Reasons for Getting a Home Loan

Updated: November 28, 2012

An OFW friend who’s been working overseas for almost 5 years now is seriously considering to finally come home.

I asked why and he simply says he wants to already marry his fiancé.

He proudly tells me that he has already saved enough money for the wedding, plus extra cash to also start his own business here.

However, he is concerned about where he and his wife would live.

While the option to be with his parents or his in-laws is always an option, as well as renting out a place, he really wants to start his new life living in his own home.

So he’s asking me for advise – whether it is a good idea to take out a home loan instead of working more years abroad to save up for his dream house.

Personal finance is personal – that’s what I believe. And no matter what I say, I told him that it’s only him, who can really determine his best course of action.

However, to help him gain some perspective, I chose to rather share what I believe are good reasons why people apply for a home loan. I thought that if he knew these, then he could evaluate himself and his situation better.

Renting out a one-bedroom apartment in the city can cost around P10,000 per month these days. That’s money you could instead, be spending on the monthly amortization of your own home.

Equity is the value of your house, less the amount left in your mortgage. So the more of the mortgage you pay off through the years, the more equity you’ll have – value which you can leverage to apply for credit that you can use for investments.

Making timely mortgage payments will build your borrower reputation or creditworthiness. This is another leverage you can use if you plan to acquire new debts in the future – such as a car loan or a business loan.

These are the three basic reasons why people choose to take out a home loan. But you should know that more financially savvy individuals also use them to…

Make Money
Most real estate investors, usually with the help of their equity and creditworthiness, take out home loans to buy foreclosed properties that they can flip (sell for a higher price) or convert into a rental unit.

I believe these are the most common reasons (and basic advantages) for getting a home loan.

If you can afford the mortgage and more importantly, you can leverage yourself to a better financial position because of it, then I think there will be no harm in applying for one.

On a final note, if you’re also considering getting a home loan and you’d like to talk to an expert about it, then I encourage you to check out Loan Ranger on Facebook and ask him your concerns.

You should know, he’s pretty knowledgeable on this topic. So go ahead, check him out and get to know Loan Ranger today.

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Disclosure: This is a sponsored post.

Photo credits: images of money


  1. Another reason to get a home loan now is the rates. If you can get a 30 fixed mortgage for 3.25%, you will actually pay less than the 30 expected inflation rate. Low rates also mean that if you take a loan, and use the cash you would have put into the house to invest in the stock market (with its average annual return of 7%), you make the difference between the loan rate and your return rate.

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