Despite the fact that most people need finance, so as to be able to acquire a home, there are some who have the funds, to make a cash deal . There is a possibility that the property is relatively cheap, they are down – sizing, have in recent times sold another house, or have lots of other liquid assets. While some may counsel to reduce debt, and in most forms of debt, I would reach an agreement, there are many reasons this guidance does not apply to a home loan, or mortgage. Given below is a review of 4 advantages of carrying a mortgage, while comprehending the major reason not to, is dipping one’s monthly carrying charges/ fixed expenses.
1. Opportunity cost of money: Many have come across this expression, but are unable to fully understand what it means, or don’t have faith that it applies to them. Question yourself, it might make more sense, to preserve one’s funds, and invest them distinctly, and take out a mortgage.
2. Cash flow: If you are giving 4.5% as your mortgage rate, and meritoriously paying quite a bit less because of tax considerations, and you believe you can, over time, make more from your investments, doesn’t a mortgage make sense.
3. Tax deductible: Mortgage interest is tax deductible, and as a result costs you substantially less than any other form of loan.
4. Escrow: When you have a mortgage, most advancing institutions will also charge and keep an escrow account, in order to pay the real estate taxes, insurance, etc. You won’t have to be concerned about keeping track to make a real estate tax payment, and being paid a late penalty fee, for the reason that the loaner will recompense this out of your account.
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