Having Trouble Saving? Buy a Home!
Let's admit it, you've disciplined yourself the past few months to save save save & now that the holidays are here, you've found yourself tapping your savings accounts a little more than usual. This time of year often causes the savviest of shoppers to ponder their 2015 savings plan-- especially if they're wanting to buy a new home. So the question is how can one afford a home in the long run, if saving for the principle is proving to be a slight challenge. The real estate experts at VARBUZZ detail the tendency of mortgage payments forcing you to save money as you pay the monthly principal.
Rent vs. buy arguments normally focus on the monthly payments, and the buying cost is a function of the monthly mortgage payment as well as escrows (insurance and property taxes). But the mortgage payment comprises an interest component and a principal component, and the way the payments are split between interest and reduction of principal (the total amount borrowed) changes over time. In general, more interest is paid at the beginning of the mortgage. The longer you have the loan, the greater the share of your payments that is going to pay it down. The payment of principal as the loan ages is, therefore, a forced savings plan whose deposits are growing—without any more being taken out of your pocket.So you see a forced-savings plan ultimately sets aside money that can be used to pay down your principal. Looking for more information on a forced-savings plan? Contact Dragas Mortgage Company today!