Deciding between a 30-year mortgage and the 15-year lease is significant decisions that will undoubtedly have long-lasting effects on the individuals finances. Therefore, it is advised before settling on a payment plan it is critical to evaluate long-term financial goals. There are three notable benefits of selecting a 15-year payment plan. The individual has the chance to finish paying off the mortgage faster, money is saved on the interest paid, and it is possible to build equity faster (Favara and Mariassunta 1090). The cons identified with a 15-year mortgage, higher payments require the individual to have more senior cash reserves, with the upper amounts, there is the probability of the individual forgoing saving activities. Concentrating on the payment plans and the buyer is limited to the modest house they would have gotten if the individual considered a 30-year loan mortgage. There are also advantages with payment of a 30-year lease. The individual has lower monthly amount as there is potential to make affordable monthly payments, there is extra cash available, and the individual can increase their savings, and the property can be used as collateral by the homeowners (Favara and Mariassunta 1090). The disadvantages encountered by individuals taking the 30-year mortgage, they pay a higher rate, more interest is requested and limits the individual to make other significant financial goals until the loan is cleared after 30 years.
There are substantial costs associated with purchasing a home/condo. Therefore, many people prefer to start their independent lives by renting an apartment. Advantages of buying a house/condo; the house build equity over time, there are tax benefits (federal tax deductions and homestead exemption), the individual may decide to use the house for rental income. Homeowners have the advantage of enjoying freedom as they can get engaged in different projects and there is a sense of belonging in a community for the home buyers (Jiang, Ashlyn, and Edward 460). Disadvantages of buying houses/condo, many dwellings not furnished, there are upfront costs, and there are maintenance and repair costs and the probability of financial loss. The advantages of renting include; relocation is more natural, no additional responsibilities on repairs, less credit card restrictions protection from exposure to the real estate market. Disadvantages of renting include, there is no equity building, no tax benefits, limited home freedom and limited to no control over ongoing housing costs.
Investment in real estate is noted to offer great rewards but also accompanied by significant risks. Rewards for real estate investments, it is easier to enter into the market, high investment opportunities available, one can take advantage of leverage, generates long-term incomes, there are tax benefits, there is long-term appreciation, and it is an opportunity to build wealth (Hurst et al. 3000). The risks associated with real estates, real estate is a risk itself, in the event an individual does not have enough information may make great loose, real estate is often affected by the economic cycle, and massive losses may be encountered, huge capitals required and the money invested remain locked up. By buying a house some taxes are exempted, some of the tax deductions are, mortgage interest, points, real estate taxes, private mortgage insurance and tax credits. With these tax deductibles, many people have been attracted to buy houses (Favara and Mariassunta 1090). As noted the real estate is a risky venture but a precious investment. With many people taking advantage of the real estate tax offers, the real estate marking is continually becoming an attractive venture for many investors in the market.
Based on the research conducted on either to rent or buy a home. I would buy a house by taking the 30-year mortgage plan. The homeownership rate is noted to be on the decline for the last ten years, the reduction in home ownership has been primarily due to the economic and demographic factors in the country. Therefore, the 30-year mortgage plan gives me an opportunity to make firmer decisions on the kind of house I desire to stay. Additionally, with a mortgage plan, it is possible for me to go firm financial projects in the future. Moreover, buying a house is a better investment as opposed to renting a home. In the case of renting an apartment, it is not an investment but instead just an avenue to spend more money. Additionally, buying a house gives me more freedom to do whatever I wish to do on my premises without any limitations instilled. Over time, houses are noted to raise the value, and I could sell the home at a better price in the future. Furthermore, by buying a house, I have investments I could live my children upon my death. However, through a rental home, there is a high probability of leaving my dependants homeless in the event the savings are not sufficient to allow them to get shelter. In summary, the advantages that are attained through buying a house outweigh the benefits that are achieved through renting an apartment. Therefore, buying a home is one of the sure investments that many people need to consider.
Favara, Giovanni, and Mariassunta Giannetti. "Forced asset sales and the concentration of outstanding debt: evidence from the mortgage market." The Journal of Finance 72.3 (2017): 1081-1118.
Hurst, Erik, et al. "Regional redistribution through the US mortgage market." The American Economic Review 106.10 (2016): 2982-3028.
Jiang, Wei, Ashlyn Aiko Nelson, and Edward Vytlacil. "Securitization and loan performance: Ex ante and ex post relations in the mortgage market." The Review of Financial Studies 27.2 (2013): 454-483.
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