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by Surferbill

FHA Mortgage Loan for Florida Homeowners

Take the proper Steps to Get Your FHA Mortgage today

 Other FHA loan Advantages Include:

Minimal Down Payment and Closing Costs.

Down payment less than 3.5% of Sales Price Gift for down payment and closing costs allowed. No reserves or required. FHA regulated closing costs. Seller can credit up to 6% of income price towards buyers costs.

Easier Credit Qualifying Guidelines such as:

Minimum FICO credit score of 540. FHA will grant a home purchase 2 years after a Bankruptcy. FHA will grant a home purchase  3 years after a Foreclosure. 

Easier Debt Ratio & Job Stipulation Guidelines such as:

Higher Debt Ratio’s than other home loan programs. Less than two years on the job is allowed. Self-Employed individuals o.k.

Apply for an FHA mortgage at

www.FHAmortgageFHAloan.com

For Florida first time home buyers and other borrowers, the FHA home loans can have key advantages:

Easy Qualification – The FHA loan insures lenders against loss for loans prefabricated to properly eligible FHA home loan borrowers. So you’re likely to find FHA mortgage loans with terms that make it easier for you to qualify.

Minimal Downpayment Stipulations – FHA mortgages can work with as tiny as 3% down and those funds can come from a family member, charity, or your employer. Even though the FHA loan does not have a zero down mortgage option yet, you will find that your 1st Continental Mortgage loan officer can point you to many Downpayment assistance programs that work well with Florida FHA home loans.

Less than A-1 Credit is Okay – The Florida FHA home loan program exists to expand the pool of home buyers. Even borrowers with prior bankruptcies or mortgage lates get approved each day for FHA mortgages to buy or Refinance homes in Hillsborough County or any of the other Florida counties we serve. The FHA loan program uses credit quality, not credit score!

Lower Cost Over the Life of the Loan – The florida FHA home loan rates are extraordinarily competitive. FHA’s lower risk to the lender means a superior rate for the borrower.

Safeguards for Borrowers Who Get Behind – The Florida FHA loan mortgages also grant the lender more options in helping borrowers who start behind keep their homes are get current again: special forbearance, workouts, even free mortgage counseling. Further, HUD can grant the lender to take past due payments and move them to the end of the loan and in some instance will actually pay your past due payments for you. Options to save your home you’ll never get from a conventional loan! In an uncertain world, this is another excellent reason for you to get an FHA mortgage.

Options for Manufactured Housing – Under certain conditions, you can even finance a Mobile Home or manufactured home using a Florida FHA mortgage loan. Call 1-800-570-0448 to get pre-approved for a Florida FHA loan for manufactured housing or just use our swift application to learn more!

FHA Loans Are Fully Assumable – When you are ready to sell your home, you can offer buyers FHA financing! All FHA loans can be assumed by eligible buyers.

These are just seven of the many good reasons to apply for an FHA mortgage. Call 1-800-570-0448 to talk with a friendly Florida FHA loan specialist now!

The FHA program has evolved since it started in 1934 and now has options for HUD insured loans that fit a variety of different borrowers and situations.

 Purchasing a Florida home is one of life’s major landmarks and for some, it is even a dream come true. At FHAmortgageFHAloan.com we comprehend the importance of this decision and it is our goal to make your acquisition into home ownership memorable. Regardless of whether this is your first Florida home or your third Florida  home buy we will do our ideal to ensure that getting you into your new Florida home is a pleasant and memorable experience.

When you start to seriously think about purchasing a new Florida home it is important that you follow some easy steps to make sure that the Florida home process goes smoothly.

The first thing you should do is an analysis of your debt to income ratio. This important step will let you know what type of Florida home you can afford and how much your current obligations will grant you the apply for  based on your monthly income and expenses.

The next important step in purchasing a new Florida FHA home loan is to get pre-approved for an FHA  home loan. The peace of mind that comes with knowing that your FHA mortgage loan and credit report have been approved will grant you to shop for your new FHA home with confidence. And when you find a Florida home and are ready to make an offer the fact that you have already been pre eligible for your FHA loan amount will give the seller confidence in you as a serious buyer.

About FHA Mortgage Loans

FHA guarantees eligible Florida home  loan applicants the capability to obtain FHA home loans with 3.5% down payment. FHA mortgage  loans can be fully assumable. FHA mortgage loan limits apply depending upon where the Florida home is located 

FHA mortgage loans wage for  low down payments and the easiest limiting guidelines to make it easier for Florida homebuyers  qualify! FHA home loans are favourite with Florida first time home buyers but are equally liked by  moving up buyers and Florida homeowners looking for a  Florida Rehabilitation loan. With an FHA Mortgage  loans you can borrow up to 96.5% of the buy price of the Florida home.

The advantages of a FHA insured mortgage product to a Florida first time home buyer are many. A Florida homebuyer might apply for an FHA mortgage loan to buy a Florida home with tiny money out of pocket. FHA home loan insurance permits FHA mortgage lenders to make mortgages for Florida first time homebuyers without risk. 

With an FHA home loan here are no income limitations or minimum  credit score stipulations when FHA insured mortgage. This is why FHA loans are among the easiest mortgage loan to remember for and nearly  anyone can remember as long as they have a reasonable credit history and can afford the monthly FHA mortgage payments. You can also combine FHA home loan programs with many Florida first time homebuyer down payment programs.

FHA Streamline mortgage Refinancing

The FHA mortgage has permitted FHA streamline refinances on FHA insured  home loans since the primeval 1980’s. The FHA streamline refinance  refers only to the amount of documentation and underwriting that needs to be performed by the FHA mortgage lender, and does not mean that there are no costs involved in the transaction.

The basic stipulations of a “streamline FHA mortgage refinance”  include:

The FHA mortgage loan  to be refinanced must already be insured by  FHA. The refinance is to result in a “lowering” of the borrower’s monthly principal and interest payments. No cash might be taken out on mortgages refinanced using the “streamline” refinance process. The FHA mortgage to be refinanced should be current (not delinquent).

FHA mortgage Lenders might offer FHA streamline refinances and include the closing costs into the new FHA mortgage loan amount. This can only be done if there is adequate equity in the Florida. FHA Streamline refinances can also be done without appraisals, but the new FHA home  loan amount can't exceed what is currently owed, that is  FHA closing costs might not be added to the new FHA mortgage with those costs either be paid in cash or through the premium rate as described above.

Loans Personal And Business Loans. What are individualized loans. What are business loans. Can I get a individualized loan. Can anyone get a business loan?
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Our immediate perception when we hear “investment” word would be stocks, shares and property. Wine investment is very cool compared to other options that you always hear about when it comes to investment. Even though it might not be of the size, with an investment of wine is a viable source of investment and the wine can increase their value over time. If your main concern is usually in obtaining a massive amount of dividends, then you should think about investing wine. As a matter of fact, the number of people who are dedicated to investing in wine is growing each year.

Only a limited production wine vintage grade resulting in increased value due to the growing appetite worldwide. That is one reason for the investment came really works is because good wine always increases in value. Wine investment can play an integral role in the investment portfolio of any mortal as the value of fine wine is unlike any other type of investment, even in the difficult economic climate, its value increases continuously. Consumption is an investment that benefits from a single source and law strictly governs its production.

Effectiveness of investment in the wine market has proven over the last twenty years. Whether conducted a series of fixed-income shares. Fine wine market diversification of competition makes the wine investing considerable exceptionally stable and high return investment. Degree of wine is a tangible product with which investors are assured that their investment wine is not affected by the irregularities of the stock market.

You might not know that tax efficiency is the most important aspect of wine investing. If your investment is supervised and is dealt with properly, capital gains tax, value added tax and export duties could be exempt because it is regarded by the Inland Revenue as a “wasting asset” with a predicted lifespan of less than 50 years.

Wine investing opens up large potential of great returns on the investment if a well thought out and well-planned come within reach of is set in place. By a proper approach you must be prepared to invest in the wine industry to get good returns on the same. Wine investing has time and again offered high returns on investment in addition to its other recompense of low instability and collection adaptability.

Wine investing is one of the strongest investments that an investor can invest in current trends and demands that now is the right time to invest in wine as an investment wine provides a solid basis, With all that good wines need to be cautious about the bid is the next and the demand for its collection of vintage in the moment sell and that is increasing in popularity and is expected to continue to improvement.

By : Sue Michell

By understanding the performance of socially responsible stocks, individual socially responsible stock, the socially responsible investor can acquire the profits of socially mindful investing, either through individually socially responsible investments, or by engaging with socially responsible investment funds and socially responsible funds. In addition, the article also confers the sustainable investing approach in investing with ethics, green investing, values investing, and socially responsible investments.

Although socially responsible investing has expanded dominance in the last numerous decades, countless socially responsible investors are still under the feeling that to invest in social good, they must decline certain levels of portfolio performance. However, with the confirmation escalating that socially responsible investment funds strictly match, if not surpass, their market counterparts, many socially responsible investors are capitalizing their earnings – and their involvement to social good.

Long-term vs. short-term corporate focus

Socially responsible investing (SRI) takes the long term vs. short term investment discussion to a socially signal investing level. In comparison to countless corporations who take advantage of natural assets and human fag for short-term profits, a socially responsible stock drives under long-term natural sustainability, lending itself well to green investing. For example, the oil magnates such as Exxon-Mobile and Chevron have experienced exponential expansion in the last numerous years. However, where will these corporations be in 10 or 20 years – when the oil rigs are pumped dry and clients have switched over to hydrogen-fuel cars? In stark contrast, green investing stress the long-term sustainability of corporate social responsibility on the environment, society, and monetary well-being.

Overarching SRI principles

The extensive investment orientation of socially responsible investing are conceptualized based upon unstable techniques of social investing analysis. The execution of social investing in Europe is usually diverse than in the United States, but the underlying essentials are based upon using a set of foundation values. Depending upon the socially responsible investments portfolio or socially responsible funds, the SRI analysis might be based on one or several of the following criteria:

1. Sustainability Practices : This socially conscious investing appearance analyzes whether a company’s business practices are sustainable in the long term. If the business operations negatively impact the environment, economy, communities, or human welfare, then it is not considered sustainable investing for long term profitability.

2. Corporate Governance : This socially responsible investing component analyzes the company’s policies on employee, community, investors, stakeholder, and environment relations. Social investment’s mutual dominance analysis is a separate process from the company’s financial outlook.

3. Religious Beliefs : Considered the original dad of socially conscious investing, religious beliefs have screened many portfolios. For example, a Catholic screened socially responsible investing portfolio might divest companies that produce contraceptives. Both Christian and Muslim screened socially liable funds are prevalent, imparting strong religious beliefs onto the social investing analysis of opportunities.

4. Public Policy : Geared for socially responsible stock portfolios that include international holdings, the public policy filter analyzes foreign governments’ actions, either on an individual country case-by-case basis, or based upon an international mandate, such as a ban by the UN or NATO.

Socially responsible investment funds’ performance

Beyond the desire to contribute to social good, socially responsible investors are seeking SRI investment performance. Values investing demonstrate that socially conscious investing can be done quite profitably. In fact, in some market conditions, socially responsible funds outperform their market counterparts.

The Domini 400 Social Index (DS 400), the socially responsible investing industry benchmark, has outperformed the S&P 500 since its inception in 1990. According to KLD Indexes, as of November 30, 2007, the DS 400 has enjoyed 11. 75% annualized returns, leading ahead of the S&P 500’s 11. 21%. The DS 400 screens its index for socially responsible stocks based upon environmental, governance, and social filters, and within its index, there are 250 S&P 500 represented companies, 100 companies not on the S&P 500, and another 50 socially responsible stocks that have demonstrated significant strength in social investing filters.

With the sustained long-term SRI investment returns in the socially responsible investment funds, such as the DS 400, socially conscious investing can match or outperform its market counterparts – dispelling the myth that a socially responsible investor must kill performance for social consciousness.

The risk exposure of socially responsible stocks

However, when comparing SRI indexes against market benchmarks, the question begets: does the performance of socially responsible investment funds come at a higher portfolio risk than its market counterparts?

Considering the rigorous screens of socially responsible investing portfolios, the socially responsible stocks are naturally geared towards companies with smaller market caps. Theoretically, the lower market caps contribute to a higher volatility and beta for the overall socially conscious investing portfolio. For example, the Domini 400 has a weighted average market cap of 83% of the S&P 500.

Beta Coefficient: measurement of an investment’s volatility against the market

However, instead of reducing the overall beta, the socially responsible investments screens minimize the individualized corporate risk. By evaluating a socially responsible stock based upon its governance, sustainability and relationship with stakeholders, social screens reduce the economic risk of the individual corporate holding. For example, by not choosing to invest in tobacco, socially responsible investors shield their portfolios from the negative performance factors of lawsuits. Or, by selecting companies that have good relations with their employees, the negative financial reprimands of strikes are curtailed from the socially responsible investment portfolio.

Risk and volatility are not necessarily synonymous in the world of financial portfolios. Whereas beta might be a good indicator to evaluate the short-term probability that a negative event might occur, this does not specifically examine the individualized corporate risks. Though socially conscious investing portfolios might have higher betas, the risk of the socially responsible stocks in the portfolios experiencing financial degradation is more limited than the market benchmarks.

Alpha: risk-adjusted measurement of an investment’s excess return over “risk-free” instruments

One of the most compelling factors of socially conscious investing is that despite its demonstrated increased returns, the risk does not necessarily increase. Social investing might be one of the few exceptions to the risk-to-reward ratio. In fact, the performance of the socially responsible funds might not be fully indicative of its true earnings, once the lowered individualized corporate risk is weighted. After adjusting for both short-term and long-term risk, social investing’s alpha might be stronger than the numbers indicate. For more information visit our website http://www. sristocks. com

An investment property is becoming a more favourite choice for those seeking to create a revenue stream and also achieve capital growth through the investment property value increasing over time.

This can also be part of a strategic financial plan and should be considered by investors as part of a diversified portfolio. When considering an investment buy you should also source the ideal investment loan structure for you. With any investment your investment loan can make a difference to your return. If you are negatively geared through an investment loan the cost to you of that investment loan can effectively be reduced.

If you buy wisely, once there has been capital growth in the investment property over time there is the option of using this built up equity to move into another investment property, take out another investment loan and thereby continue to further increase your investment portfolio.

Aside from the traditional belief that tax advantages are the key driver for taking out an investment home loan there are many other factors to think about when purchasing an investment property.

Below are some key points for your reference, by using these points as a guide in conjunction with a detailed discussion with your accountant or financial planner you will be in a superior position to ensure your investment buy and investment loan is a financially sound decision for the long term.

In relation to property enquiry therefore, you should consider:

* What is the infrastructure like in the area? Are there enough schools, hospitals, shopping centres, physicians and dentists, freeways or main roads?

* What has the historical capital growth been in the area over the last two decades?

* Is the local council planning to increase housing density or add a new road to increase traffic flow?

* If you are purchasing in a new subdivision, are there more new land blocks and home and land packages planned nearby. New developments can impact on the value of your home as purchasers often like a new home to one that might be 2 or 3 years old in the same area.

* What length of time will the investment be held? And will this tie in with planned infrastructure development which will in turn accelerate capital growth?

There has been current press to recommend that investment and home property values in Sydney have a potential capital growth of 18% over the next 3 years so buying off the plan as an investor might be an captivating option in the current market. If you find a good property development, suitable for investment, which has a completion date in state 2010 – 2011 then you can exchange contracts with either a 10% cash deposit or a deposit bond (as a guide the cost of a deposit bond of around $86500 for state settlement September 2011 will cost you approximately $9000- $9500 (significantly less than the interest you would pay over the period if you borrow $86,500 at current interest rates of 9% p. a). The general feeling is that direct investment into property as opposed to into managed property funds is a superior way to go – you are in control of your investment and refrain the high management fees so often charged by share and property investment funds.

Do some research on the world wide web to see which areas have the greatest potential for capital gains – remember if you are looking for an investment property you should invest with your head not your heart. An investment property needs to be well located to transport and other facilities so that those renting can easily access these services.

When considering which investment loan would suit you ideal take the following into account:

1. Does the investment loan grant you to split it into a number of investment loan accounts. This is a good feature to have in an investment loan because you are positioning yourself for the future – if you use the investment property at a later date to gear into another investment buy then you can split the statement so that the investment loan portion relating to the new buy is clearly identified. This grants you, and your accountant, to easily track the costs associated with the new purchase.

2. If you use your home property (with an existing home loan) as security for the investment loan then it is imperative that you do not mix any home loan debt with your investment loan borrowings. The ATO in Australia requires you to apportion any additional repayments to a loan where the borrowings are “mixed”. You want to apply any additional repayments to your home loan before your investment loan. You are paying your home loan off in after tax dollars – whereas you can deduct the interest you are paying on your investment loan against the income form the investment property.

3. Does the investment loan grant you to capitalise interest? It is always a good intent to include a capitalising feature as a part of your investment loan to protect you against any unexpected costs in relation to the property. It also means that instead of subsidising the investment costs and interest shortfall on your investment loan you can capitalise these and make additional repayments to your non-deductible home loan debt.

4. If you have adequate equity in your home then you might be superior to think about a 100% + costs investment loan for the investment acquisition and use any savings you intended for the investment buy to pay down your home loan debt.

If you think about all these points your investment loan will be working in your favour at all times.

Intended Audience

Individuals looking to buy a home for individualized use or as an investment. As well, looking into conventional wisdom’s statement that buying a home is one of the ideal investments someone can make.

Summary Points to Take Away

Why a Home is good investment: (1) Forced Savings Plan (2) Leverage (3) Inflation Resistant (4) Tax Free Capital Gain (5) Control over Asset. Points against a Home as an investment: (1) Lack of Diversification (2) Maintenance Costs (3) Historically lower returns than equities (4) Unavailable to take advantage of other opportunities (5) Limited Scope. Additional points to think about if planning on purchasing property for individualized use: (1) Doesn’t wage any cash flow (2) No tax shelter from interest expense (3) Can get individualized joy out of investment.

Analysis

Conventional wisdom says that buying a home is one of the smartest and ideal investments an individual can make. This article is geared towards challenging this conclusion to see whether this statement rears any truth to it.

Why a Home is a Good Investment?

Forced Savings Plan

Most individuals claim that the buy of their individualized home was the ideal investment they’ve ever made, which is true in most cases because it is the only investment they’ve ever made. The general public struggles with saving for retirement; thus, purchasing a home assists in that problem as it forces individuals to continuously pay down the mortgage (or lose the home in a foreclosure to the bank); therefore, grants the storing of equity for the owners. This built up equity (i. e. market value of home minus remaining mortgage) can be borrowed against during their retirement years or they can downgrad into a less costly home in order to wage some retirement funds to the owner. If individuals take a disciplined approach to saving, then the benefit of being forced to save in order to pay for a home diminishes

Leverage

Typical real estate buy require only a 5% deposit, while the remaining amount can be borrowed through bank debt. Few substitute investments outside of real estate can the acquirer obtain such significant leverage, which can enhance investment returns.

Example, suppose that you purchased a home for $200k, for which you prefabricated a 5% deposit down ($10k). During the next few years the home appreciates in value and you sell it for $220k (10% higher than the level you purchased it). Though the return on the home is only 10%, the return to the investor based on invested funds sunk into the home ($10k) is 200% ($20k attained over $10k investment) –  that is the power of leverage. On the negative side, more debt means higher fixed monthly mortgage payments; thus, higher risk of being healthy to make the monthly mortgage payments. As long as cash flow is not a concern and the mortgage payments can be met – investments should be leveraged to maximize returns to the investor. Could you envision travel into a bank and asking for $100k to invest in equities while only putting 5% down – likely to never happen, this is a major benefit of real estate ownership.

Inflation Resistant

Real estate holds its value during inflationary periods; thus, acts as a hedge against the investors other assets that aren’t conserving against inflation (ex. Currency). The quality will continue to hold its buying power (store of value), which is difficult to get outside of investing in precious metals. The reason real estate holds its value is there is the same number of houses that the increased monetary supply of dollars are chasing; thus, it’ll take more dollars to buy the houses as the supply of houses stays stagnate while the demand rises (due to the increase in the number of dollars in everyone’s hands). This can become critical given the current economic times and numerous expansions of monetary supply crossways many nations, which will have the aftermath affect of higher inflation.

Capital Gain is Tax Free

In Canada, each home owner is provided with a capital acquire exemption on amounts attained in excess of cost for their principal residence. Only one piece of real estate can be claimed as the principal residence per individual. For example, if you owned a home and a cottage, only one of those houses upon selling could take advantage of the principal residence exemption. No other quality class has such advantageous tax reduction characteristics. Unfortunately this is a onetime event; thus, those holding numerous pieces of real estate can only apply it to one property.

Allows for Control over the Asset

Real estate is typically an investment an individual has control over (assuming you’re the majority owner – which is typically the case) by the means of the owner has the capability to increase the value of the asset, which might not be the case in most other investment opportunities. When purchasing real estate, owners can make capital improvements to the home (ex. Completed basement, new porch, etc. ), which will increase the value of the property (capital appreciation) as compared to purchasing stocks or mutual funds as assets where the owner can’t take action to increase the value of those assets (unless they’re a significant owner, greater than 20% – which is typically unlikely). The capability to control an quality adds value to the owner through what is known as a control premium, as a real estate quality might be more valuable in the hands of some individuals over others.

Why a Home is a Bad Investment

Lack of Diversification

Average individual thinks the stock market is very risky while investing in real estate is more of a certainty. Purchasing equities grants the owner to conveniently hedge their risk amongst various companies in numerous industries, countries, etc. The buy of real estate doesn’t wage the capability to diversify risk away as easily unless an investor plans on owning numerous pieces of different types of properties (ex. residential, commercial, resorts, etc) crossways various markets (North America, Europe, etc) – which is probably very unlikely for the average investor. Purchasing real estate prevents the diversification of risk because it’s dependent on the economic, migration, and regulation trends of the local area.

For example, adopt you purchased a home in Oshawa, Ontario – which is a town extremely reliant on the massive manufacturing artefact of General Motors (GM). Should GM cut back on production or move their artefact housing prices would start sharply as it is the biggest employer in the area; thus, demand from individuals will decline as unemployment rises and real incomes fall. With a decline in demand and supply staying stagnate (as you typically can’t “un-build” a home once it’s constructed) the price will have to shift towards in order to align demand with supply.

Real estate doesn’t grant the investor to diversify away the specific risks in the local area as compared to purchasing equities, which grants the investor to spread risk amongst investments that perform differently during different points along the business cycle. Most individuals when purchasing real estate have all their eggs in one basket.

Maintenance Costs

Transaction and maintenance costs are significantly higher for real estate investments than stocks, mutual funds, etc. When purchasing stocks costs are typically broker commissions ($20 per transaction if using an online discount broker), while when purchasing a home it is typically 2% commission on the transaction value, significantly higher than purchasing equities.

Once you buy shares, no further cash is required from the investor unlike real estate, which requires constant annual expenditures that continue to increase the investors cash committed towards the property, such as property taxes, insurance, utilities, maintenance and fixes of the asset, etc. These are costs that real estate investors or home purchasers don’t bourgeois into their expected return, but play a significant role as the payment of property taxes (etc. ) doesn’t contribute to the value of the property for eventual understanding in the hopes of capital appreciation.

Historical Lower Returns Compared to Equities

During any 20 year period throughout history, no other quality class has outperformed equities, which includes real estate. This is from the appearance of quality vs. quality without consideration of leverage and how that might enhance returns (as discussed earlier). While it is true that over the long run real estate prices go up in value, this is typically due to inflation incurred. Current spikes in housing prices seen in the past 10 to 15 years has been due to changing demographics, specifically the baby boomer generation (who makes up largest segment of the population in North America) go through life stages at the same time (same goes for starting a family and purchasing a home and real estate investment property). The result was a massive influx in demand without a corresponding increase in supply as construction requires lead time; thus, leading to rising real estate prices.

Will this high demand continue? That’s where the argument lies. Likely there will be softness felt in overall real estate demand as baby boomers already have their homes and they’re likely to either stay put, move to retirement homes or downgrade into a smaller place in order to obtain some retirement income. Immigration will continue into North USA that will prop up demand, but likely not the extent to fulfill the whole in demand left by the baby boomer generation; therefore, the future appreciation in real estate properties is likely to flatten out.

Can’t Take Advantage of Available Opportunities

The buy of a home or real estate property requires the individual to tie up a significant portion of their net worth into the property (in a lot of cases, all of it). Having all your net worth in real estate is a risky strategy as you’ll be severely impacted by movements in real estate prices as compared to having your cash tied up into several quality classes; thus, less vulnerable to swings in any one quality class. Similar to the discussion had under the “diversification” section of this article.

With the majority of an investors net worth tied up in a real estate property, there isn’t acquirable cash to take advantage of other opportunities that come along; thus, significant opportunity costs are involved in venturing into real estate. This should be considered before purchasing an costly individualized home or making a real estate investment.

Limited Scope

Real estate is a local good, unlike gold for example – which can be purchased and sold throughout the year for the same market price. An individual looking to buy a individualized home or make a real estate investment doesn’t have access to all acquirable properties as there are physical limitations to contend with. It comes down to wanting to live where you grew up or currently work or not wanting to buy a rental property far from your home in order to reduce logistical issues. For example, if you live in Toronto, Ontario and are looking to make an investment in a rental property, you’re unlikely to think about properties in Paris, France though the opportunities might be superior than those surrounding Toronto due to language and logistic issues. Equities (and etc. ) are globally traded and available; thus, users can take advantage of opportunities around the world; thus, their scope is not limited to the local area of their current surroundings like real estate is.

Additional Points to think about if you’re purchasing a Home for Personal Use.

Doesn’t Provide Any Cash Flow

An quality typically provides you with cash flow, i. e. puts cash in your pocket. When purchasing a home, cash only flows out (property taxes, repairs, etc. ); some would argue that if it appreciates in value then it is an asset. In this instance it is only an quality when converted into cash and if that is the case, where will you live? Likely end up buying a new house, which has also gone up in value similar to your house.  This makes it difficult to realize the value of your individualized home appreciation, which acts more like a liability than an quality since it takes cash out of your pocket instead of putting some in there.

Tax Deductibility of Interest

Interest expense paid due to bank loans taken to finance investment properties is deductable against income because the investor is pursuing income and tax legislation grants deduction of any expenses incurred in the motion of income. This is not the case for a mortgage taken out to buy a home for individualized use as the individual is not in the motion of income; thus, interest expense is paid with after tax dollars, with no tax shelter provided. If those funds had been borrowed to invest in equities or mutual funds, the interest would be deductable because again that would count towards the theme of pursuing income.

Can Get Personal Joy Out of It

Unlike equities and other substitute investments, the investor can’t personally use or get joy out of it as compared to purchasing a home, which the individual can live in and enjoy during the investment process. An investor who buys shares in General Motors (GM) can’t exactly borrow and test drive automobiles whenever they please simply because they’re a part owner. This is a qualitative benefit that is difficult to quantify, but should be considered.

Where to go from here?

The main reason to buy a home is to have somewhere to live and enjoy their life, don’t think of it as an investment. Buying a home isn’t a bad decision; it is the investor’s perception that might be tainted because it is important to realize that there are many arguments against a home as an investment to be considered. Don’t buy real estate property with the mindset that an individual can’t lose and that there is no superior investment opportunity than to buy a home, etc. Beware of conventional wisdom that says there is no superior investment than purchasing a house.

THANKS,

SIMON GIANNAKIS