Mortgage Is a Good Debt: Why?


Have you planned to buy a house for a new start? Are you facing difficulties in gathering an immense amount of money? Before applying for a loan, it is significant to know 3 reasons why a mortgage is a good debt. Sometimes taking a loan might be beneficial, while sometimes it might be a disaster for you. Many new families plan to buy a house for a fresh start, but the property price is usually not affordable. There is a facility provided by the banks to people to enable them to borrow some money.

However, the collateral for the loan is the house itself, meaning if somebody fails to repay the borrowed money, the bank will seize the house and sell it to regain its cash. This facility of lending money in the name of buying a home can be referred to as a mortgage loan.

What is Good Debt? – The Burning Question of Today!

Good debt is an investment that will flourish over time or produce long-term benefits. Obtaining a student loan is one of the best examples to understand “good debt.” First thing, the students are provided with loans at a low-interest rate. 

Second thing, the student loan will help you gain a professional qualification that will give you an edge in the future compared to others. That is why student loans satisfy the conditions of “good debt” that are easy to repay and beneficial in the future.

Reasons to Call Mortgage a Good Debt!

The following are the prime reasons for calling a “Mortgage” loan a good debt.

1. Positive Replacement of Rent

You can take a mortgage loan as one of the good debts because first, it is provided at low interest, so the borrower does not have to pay extra money in terms of high interest.

Secondly, if someone takes a mortgage loan to buy a house, so he/she will pay monthly installments of the loan, which will be better than paying rent because a one-day mortgage loan will pay for your own home.

Lastly, do not plan to borrow an amount that’s more than your potential; otherwise, you will be in hot water. Plan well. Do well!

2. Increase in the Net Worth of Asset

A residence, like any other object that comes into your ownership, is classified as an asset. An asset is something you possess. Home has a net worth. The 3 reasons why a mortgage is a good debt. Whether you assign the net worth as the price at which you bought the house or the price you consider you can sell the house, that amount is how much your home is worth.

The mortgage loan will help you buy your house, which is not possible in an average condition. Only a few Americans can afford to pay $189,000 (the median price for an existing resident) without borrowing a loan.

However, if you make a balanced plan for a mortgage loan, there would be no difficulty repaying it.

3. Easy to Repay

Reimbursement of the mortgage loan is done gradually, consistently, and relying upon the interest rate, your monthly installments of the mortgage loan would be lesser than the rent in your residential area. The banks of the U.S offer different terms (years) for the mortgage loan. However, the interest rate of mortgage loans is around 3% in the United States, which can quickly repay the loan compared to other loan plans.

To sum up, everybody wants to buy his/her house so they can live happily and stress-free in that house. Many new families in the U.S are facing financial crises regarding buying their residents. So mostly, they shift into renting a house rather than buying it. Rather than going to rent, you can borrow a mortgage loan that has several benefits.

Remember that possessing a house will be an asset, which means borrowing a loan is a good investment. At last, do not delay – Invest today.

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