THE POWER OF LEVERAGE

Leverage is a Physics term that refers to the ability to use something that will help us to move an object that otherwise would be impossible for us to move only by ourselves. Since the greatest invention of all times: the wheel, humans start learning the principle of leverage! A great example is, placing a jack in the right place of a car, you will be able to lift the whole car, which you could not do alone with your bare hands.

What is leverage in Real Estate: The use of borrowed money (other people’s money, mortgage, large investment) will allow you to add your own money (down payment, minimum investment) to buy the entire real estate property.

Leverage is a general term for any technique to multiply gains and potential losses. Most often, it involves buying an asset using borrowed funds, with the belief that income and the value from the asset will be more than the cost of borrowing. 

Leverage works like a seesaw: to your advantage when real estate values rise, but it can also lead to losses if value declines. Now, is the precise moment to secure a mortgage to buy a home. Interest rates are record-low, and this allows the buyer to acquire a more valued property with the same monthly payment. It’s very important to select the right financial product when buying a home. 

A 30 years fixed mortgage is an excellent choice! This will allow you to have a very low payment for the life of the loan. Longer time to amortize your debt, coupled with low rates is the safest way to protect your investment. This is a very affordable mortgage and actually you can secure around 3% interest rate, just right now!