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The Fortifying Financial Nature of Home Ownership
The home ownership can be one of the most meaningful aspects of any person’s life. With a house and plot of land to call home, a family can feel secure, safe and comfortable. After a long day at work, a man or woman can relax in the solitude and quietness of their very own home. While those are all great perks of home ownership, when it comes time to pursue a loan of any kind, home ownership can show off one of its most valuable traits.
Applying for a loan is much like applying for a job. After looking through the various types of positions available, you submit a resume and hope to get the call to come in for an interview. Your credit report functions much the same for a loan application as a resume does for a job application. A lender can see your financial history, current condition and forecast from there a level of risk.
Your Financial History Can Make or Break You
Just as a great reference can make your resume sparkle in the eyes of a potential employer, so too can home ownership make your financial history jump off the page for a potential lender. Home ownership implies a steady stream of income, financial stability, the intention to plant roots and most importantly, the ability to repay a sizable financial commitment. Naturally, missed mortgage payments can undo all of that benefit, so only a strong mortgage history will help you.
Home Equity Loans
When a home owner investigates taking out a loan, most will go straight for home equity loans that borrow against the equity built up in the home, and rightfully so. A home equity loan can be a great financial solution for those that need additional funds and provides a host of benefits, all of which are accessible because of the benefits of home ownership.
Home equity loans, because they have the backing of a home, are available at lower interest rates and in greater amounts than unsecured loans that have no backing. Obviously, if you do not own a home, you are not eligible for a home equity loan, something that can be a vital financial tool used to keep a family afloat or pursue a new business or other dream.
On Unsecured Loans
Of course, not everyone is thrilled with putting their home in jeopardy when pursuing a loan and unsecured loans fill that void. Contrary as it may seem, home ownership can be a great benefit in that circumstance as well. While you may not see the low interest rates and favorable terms possible through a home equity loan, the rates and terms for an unsecured loan can be improved greatly through home ownership.
As a lender examines a particular person’s ability to repay an unsecured loan, a variety of traits are taken into account. For someone pursuing an unsecured loan without the benefit of home ownership, rates will be higher, payments will be more expensive and the loan term may be shorter. These can be significant barriers and for many people, they can be a complete roadblock to a needed loan.
So, as you go through the process of searching for a home, it is of course true that you will be providing security for yourself and a foundation for your future. However, you will also be gaining a significant financial advantage should the need arise to take out a personal loan of any kind. These situations are often sudden and surprising, so having the kind of safety net home ownership can provide is a significant benefit and one that should not be neglected through your pursuit of a home or even during the choice to even purchase a home or not.
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We respond right away! -Colleen Lane, Realtor®
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