. Which many have applied to the buying the property?

Buying a property at a distance for a reasonable price or at an unbelievable price can be slightly better of an individual, but there are many aspects one has to look at, which most people fail to see it because they are not looking and digging deeper into it.

If you are wondering if you are making the right choice or your idea of buying the property is just another loss which you are realizing? We will reveal that fact with some compelling examples that can add value to our events.

Should An Individual Buy A House on Mortgage?

The Myth in Long Term House

There is this an old man who came by to me and asked me, do you have a property which is now worth millions of dollars? The old man suggested me to but a house for now and maintained it for an extended period then the value of the property gradually increased.

Now that the old man does not realize that he has spent more than 1 Million dollar in the house since the property owned by the old man.

Look at the cost and expenditures,

  • The value of the house in 1980 – $130,000.
  • Property Tax paid – $120,000.
  • Repairs and re-innovated during 1980 to present date- $360,000.
  • Mortgage and Rent – $410,000+ in a total of the loan.

The present value of the house is $1.2M. Now if we calculate the overall expenditures which have been spent in the house during 1980 to present and the present value of the house.

The value of the house has never been increased as you have already spent the same amount.

Cost of Handling

Now that your primary goal is to make the house to pay for the loan itself face the reality you have to put 50% of the mortgage from your pocket despite having the rent payment.

If you think about it, let us calculate few things when you have planned to pay Mortgage with the Rent.

  • Assume that mortgage per month – $1000.
  • The monthly rent – $550.
  • Now you have added $450.

Well, that is how the plan looked like but did you know that as a landlord you have pay for accidental damages. Let’s assume that if the roof is damaged in the course of 10 years, then you have to invest $400,000.

Conclusion

Make more realistic goals than assuming it. When there is this sentence adds to your conversation “Should” indicates that your idea is going to go well. Make sure that you dig deep and research on how you can make your Real Estate planning much more better and effective for your life.

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