Having a house is a large part of the American dream. It is not an unrealistic goal when you come to America. Owning your own home is becoming a reality for millions of immigrants, a logical outcome of hard work and clear goals.

A typical house in the suburban neighborhood

Benefits of owning your own home:
Obviously the greatest benefit is having a home that you can call your own. You own home gives you a sense of permanency, a feeling of belonging to the community. You can renovate your own home, add any personal touches you like, which is not always possible when you are renting.

Purchasing a home is an investment. Your monthly mortgage payments are a sort of scheduled savings plan. By paying your mortgage every month you are building your "equity," which grows over time. This ownership interest in the property is yours that you can either borrow against or sell and thus convert to cash. When you pay rent, you do not have the opportunity to build this equity.

In the United States, homeowners also receive so-called "tax breaks." The interest you pay on a home mortgage is usually deductible from your federal income tax.

Factors to consider:
Even when you have decided to take the step there are some considerations to be made. Financing is often a major obstacle. It is therefore important to fully understand the various options that you have and how to most efficiently deal with them.

First of all, consider your employment. A steady job will undoubtedly make meeting the monthly mortgage payments easier. "Steady employment" is considered holding a job for at least two years. That does not mean that you must be in the same job for two years. Moving to an equal or better job is considered beneficial to your employment history.

Paying your bills on time every month is another very important consideration. When applying for a loan you will be required to list your debts, the amount of monthly payments and the amount of time you have to repay all your loans. The lender will also check to see how you have been paying your bills in the past. If you do not have any credit cards or you have not taken out a loan, then a credit reporting firm may not be able to issue you a credit report. A credit report shows how you have paid your loans in the past. In that case, you may be required to prove that you pay your rent, telephone and utility bills on time every month.

When you decide to buy a home, you will have to make a down payment and cover closing costs. Usually the down payment constitutes 5 to 20 percent of the purchase price of the home. You will need to pay that amount before taking a loan.

Since you will be taking out a mortgage for about 30 years, carefully consider the amount you will be paying each month. If you are already paying rent, you are probably prepared to meet the mortgage payments. Your monthly mortgage payments will be calculated on the basis of the amount of your loan, the interest rate, and the period in which you will repay it, i.e. the "term."

It is usually believed that any given mortgage should not exceed 28 percent of the monthly gross income. In calculating this, you should consider all other income besides your salary, as well other long-term debts such as car loans, student loans and others. This total should be no more than 36 percent of your monthly gross income.

The mortgage:
A mortgage means that you are taking a loan against your house, which will serve as security for the repayment of your loan. The lender holds the title to your property until you have repaid your loan plus the interest that you owe. If you fail to keep up with your payments, the lender can repossess the house.

Ask yourself some questions before choosing a mortgage plan. For example, how many years do you expect to be living in the house that you are now considering buying? What other major expenses will you be having in the future, such as education of your children? Would you consider changing your payment plan over time? In the United States, there are several mortgage plans available to potential buyers.

Fixed-rate mortgages:
This type will remain constant for the period during which you have taken out your loan, i.e. usually 15, 20, or 30 years. This is a good idea if you plan to remain in the house for a long period of time.

Adjustable-rate mortgages (ARMs):
If you plan to move to another home within a few years and you are fairly certain that your income will grow over the years, then it is wise to choose a mortgage plan that is more flexible. With an adjustable-rate mortgage you can expect to see your interest rate increase or decrease depending on market conditions. An ARM usually offers a lower initial interest rate but your payments are usually adjusted once or twice a year.

Biweekly mortgage:
The mortgage payments are due every two weeks but that way you will pay off your mortgage more quickly and you will save in interest over the years.

ARM with an initial fixed period:
This mortgage plan allows for several years of fixed payments, usually from three to ten years. After that period your interest rate will be adjusted every year.

Balloon mortgage:
You can expect to pay a lower interest rate for a specific period, usually within five to ten years, but at the end of this term, you will have to refinance or pay off the outstanding balance.