Is A Mortgage A Worthwhile Investment?

MortgageDefining how to invest money in this tumultuous economy is a topic which could be argued correctly in either direction. Investing money into anything – stocks, mortgages, bonds, or anything, requires careful deliberation, short and long term consideration, extremely specific projections which would more than likely be safely discussed with a financial adviser, and old-fashioned common sense.

Mortgage: house, land, business?

A mortgage is a conveyance of an interest in property as security for the repayment of money borrowed equal to the value of the property. In simple terms, a mortgage is an exchange of a deed, or document assigning ownership to the person or entity who engages the mortgage in exchange for monthly payments which will eventually equal the total value and the mortgage deed will be free and clear; the person who made the payments will be the actual owner of the property, which might be a small house or one hundred thousand acres of land. Large corporations might mortgage buildings with market values of billions of dollars.

Is a mortgage a safe investment?

In an economy that is a volatile as the one in which our global market exists, to suggest that there is any safe investment would depend on who is investing, what their supposition of safe is, and how valuable the money is to them. To someone who only owns $1,000 and they are considering a safe way to invest their money so that it will be there for them to have in the event of a life event, the value of a dollar would differ greatly than a corporation that is investing billions of dollars of money that belongs to others with the arrogance to presume that their education or knowledge would guarantee that the investment would guarantee a worthwhile return. For one who is planning on purchasing a home to live in, shopping carefully with a realtor and checking property values over the last decades and predictions for the coming decades, one could make an investment in a home carefully knowing that they would be paying for the domicile that their family would be inhabiting and calling home.

For those who are purchasing homes that have been foreclosed upon and hoping to fix them and then resell them to make a profit, this is also an investment that generally pays positively, depending again on careful research of the area, the demographics, and the property values pre-and post mortgaging the property.

For the average family, a mortgage is a much more worthwhile investment than simply renting a home or an apartment. When paying rent, the payer is simply giving away money to the owner of the property to live there and has no legal rights to the property. When making mortgage payments, the person making the payments is purchasing small amounts of the property at a time, which over time, will result in ownership of the property. All mortgage interest is tax-deductible on the property and the owner the property (the person who has taken the mortgage out) can make property changes to their home while renters have to have permission to change the paint colors of their walls or carpet and cannot make changes to their domicile, including the yard, without the permission of the owner of the property. So, in this situation, a mortgage is most definitely a worthwhile investment.

The bottom line: mortgage or not?

The bottom line is that a mortgage is a serious investment. Interest rates within one’s country, in other countries, on the global stock exchange, and in one’s neighborhood, are all factors to consider. The most important factor to consider is the amount of value, or money, that an investor has to gain or lose. Ironically, there are investors that need losses to show on their tax returns in order to not pay taxes on money that they have earned, so they can show a loss on a property investment, yet ten years in the future, show a profit on the property by selling it after improving it. Investments are really semantics; when a family goes into the grocery store to purchase their weekly groceries, they just affected the global stock market. By purchasing certain brands, that brand has a stock value that increased or decreased, and the global value of the stock is directly affected by purchases made by other entities in other countries.

A mortgage is a worthwhile investment if the purchaser invests in the property, maintains the property and maintains a watchful eye on the market to make sure that the property values in general are not plummeting. Skidding investors should be prepared to stand firm during tough times and know when it is time to sell their investments or simply take short-term losses.