When it all comes down to it, one of the big things that created the American dream, and one of the big things that it has always been about, has been allowing people to buy property and to own land. I mean, look at the countries that had colonies. Heck, look at England today, and the way that their property ownership is these days. Do you know how insanely difficult it is to get property in England? There is so little property on sale in England right now that even if you were to have the money on hand, you’d still be hard pressed to find the land that you could buy, or even land that was reasonably affordable. The truth is, buying a home in England, or buying land that you would actually want to own, it is nigh on impossible. Now, having said that, if you can find and buy the right amount of land in England (or in the United Kingdom in general), you are going to be able to have your very own seat in parliament, and that can also mean that you get to have your own title, Lord something of something something. I’m not joking, buying the right land entitles you to a lordship. I don’t know how that works legally if you’re not a natural-born Englishman, but that’s neither here nor there.
But here in the United States, there is tons of land for sale. There is property for sale in the midst of big cities. There are tons of it for sale out in the middle of nowhere, in places that you don’t have to ever interact with your neighbors unless you really want to. You can even buy some pretty insane places to live, places like old missile silos that have been decommissioned. The fact of the matter is that if I could, I would go and hit up a mortgage accounting firm right now and own a missile silo, but it also costs around half a million dollars to get one of those place. But hey, I can dream, right?
Anyway, buying a house in the United States, or a parcel of land, while nowhere near as expensive as it would be for comparable land over in England, is still insanely expensive compared to most other purchases that you are likely to make. I mean, let’s look at it like this. A penthouse in downtown New York City can be had for about 250K USD. That’s a lot, make no mistake about it. But that same location (or rather, a comparable one, as the case may be) in the United Kingdom costs something like 2.5 MILLION pounds, or GBP, however you like to have that written out for you. That’s insane. Remember, by the way, that a pound is worth about 1.6 dollars American, which makes the gap in price even more insane. I mean, the cheapest house I’ve ever seen in the US was about twenty thousand bucks, and that’s just the reality of it.
Anyway, getting a mortgage is basically the key to being able to afford a house in the United States. Any of the accounting advisors that you can find will tell you that you ought to put down somewhere between ten and twenty percent of the total price of the home. This is going to be a good way to keep the prices manageable, to keep rates low, and to make sure that you’re well invested in your home. Then, of course, there is the fact that you have to pay back what you borrow, so the less you borrow, the better of you are.
Now, when you go to begin paying back your loan, you’re going to notice something. Specifically, you’re going to notice that you aren’t paying the same person that gave you the loan. You’re paying a mortgage servicing group, and that’s what MSR accounting is all about. You see, these people, they take the mortgage payments that you put into escrow, they cut a little out of the interest in order to pay themselves, and then they take out taxes, insurance, and then send the rest on along to the people who first gave you the mortgage. Truly, it’s an amazing process, and one that you would be surprised to understand works astonishingly well.
So, if you’re looking into home ownership and getting a mortgage, now you know what you’re going to be in for. Forewarned is forearmed, and now you know what you’ll be dealing with, and a little about how paying back a mortgage goes.