If you have ever looked at your Utah home’s mortgage balance and thought, “Yikes! That’s a lot of money!” you’re not alone. Such a gulp-inducing moment can be triggered by listening to one of the celebrated financial gurus explaining personal finance. Much of the latest financial wisdom is aimed at extolling the virtues of an entirely debt-free existence—which would seem to preclude any six-figure home loans on the family ledger.
For most every Utah family in the early or middle years, that debtless goal—although it pencils out as a good idea—is pretty much unattainable. If owning makes more financial sense than renting (it almost always does), unless the family can operate from a garden shed, taking on a home loan is unavoidable fiscal reality. Since home ownership is the acknowledged path for making headway when it comes to shelter, is there a good reason to worry about the mortgage that goes with it?
Last week, Daniel Bortz, a reporter in the Finance section of realtor.com, came up with “8 Surprising Facts” about mortgages—a few of which should serve to alleviate any free-floating anxiety homeowners might associate with their Utah mortgages—even hefty ones. Here are three that may or may not be very “surprising,” but in any case, certainly are relevant:
- Mortgage interest rates can get really high…
In October 1981, mortgage interest rates averaged 18.45%! When you take a look at your typical 2016 Utah mortgage statement, and note how low your current monthly interest payment is, “Yikes! That’s a lot of money” should become, “Yikes! What a great deal!”
- Even billionaires like Mark Zuckerberg have a mortgage
This could be the most anxiety-alleviating surprising fact of all. The Facebook founder refinanced his home with an adjustable-rate mortgage (the kind financial gurus tell you is the riskiest way to go). He refi’ed a 1.75% adjustable with a new 1.05% adjustable—a maneuver that saves him $1,981 a month! Why, since he could obviously pay cash for any property, would he take a mortgage at all? It could have something to do with the tax advantage home loans feature.
- People celebrate their last mortgage payment in bizarre ways
This is hardly surprising—but does bear indirectly on why your Utah mortgage should be little cause for financial anxiety: it’s going to eventually disappear! And since the asset (the house) is counted as a positive which balanced the liability (the mortgage), month by month that liability gets smaller as the value you own grows. The Yikes! balance of the loan is negated by the Yippee! value of your property. (BTW, the “bizarre ways to celebrate” include Archie Bunker’s torching the paperwork in an episode of All in the Family).
These positives are the financial ones, but they are also bolstered by this real world big fat plus: owning your Utah home undeniably imparts a feeling of security and stability—something that most of us find to be nearly priceless.
I hope you’ll feel free to give me a call for feedback or advice whenever any Utah real estate questions arise. I’ll be standing by!