Tax Shelter?

I was listening to Boortz this am on my way in to work, and one of the callers was talking about taxes, and how it seems a lot of people over extend themselves on their mortgages for first or second homes in order to gain the tax credit when April 15th rolls around. The more I thought about that, the more I could kind of see his opinion, however, I do not believe thats the reason that people get over extended or in too deep. I think its a problem of not doing their homework and of not properly understanding the way mortgages work.

The first thing anyone considering buying a home (whether its a first, second or replacement home) needs to do is to sit down and compare mortgages. There are more types of mortgages available than ice cream and many of them aren’t a good fit for most of us. When Amy and I sat down to purchase our house, the only type that we considered were fixed rate mortgages. The problem was do we go for a 15 year fixed rate or a thirty?

We settled on a 30 year fixed rate mortgage, simply because we plan on being in the house until the girls are grown and on their own. We like the location, we like the house and the yard it has. We could see ourselves being there in 20 or 30 years. You need to consider these things when applying for a mortgage. If you feel like you can’t afford to buy out right, you can always try a rent to own or Buy To Let mortgage. Generally, you make monthly payments on these which is like paying rent which can then be applied to your down payment or mortgage when you are financially able to buy. Some problems with this are that the interest is generally higher and you are technically a renter until you buy the property. If you don’t mind paying more than you have to, or being a renter, then maybe this is the route for you.

Either way, make sure you do your homework before you buy. Too many people are ending up forclosed on these days…

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