I think it's fair to say that everyone would like to own their own home. It's the American Dream after all!
Oftentimes, sacrifices must be made to own a home. Most people will do whatever it takes. Others will not.
I think people need to take time to honestly and realistically analyze their financial goals as they prepare to buy a home.
1 - Budget. Don't fit your budget to the home. Find a home that fits your budget. Of course the more expensive home is nicer. As you battle to pay the bills every month, find yourself behind on taxes, fighting with your spouse and spread so thin that you can't afford to go out for a nice meal, you will despise this nice home and long for affordability....
2 - Stability. If you have no idea which state you will live in 6 months down the road.... don't buy a house unless you plan on renting it out. Have a stable job? Lead a pretty stable life? It might be time to buy!
3 - Prioritize. For fun, please rank the following in order of importance:
1. New Rims
2. $8,000 Birthday Party
3. Brand New Car
4. A Home
This seems like a big joke, but it's really not. Sitting in the office today, we were chatting about the most mind boggling reasons we have seen to NOT buy a home... Numbers 1 - 3 were our finalists.
My definition of "hood rich":
My rims are 20" and spinning. I partied like Keith Richards for my 25th birthday. Oh, by the way.... those rims are on my new Beemer!
If you're earning huge money, have a balanced portfolio of investments and are on track to meet your long term financial goals, I could care less if you are blowing some cash. It's play money for you!
Prioritize. Create goals. Build a realistic game plan to obtain those goals.
Would you like to own a home or are you on your way to home ownership?
Oct 17, 2007
Oct 11, 2007
No Cost Loans!!
Yesterday morning, a tv ad caught my attention. 'America's Home Lender' was advertising 'No Cost' loans!
No administrative fee.
No processing fee.
No credit fee.
No title insurance fee.
No recording fee.
No appraisal fee.
This is incredible! This sounds too good to be true!
'No Cost' loans are a great product, but they aren't no cost. (If something sounds too good to be true, it is.)
Below, I'm going to explain how a 'No Cost' loan works.
Appraisal, processing, credit, title insurance, recording and other fees are paid out of a couple of potential sources.
1 - Equity. If the pay off for your current loan is $200,000 but your new loan amount is $207,000, can you guess where the cost of the loan is? You guessed it... EQUITY!
....That being said, if you don't have/want to bring in $7,000 in order to close your loan, this is a good deal, BUT it is not a true no cost loan!
2 - Interest Rate Premium. The higher the interest rate, the more the bank pays mortgage professionals. By raising the interest rate a point or two, there can be more than enough $$ to cover the costs of fees which make it possible to bring no money into closing! Once again, this is not a true no cost loan, BUT it could be the right move for someone who doesn't plan on staying in their home long term, doesn't have $$ to bring to closing or is willing to refinance again in a few years.
Folks, mortgages are expensive. Addictions to refinancing regularly quickly eat up all of your equity (and sanity). Get into a fixed rate mortgage, make an extra payment occasionally (after you put some reserves into your savings account) and give the market an opportunity to provide you with some equity!
Wishing you all a wealth of real estate finance knowledge!
No administrative fee.
No processing fee.
No credit fee.
No title insurance fee.
No recording fee.
No appraisal fee.
This is incredible! This sounds too good to be true!
'No Cost' loans are a great product, but they aren't no cost. (If something sounds too good to be true, it is.)
Below, I'm going to explain how a 'No Cost' loan works.
Appraisal, processing, credit, title insurance, recording and other fees are paid out of a couple of potential sources.
1 - Equity. If the pay off for your current loan is $200,000 but your new loan amount is $207,000, can you guess where the cost of the loan is? You guessed it... EQUITY!
....That being said, if you don't have/want to bring in $7,000 in order to close your loan, this is a good deal, BUT it is not a true no cost loan!
2 - Interest Rate Premium. The higher the interest rate, the more the bank pays mortgage professionals. By raising the interest rate a point or two, there can be more than enough $$ to cover the costs of fees which make it possible to bring no money into closing! Once again, this is not a true no cost loan, BUT it could be the right move for someone who doesn't plan on staying in their home long term, doesn't have $$ to bring to closing or is willing to refinance again in a few years.
Folks, mortgages are expensive. Addictions to refinancing regularly quickly eat up all of your equity (and sanity). Get into a fixed rate mortgage, make an extra payment occasionally (after you put some reserves into your savings account) and give the market an opportunity to provide you with some equity!
Wishing you all a wealth of real estate finance knowledge!
Oct 8, 2007
MSNBC Agrees
Here is a recent article concerning new build homes. I've already written a blog on the topic. For more info, check out this link http://www.msnbc.msn.com/id/21151323/ and scroll down my blog to find 'Don't Buy New Homes.'
Can you imagine buying a home with an adjustable rate mortgage at the peak of the boom with hopes of double digit appreciation only to find yourself $25 - $50,000 upside down only two years later?
These people are left with two difficult choices:
1 - Eat the adjusting payments
2 - Lose the home to foreclosure
Horrible. Horrible. Horrible....
Can you imagine buying a home with an adjustable rate mortgage at the peak of the boom with hopes of double digit appreciation only to find yourself $25 - $50,000 upside down only two years later?
These people are left with two difficult choices:
1 - Eat the adjusting payments
2 - Lose the home to foreclosure
Horrible. Horrible. Horrible....
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