House & Garden

The Financial Foundations Of Homeownership

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A confluence of circumstances has resulted in an entire generation of people finding it difficult to own their own home. A study conducted a few years ago found that the number of Millennials (18 to 34 year olds) who own their own home is now at a thirty year low. This is problematic for a number of reasons. The financial crisis of 2008 that had an impact on people all over the world (in 2009 alone, over 3 million households had lost their homes to foreclosure) was caused in part by the desire for people to own their own homes. In nearly all cultures, owning your own place, however modest, is a rite of passage and it represents an ascension into adulthood. Unscrupulous bankers took advantage of this fact and offered mortgages to people who could not pay them off. A lot of investors made a lot of money betting that these so-called toxic mortgages would fail. The bubble burst and lots of people found themselves not able to pay their debts, including regular people who just wanted a home as well as the financiers who got rich promising them unrealistic possibilities. Economies around the world have since recovered, although many are still feeling the effects of the crash. In any case, the outlook for homeowners has changed now and the decision to invest in the single biggest purchase most people will make in a lifetime should be taken with a great deal of caution. Here are a few things to consider:

First, you have to decide what sort of property you’d like to invest in. Buying a new house may be more expensive at first but with new technologies, many are cheaper in the long run (they leak less energy and therefore help you save on your utility bills) but buying an older property has its benefits too. The character and charm of a home is important, as is its location (older homes tend to dominate in established, fashionable areas). You may also want to think about building the house yourself. Luxury home builders will help you create the exact place that is perfect for you. Not everyone will be able to afford this because you have to have a lot more of the money up front. The most generous builders will not accept monthly payments over twenty or thirty years like your bank will. However, it does give you a lot of options.

If you are thinking of getting a mortgage, you have to make sure that when you approach a bank, you are already prepared. A lot is said about a person’s credit rating and if yours is not quite as good as it could be, there is no reason to despair. Improving it is just a matter of slowly and consistently paying off your existing debts. However, lenders use other metrics too. If you are not yet on the electoral roll, you should join (not least because it is your civic duty) but because banks will check this to see if you are settled and reliable. Finally, if the world of finance is new to you, you may want to think about speaking to a mortgage advisor. They are free and with their experience, they can help you find the best deal for you.

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