A homeowner is often referred to as having more financial stability. You can become a homeowner by paying down your mortgage and acquiring an asset that can grow in value over time.
Renting a house can mean that your landlord may charge you more for each renewal. If you have a fixed rate mortgage attached, you will be guaranteed the same monthly payments for the entire term of the loan.
There has been much talk about a possible recession by 2023. Federal Reserve’s aggressive interest rates could cause a significant pullback in consumer spending and a period of economic recession. The idea of a recession is a frightening thought. Here are some ways that being a homeowner can work in your favor.
The worst thing about the possibility of losing your job in a recession is perhaps the fact that it could be scary. Unemployment benefits are often available to workers who have been laid off due to no fault of their own. However, these benefits are limited to a certain amount and you might find your weekly unemployment check is not enough to replace your lost paycheck.
You could tap your savings to help you get through a time of unemployment. Your savings may run out at some point. Your home might be able to help you.
You may be able to borrow against your home equity if you own it. To be clear, both of these scenarios involve borrowing money on which you will accrue interest. However, the interest that you pay for a home equity loan or loan may be lower than what you would pay on another loan product. It’s also likely to be lower than the interest you would pay on a credit-card.
You should also consider whether you are eligible for a loan. Unemployed people may find it difficult to borrow money. A lender might be willing to lend you money if you have a lot of equity in your home. This is because the amount you are borrowing is guaranteed by a valuable asset.
You may be able to get a loan for home equity or HELOC, even if you have poor credit. This is because the loan will be secured by your house, which gives lenders greater confidence.
It can be difficult to own a home. Owning a home means you have to take care of it. If there is a recession and you have to borrow money, being a homeowner can work in your favor. As we wait to see how the year unfolds, that alone could give you more security.
The mortgage rates are at their highest levels in many years and they will continue to rise. To get the best rate and minimize fees, it is important to compare rates with different lenders. A small change in your rate can make a huge difference in your monthly payments.
Original Blog: https://www.fool.com/the-ascent/mortgages/articles/own-a-home-heres-how-it-could-help-you-get-through-a-recession/
