Mortgage Help   Mortgage Rates Real Estate Credit Foreclosure Tax Mortgage Rates Homeownership: the good, the bad, the in-between Mortgage Basics Chapter 1: How much house can you afford? Homeownership Should You Buy or Rent Summary   Chapter 2: Adjustable-rate mortgages ARM and a fixed-rate mortgage Fixed-rate mortgages Understanding the key elements Which type of lender is right for you? Other types of mortgages Subprime Summary   Chapter 3: Your credit score Down Payment How lenders set rates Low down payments Mortgage insurance Your mortgage payment Mortgage Points Summary   Chapter 4: The good faith estimate Inspection and Insurance Necessary paperwork for a buyer Other lender paperwork Paperwork and fees Prequalification and preapproval Special circumstances Summary   Chapter 5: Ten questions to ask Turned down for a mortgage Underwriting What lenders ask Summary   Chapter 6:  Understanding the closing process Escrow Summary   Chapter 7: When your mortgage is sold Avoiding foreclosure Paying ahead Payment changes Refinancing Removing mortgage insurance Summary Economic issues to consider While buying a home is an investment, if you are looking to make money, it's not your best bet. Owning a home usually doesn't result in more investment return than traditional financial instruments, such as mutual funds. The stock market has a long-term average rate of return in the 8% to 10% range. Your home will probably only appreciate at under 8%. Whether you invest in the stock market or a home, keep in mind that all investments come with risk. Some of the risks associated with homeownership are balanced out with benefits. For example, the IRS allows you to deduct part, or all, of your mortgage interest and real estate taxes. You can only receive the benefits if you pay more in interest and taxes than the standard deduction. Most homeowners will find that they are able to tax advantage of this tax benefit, especially in the early years of a mortgage. Benefits of homeownership There are many other benefits to owning a home. You are building equity as you pay off your mortgage and as your property value rises. If you take out a fixed-rate mortgage, you know that your housing costs will be constant for the next couple of decades. Disadvantages to homeownership When you own a home, you become responsible. If you rent, you simply call the landlord when the pipes break. When you own, you have to handle the problem. You have to remember that you will not only have to do repairs, you will have to pay for them. You may not want to jump into owning a home for a variety of reasons. For example, if you are facing a potential job change, you may want to wait. Owning a home is a slightly permanent situation. If you plan on moving soon after purchase, take into account that closing costs, agent commissions and other fees will add up. If you sell after living in the home for only a short period of time, it could cost you. You have choices When it comes to real estate, the options are endless. You should check out all of your options. For example, some middle-ground approaches to owning a home include leasing with an option to buy or a contract for a deed situation. What is seller financing? With seller financing, the seller is carrying a portion or your entire mortgage. When you enter a seller financing situation, you will usually face a higher interest rate, a shorter term and a potential balloon payment. Seller financing gives many buyers an opportunity to own a home without high closing costs to contend with. For those with little cash on hand, it could be beneficial. But you should be cautious to make sure that you are protected by the law. If you take out a primary mortgage and "carry back" a second mortgage through the seller, you will be paying two monthly mortgage payments. The seller usually determines the interest rate you will pay, so you could end up spending more in the long term.