Real Estate Buying and Equity
Real Estate
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Most people desire the ‘Pride of Ownership’ associated with real estate buying. It is a symbol of stability and family and for many a milestone event in their lives that marks a point of personal success and establishing equity in the form of an appreciating asset.
Owning your home provides many benefits, the most significant benefit being the accrual of personal or family equity. As a homeowner you have the freedom to customize and decorate your home exactly to personal taste and to modify the house in accordance with changes that occur over time like having children or taking in elderly parents for whom an addition to the house is needed.
On the other hand as children grow up and go on their own, less room is required leaving open the option to renovate a portion of the house to create a rental suite that will supply an income stream toward paying off the mortgage.
In all, home owners enjoy the freedom to make desired changes at will, and within the time-frame and budget they set for themselves. Every dollar spent to improve the dwelling adds potential equity. For these reasons (among others) owning a home is a source of pride and enjoyment unavailable to those who lease or rent. It does, however, take the willingness to commit long-term to a specific financial obligation and budget structure ...sometimes meaning the sacrifice of certain luxuries along the way!
Setting out to find a new home is an exciting venture but you must be realistic about your ability to carry mortgage payments. Looking at homes worth $600,000 if your income will only support a mortgage of $400,000 will be frustrating so your first step should be to establish the size of a mortgage you will qualify for and comfortably carry! The two ways to do this are by either doing the math yourself and estimating, or by actually getting pre-qualified for your mortgage through a mortgage broker which gives you the benefit of knowing exactly where you stand.
Once you have determined a suitable price range you can explore and view available homes that are within your ability to carry a mortgage comfortably. If you pre-qualified yourself, you will be in a position to make a spontaneous offer (containing fewer ‘subject to’ clauses) with confidence, possible acquiring a home you may have missed had you needed to wait.
Mortgage lenders look for certain characteristics about the property and purchaser in order to make a home loan. Lenders want to be assured the property is a secure investment for them until the final mortgage payment is made!
Your credit rating and income could directly affect the mortgage interest rate and term, and will influence the dollar-amount of the mortgage approved.
Last Updated: 19-Mar-2006
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