Financial Priorities

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The need for shelter is a top priority for every single person in the world. There are various ways of obtaining houses today. In the past, ownership of residential property was easily obtained due to the low values of houses. Due to the consequences of the recession and the real estate market, the prices of residential houses are much higher and financial institutions are stringent in financing individuals wanting to purchase residential property. Owning a home gives one a person maximum control of their housing situation and independence over landlords. Upon buying a house, your equity starts increasing as the value of your house increases. Buying a house also means you get to control your housing cost.

Sounds like there are no demerits? Well, they are, and we will be seeing them soon. For now, let us focus on whether getting a house is even the right idea because you might as well live comfortable in a rented apartment. It all depends on your needs and income.

One’s income plays a major role in the demand for housing. As your personnel income increase, you will naturally demand housing, quality, and luxury. On the flip side, as income decreases, so does the demand.

In most cases, house buyers often possess up 10 – 30% of the purchase price as a deposit. The financial institution puts up the rest in what we all know as a mortgage bond. Here lies one of the hunchbacks of buying a house. Buying a house often time sets one up for a long-term financial commitment.

In a mortgage bond, purchasers are often required to pay back the financial institution over a 20-30 year period at a certain, predetermined, and agreed-upon interest rate. The effects of interest on a mortgage bond are huge, and most people fail to understand this. Generally, one should pay attention to the mortgage internet rate as it often gives a hint on when one should like to get a house.

Do you remember what we said about how buying a house could increase your equity? Well, it works both ways. One can also lose one money as the value of your house reduces. This is something that happens very often and you should be prepared for it. If after buying a house, bad schools, strip clubs, homeless shelter, cemetery, funeral home, power plant, shooting range, and hospitals, starts popping up around your newly purchased house, sorry, the value of your house would sink in no time.

Buying a house in a neighborhood indirectly takes you into politics. As a homeowner, you would definitely become integrated into the local community, as you would have a vested interest in upholding the community property values. 

Silver, S. D in his journal titled, Interdependencies in Social and Economic Decision Making: A Conditional Logit Model of the Joint Homeownership-Mobility Decision noted that one would likely base one decision to rent or buy a specific property on: 

  • Family situation and household formation 
  • Disposable income and household expenditure and
  • Mobility factors 

Everyone would love to buy their house. Unfortunately, this doesn’t happen as everyone is not in the right circumstances. Young individuals being their life by renting a unit while their salary is still quite small, as they grow older the salary increases and all the exciting money draining activities slow down. The individual may buy a townhouse, then the individual might meet a partner and now with combined income buy a bigger home with the consideration of a family and finally if the couple is ambitious and get a break in life they might want to buy a luxurious home. Though there are always exceptions to this general cycle, this is what is often seen.

After setting up the priorities, you are ready to handle money effectively. There are different ways one could get funds, but we would be looking closely into credit lines. Credit line differs from your normal loan in that instead of receiving a lump sum, one receives it at one’s will. This leads to varying monthly repayments. To get started, these are a few credit lines offer we could find. Check them out.

  • SunTrust Select Credit Lines(interest rate as low as 5%)
  • Tally+ Express(min. Credit Card Score: 660)
  • PenFed Credit Union lines of credit
  • Upgrade Card lines of credit

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