According to an American study by Experian Consumer Direct, the average credit score of someone with a mortgage is better than that of someone without. People with second mortgages have an even higher score. [via Payments News]
I don't see this as suprising information. My parents managed multiple mortgages - including second mortgages - over a period of time and it's simply necessity to be disciplined. If you take on so much debt that you need a second mortgage in the first place, then if you're not disciplined with your finances, you're going to lose your property.
What would be interesting to study is how many people who have gone through bankruptcy had second mortgages. I think such information would show that not everyone can handle either a mortgage or a second mortgage. Sad but true. So only the most disciplined people keep their property long enough to be part of a study in the first place.
But owning a property can be an investment in more than one way, especially if you don't live in it. How about that as a motivator? Buy properties as investments, not as homes. Not sure if you can save enough? Many people think that they have to buy a home by a certain age. I wholeheartedly disagree. Age shouldn't be a factor. You're more likely to keep a mortgage if you have some experience in life with managing your finances, right? Rushing into a home you cannot afford is financially unwise.
So how about pretending to yourself as if you are saving long-term for a home. It's been said in numerous goal-achievement books that if you act like something is going to happen, it very likely will happen, provided you prepare yourself appropriately. So act as if you are capable of saving enough money for the down payment on a house. Don't give yourself a time constraint. Don't even tell yourself that you have to move into it. It'll be an investment like any other, but on a long-term basis.
Since real estate isn't real a "liquid investment" per se, you might be surprised to see me mention it a few times on this site. However, what is saving money for if not for some purpose further down the road? Chosen wisely, real estate is an incredibly good, stable investment. But if you go into to it with a huge debt load, it'll eat you up, along with family relationships. Many a marriage broke up purely because of quarrels due to money.
It has to be thought of as a long-term investment. If there are no time constraints on moving into your home, then you give yourself a relaxed atmosphere to save, and start to see other investment opportunities that you might miss if you were under financial stress. The result is that along the way, you may use some of your "house fund" for other short-term investments that ultimately build up your fund even faster than you thought. (I.e., always be on the lookout for legitimate ways to multiply your savings in a relatively safe, liquid manner.)
Star off by putting your money into an interest-bearing online savings account, mutual fund, or bonds. As the money collects interest and you focus on imagining your dream home, magic can happen. You might find yourself suddenly saving more money than before, as described above, without feeling as if you are sacrificing anything. When this happens, you've achieved the "long sight", which can't be taught, which must be achieved on your own.
Even if you don't want a house to live in, owning a rental property could subsidize your own rent, possibly give you a net monthly income. (But not if you buy it with a minimal down-payment.) If you later sell the property, the net profit could take care of you into retirement. At worst, if you don't purchase a house, you'll at least have a tidy sum of money saved, and will have learned valuable lessons in savings discipline.
Have I piqued your interest? Are you thinking about saving towards the long-term investment of a home or a rental property? Read this post about how to open an online savings account, and get started on your way towards saving.
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