Homeownership is one of the proven wealth-building techniques of the past 200 years. Those looking to leverage a home into a true asset must exercise the correct processes and have the right financial partner. Here are some tips to ensure that you maximize your financial tools and come out on top.
Learning Interest in Real Estate
The traditional real estate banking industry makes its money from interest on loans. If you are new to the homebuying market, you may be surprised at just how fast interest adds up. For instance, a 5% interest rate on a 30-year mortgage nearly doubles the price you will pay for your home.
The way to make your real estate an asset is to reduce the amount of time you are paying on a loan. A1 Mortgage is the only Freedom Loan company in Kansas City that helps you pay down your entire home loan in 10 years instead of 30. Keeping with the example above, you would save around 66% of the interest using the Freedom Loan versus a traditional package.
Different Types of Loan Structure
The fine print in traditional real estate loans often states that you will spend the first three to five years of the loan paying only the interest. It is an easy way to end up paying $300,000 for a $150,000 house. Doing business with a Freedom Loan company ensures you are paying down the loan principal from day one.
The majority of home buyers in the UK and Australia have a Freedom Loan structure for its advantageous structure. If you live in the United States and you have good credit and home equity, moving into this structure can save you hundreds of thousands of dollars.
Owning a Home and Taxes
On the surface, paying high amounts of mortgage interest seems like a fair trade because it is tax deductible. However, the rules have changed. Home buyers who purchased after December 15, 2017, will experience a reduced amount of mortgage interest that is tax deductible because of The Tax Cuts and Jobs Act (TCJA). Check with your tax advisor for more details.
Your Freedom Loan Company
As the only Freedom Loan Company in Kansas City, A1 Mortgage is in the business of saving homeowners money. Speak to us if you are in the market. Let’s have a discussion about how to save on interest, save on taxes and create real wealth for you inside of your home.