Is It Bad To Take Out A Mortgage?
Hot-dog, baseball, and homeownership are some of the things that are a quintessential part of American Society. Having a differing opinion on these things is almost considered fringe behavior. Now, owning a home is still a major part of the American dream, but we tend to forget its downsides — being in debt after taking out a mortgage. A home loan can quickly eat up all your savings, and making all the payments takes nearly half of one’s life.
However fret not! There are many alternatives to taking out a mortgage, and most of them have a very low-interest rate. Some alternate options are even interest-free, like borrowing from a friend or family member. However, this blog post will focus on explaining how taking out a mortgage is a trap that seems lucrative and explain why it should be avoided. With this said, let’s look at why taking out a mortgage is a bad thing
1. A Dent In Your Savings And a Whole In Your Pocket
This might seem unreasonable, but it’s true. Home loans make a dent in your savings and leave your bank accounts empty. According to the US Census Bureau, an average American pays nearly $1,500 for home financing. That is a big amount, especially if the payment plan stretches for more than 20 years.
2. Home Loan To Avoid Paying Taxes
Most American’s justify taking a home loan as a means of avoiding taxes. This is a weak reason to invest 20 – 30 years of your life in returning back money. Taxes can also be avoided by spending your entire income or shifting to another country with no income taxes. So, excusing a home loan’s downsides by speaking in favor of avoiding taxes is one of the worst ways of justifying mortgages.
3. Spending Too Much On Houses
Home loans can be lowered down to be within your budget constrain. However, the American Society is conditioned to believe that a bigger house is better. Legally, lenders prevent approving mortgage loans that are more than 35% of your household income. However, financial experts say that a home loan less than 28% of your household income might be considered a better choice.
Finally, It's An Enormous Debt For A Very long Time
Call it society’s pressure or the urge to satisfy our prestige. Many Americans deliberately fall into the mortgage trap. People need to consider that home loans are not easy to repay. Repaying a mortgage takes up half of one’s life, leaving them with fewer savings for retirement.
Overall, mortgages should be avoided or taken after a lot of consideration when other means of home financing, like borrowing money from friends and family members, have been written off.
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