Don't know anything about buying a house.
2006-09-04 21:36:48 · 5 answers · asked by Paula S 2 in Business & Finance ➔ Renting & Real Estate
Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.
If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.
For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.
Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.
I also assume that "growth in value" is no longer a factor, because as housing market slump, there is no appreciation in housing price for next 6 months to certain number of years.
And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.
2006-09-04 22:05:21 · answer #1 · answered by Price is what you pay for value. 3 · 0⤊ 0⤋
If you have to borrow money from a lending institution to purchase a home you are acquiring FINANCING. You pay the money back over a period of years usually 30 or 15. You pay
P & I which is principle ( the actual cost of the house ) and interest ( the money you are charged for making the loan to you).
2006-09-05 00:14:02 · answer #2 · answered by d b 3 · 0⤊ 0⤋
In simple words, its monetary loan given under certain legal agreement and rules from a financial institute like Bank.
This usually happens between an individual and an organizational entity like Bank.
Bank remains the owner of the property e.g. house until all loan
with interest is cleared by an individual who has taken a amount from bank.
2006-09-04 21:56:30 · answer #3 · answered by Atul 1 · 0⤊ 0⤋
Financing is when you secure a LOAN (mortgage) to pay for the house.
2006-09-04 21:39:11 · answer #4 · answered by surfinthedesert 5 · 0⤊ 0⤋
Speak to a broker they can help you as they will have information on several banks and lending institutions safes you doing all the work.
2006-09-04 21:40:19 · answer #5 · answered by Anonymous · 0⤊ 0⤋