Looking to get a home loan in Cape Coral, FL?
Contact Elite Mortgage Source of Cape Coral, FL today!
What Is a Home Loan?
A home loan, also called a home mortgage, is an amount borrowed from a lender which could be a bank or a lending institution for the purpose of purchasing a house, condo, apartment or any other residential property in Cape Coral, FL. These are “secured” loans that are backed by collateral that is promised to the lender in case the buyer stops making payments. In this case, the collateral is usually the home and if the payments on your mortgage stop, the lender can take possession of your home. This is called foreclosure.
Interest Rate on a Home Loan
The interest rate on a mortgage is determined based on two factors: the risk attached to the money being given to you by the lender and the current market rates. There would be less risk attached if you have a good credit score, lower DTI, cash available for monthly payments and fewer red flags on your credit report altogether.
Why Get a Mortgage?
You might have the cash to purchase your new home but there are benefits to getting a home mortgage instead. Let’s discuss the benefits:
More Income
If the average rate of return on the stock market is higher than the current mortgage rates, it would make sense to invest that money elsewhere rather than making a big purchase. By locking up that money in a purchase, you might be losing out on income you could have gotten from investing your money.
Debt Leverage
Paying cash means you use that entire amount just to purchase a home and nothing else.
You cannot access that money again unless you refinance your house or get a home equity loan issued. The growth of that amount you invested in your house is linked to the appreciation of your property. If the real estate market is unfavorable, your property’s value would decrease too and you would lose out on money.
But if you were to take out a mortgage on even the partial cost of the house, you can use the rest of the amount to invest elsewhere while taking advantage of the lower mortgage rates.
Credit Score
This might not be the fastest way to build credit history but regular payments on your mortgage would improve your credit score over time. A great diversity of debt is actually preferred by credit reporting agencies and home loans are considered to be a form of debt that is productive and improves the borrower’s credit profile. In the long haul, it might just be a few points but it’s still a great opportunity to boost your credit.
Tax Deduction
Mortgage debt is tax-deductible. A married couple can write off mortgage interest of up to $750,000 on their taxes and $375,000 if they file separately.
If you haven’t saved enough for your other goals like college, retirement, weddings, or in case of an emergency, it might not be wise to tie up your money in a huge purchase like a home purchase. While taking out your loan, ensure you have enough cash on hand to cover for a few months, preferably 6 months, of monthly payments.
Get Your Mortgage at Elite Mortgage Source
Elite Mortgage Source of Cape Coral, FL is there for you to discuss your case and guide you on the journey to get your own home!
