Mortgage loans make the largest chunk as far as retail loans are concerned. It could run into a few trillion in this country and it continues to grow at a brisk pace. Buying a home without any doubt is one of the most momentous decisions for many of us and we would like to make the best out of it. While funding home purchases from internal resources is the best possible alternative, this may not always be possible because of several reasons. Most of us are salaried income earners or those who belong to the fixed income category. If we do research, we will come to know that out of every ten home purchases, eight are through the mortgage loan route. Therefore mortgage loans are extremely important for those who belong to Oklahoma City and surrounding areas. OKC mortgage company helps turn many dreams into reality. However, like all borrowings, there are some pros and cons associated with mortgage loans and we will have a look at the same for the benefit of our readers.
Pros of Mortgage Loans
- Tax advantage is a big plus point. When you borrow a mortgage loan you have a double benefit coming your way. It helps you to build a real estate asset. This is much better when compared to paying rent for years and decades at length. Further, the interests and principal repayments of mortgage loans are also eligible for a tax deduction. This will help borrowers to get decent relief from annual tax payouts. This, in turn, will put more money into their hands and they can use the same for various purposes.
- Investment potential is quite good. Though you will have to pay off your mortgage loans over some time, the value of the property will certainly increase manifolds over 15 to 20 years or even more. Therefore, buying a property through the mortgage loan route is a very smart and good investment. Except for some unforeseen events like the 2008 crash, investments in real estate have always given very good returns ranging from 15% to even 50%. It is, therefore, quite obvious that mortgage loans can help in furthering your investments though it takes time and patience.
- Forced savings is another big takeaway. Many people squander their incomes away by going in for binge spending and reckless spending. When a person is tied to a long term mortgage loan, it makes him or her more disciplined and discreet in spending habits. They are aware of the consequences of default of EMIs and this will always weigh on the back of their minds at all points of time.
At the same time, there are also some downsides as far as home mortgage loans are concerned.
- Risk of foreclosure always looms large. Those who were victims of the 2008 financial meltdown understand the pain and suffering associated with mortgage loans. Thousands of borrowers became financially bankrupt for no fault of theirs. This resulted in the problem of foreclosure by lenders and overnight many homeowners were left with no shelter on their heads. While some OKC mortgage lenders may agree from the rescheduling of payments, when the chips are down, foreclosure is certainly a big threat.
- Risk of payment charges. Many mortgage payments can force homeowners into foreclosure. They might be lured into a low rate, to begin with, but once the ARM kicks in (adjustable rate mortgages), it is quite obvious that their financial burden will suddenly balloon beyond manageable limits.
Focus Federal Credit Union Address:420 NE 10th St, Oklahoma City, OK Phone: (405) 230-1328