The Plus Side of Having a Mortgage
June 6, 2011
Here is a quote from an article in the February 14, 2011 issue of Forbes Magazine:"Millions of Americans hate their mortgages these days. To many they represent not only their biggest financial liability but also a once promising investment gone sour." The article continues with six ways to consider the pluses of having a mortgage.
While I am not sure that I totally agree with some of the ways to be positive about a home loan, the fact that it is possible to consider the loan in a positive light is an intriguing thought.
Leverage is one way that a mortgage can allow someone to control an asset. In a rising market, leverage can lead to increasing the amount of money actually invested. The flip side of leverage is that you can also lose all the money that you invested. However, unlike leveraging other investments in a margin account, if the value of the asset decreases, the lender cannot call the loan all due and payable. At least not if you continue to make your payments.
The federal and state governments also help you take some benefit from your home loan in the form of income tax deductions for interest and property taxes.
this deduction may also help to lower your taxable income enough to avoid paying the alternate minimum tax.
If you could afford the payments when you purchased the property, hopefully you can still afford to make them. In the meantime, you can have a place to live and at some time in the future you will see at least some if not all of your initial investment come back.
While it is dismaying to have negative equity, if you hang on long enough the economic cycles will be in your favor.
Here is a quote from an article in the February 14, 2011 issue of Forbes Magazine:"Millions of Americans hate their mortgages these days. To many they represent not only their biggest financial liability but also a once promising investment gone sour." The article continues with six ways to consider the pluses of having a mortgage.
While I am not sure that I totally agree with some of the ways to be positive about a home loan, the fact that it is possible to consider the loan in a positive light is an intriguing thought.
Leverage is one way that a mortgage can allow someone to control an asset. In a rising market, leverage can lead to increasing the amount of money actually invested. The flip side of leverage is that you can also lose all the money that you invested. However, unlike leveraging other investments in a margin account, if the value of the asset decreases, the lender cannot call the loan all due and payable. At least not if you continue to make your payments.
The federal and state governments also help you take some benefit from your home loan in the form of income tax deductions for interest and property taxes.
this deduction may also help to lower your taxable income enough to avoid paying the alternate minimum tax.
If you could afford the payments when you purchased the property, hopefully you can still afford to make them. In the meantime, you can have a place to live and at some time in the future you will see at least some if not all of your initial investment come back.
While it is dismaying to have negative equity, if you hang on long enough the economic cycles will be in your favor.
posted by shirley harry at 7:48 AM
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