What is a Mortgage?
Simply put- A mortgage is loan made to a purchaser that is secured by real estate. In other words, in exchange for providing the necessary funds to procure real estate, the lender enters into a contract with the buyer stipulating the conditions for pay-back of the principal with interest. In the event of non-payment of the amounts as agreed upon, the lender is empowered to take possession of the property. Typically the repayment occurs through a process of monthly payments over a predefined period of time.
Why Buy Instead of Rent?
Buying a home is largely considered to be a sensible investment as opposed to renting, as the value of a home historically appreciates over a period of time. As the years go by, the owner can build a significant amount in ownership interest, otherwise known as home owner’s equity in the property. The Chicago real estate market has proven to be a valuable asset for most investment portfolios. In contrast to renters, the home owner receives significant benefits relative to tax savings. Interest paid on mortgage is eligible as tax deductions. A professional tax consultant would be able to offer ideas regarding the tax benefits guided to fit your home investment. Most of all; a home provides you with “pride of ownership” giving you the satisfaction of knowing this special place is yours to show off to your family and friends.
Owning Can Cost Less than Renting
Renting a home has its own benefits for people who are prone to moving on a regular basis and those who have financial constraints. However, it is would be wrong to assume that renting is cheaper than owning a home. Monthly interest on mortgage is often lower than the rent payable for a much smaller property. Moreover, owning a home is much like owning a savings account. The monthly interest paid on mortgage actually adds up to the home equity making the home an invaluable asset in your investment portfolio. Monthly rent can evaporate from your pocket and simply adds to the bottom line of the land owner. Therefore, as a renter you would lose out on the reliable returns that home owner enjoys. When you consider the federal tax deductions towards mortgage interests and real estate taxes, home ownership becomes an even more lucrative prospect.