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Is it wise to borrow housing loans to buy new home?

USA is a nation of life opportunities. People from other nation move into this country to give hike to their lifestyle. Basic need to survive is to have a good place to live in. Citizens generally get confused in whether they should buy new home or rent a house. Citizens owning their house can renovate and change it according to their changing life style whereas those who rent do not need to worry about spending on renovation.

Housing prices are steadily increasing in USA. So, it has become very to buy new house with saved cash. That is why USA citizens are getting into trend of borrowing housing and mortgage loans to finance new house. In these loans they need to pay 10 percent down payment while buying a new home and due amount is paid with home loans. The major drawback is that these loans are available on very high interest rates which end up the consumer into high debt and sometimes long term loan cycle. It is financial disadvantage of buying new house.

Moreover their value keeps on decreasing with time by 10 percent every time. Real estate is rising with new home loans but it is decreasing with decreasing market value of homes. Thus what is use of borrowing a high interest rate loan to buy new house when you know that it is not going to give you any future profit. Instead renting is good.

borrow housing loans to buy new home

borrow housing loans to buy new home

USA is especially known as the hub of international students. Even after study completion, youth may be not sure sometimes about their career settlement. They just keep on switching to new places to earn more to achieve financial soundness first. They prefer to live on rent rather than buying their own house. Renting is obviously a less expensive solution than buying. USA Home prices are very high in most of the states. It becomes very hard to buy a new house by a medium budget family income.

A young earner can easily afford to pay his home rent and living expenses with his salary. In addition, he can save money for future use. Even if home prices fall down in future, he can use that saving to make down payment for house which he finds affordable. Renting is always prudent option if student or any earning person is going to stay in a place for less than 5 years. It allows consumer to move to any place suiting to his work skills giving better income.

Most importantly, federal government has completely launched new loan rules which are very strict regarding repayment and APR. This event has discouraged young people for taking home loans acquiring high interest rates. Most buyers are supposed to pay insurance in advance before lending them mortgage loans. Lenders can only lend up to 85 percent of property’s total economic value and rest of 20 percent will be down payment made by borrower. Repayment period is also set to 25 years instead of 30 years.

Another aspect for senior citizen is that their home ownership provides financial security after their retirement. It simply decreases living expenses. Thus there is always a wise decision to be made in owning and renting a house depending upon your age, career settlement and family basis.