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What’s Right For You - A Monthly Rental Payment or a Monthly Mortgage Payment?
Just under 1/3 of Americans rent a property . For many this may be the only way they can get a roof over their heads. For others, this is just a temporary situation whilst they strive to save for a down payment and achieve the “American Dream” of owning their own home. First time buyers should realise the pros and cons of a rental payment vs. a mortgage payment and decide whether buying is right for them or not.
First time buyers have a very different profile to the rest of the nation who hold a mortgage. Their median incomes are $10,000 less. Over 50% of first time buyers are aged between 18-34 in comparison to just 25% of other mortgage holders. Also for 40% of this group of people, their mortgage loan to value ratio is over 90% in comparison to 24% for other mortgage holders . Therefore, for young people to make the decision to take out a mortgage and swap their monthly rental payment for a mortgage payment, it's a huge financial commitment. It's a decision that shouldn't be taken lightly and the advantages and disadvantages of taking out a mortgage should be weighed up before taking the first steps in finding a mortgage lender.Advantages
If you default on your mortgage payment then you run the risk of repossession and becoming a bad credit risk.