Things to ponder when buying a house

Something I have been watching recently has been the housing market. 
Here is my criteria when it comes to a purchasing a house:

The house must be affordable.  You can’t have the plan of getting rid of the house in 2-5 years.  The market may drop again and you need to make sure that you can afford the mortgage no matter how long you will be in it for.  If you have stretch to buy the house or are relying on two incomes to buy it then I would pass on it.

The Rate must be locked. Get a 15 year fixed or 30 year loan for the house.  Sometimes people do the interest only because they think they will get rid of it fast.  Before they know it they were in the house for 10-15 years just paying interest on the loan.  If it was fixed the house would have had some principal paid off on it.

Put 20% Down.  Investment or not you must put this amount down into your house.  This will allow you to avoid mortgage insurance and get you the best rates available from lenders.  I am sure people out there disagree with this but this is my opinion.

Location. Is this where you want to live?  Are you okay with the commute to work and other places?

A mortgage is not your only bill. Not only will a mortgage be your biggest bill but many people have to remember they have car payments, insurance, HOA fees, electric, cell phone, cable, food, and many more. So after you have all those bills can you still afford it?

Last minute double check.  Once you think you have found a place you want to buy do a final market analysis with your agent to see what else is out there in the same area for the price you are willing to pay.  You might find a better bang for the buck.

There are many more things to consider but these are a good start in the process of getting a new home.

Economy update and some questions

I have been super busy recently.  Much has happened since we last talked and here are a few things on my mind about what is going on in the economy.

Gas prices each week continue to go up.  For the last three weeks when I have been filling up I have paid $33, $37, and today $45.  Wow! When I was filling up today I saw way more motorcycles recently in the valley.  I can only imagine that more and more people will be getting bikes.  Since I sold my car recently maybe I will get a scooter.  Probably not!  The point is Gas prices need to go down and I really can’t imagine people will keep paying these high prices.  When I am driving places now I even think of getting the most out of my drives.  If all consumers can cut down on Gas usage could we drive the price at the pumps down?  How do we get cheaper prices?  Oil keeps going up and so does my credit card bill.  If you can try to carpool.  If you need to go down the street to the store to pick up a few items, get some exercise and walk.  A final thought on Gas for all of you who are getting money back on the stimulus package from the government it looks like they gave it to us to pay for gas for a few months. I hope gas prices get better.

The stock market continues to roll like a coaster.  I hope all of you are sticking in it for the long run.  Keep funding, this will not last forever.  If you are a day trader good luck to you. 

The housing market is still tanking.  I saw a news story the other day and realized that more and more people are walking away from houses even thought they now can afford the payment.  People were saying why pay for a house that has dropped 100k?  I wonder if there will be any enforcement on all these people who are walking away.  I have a big post on this matter coming up soon.

Global Warming is getting on my nerves.  I hear so many people talking about it everywhere.  Many out there who think they know all, keep telling us to worry about this Global Warming and that we really need to take care of our environment.  My one question on this whole matter is that how can we for sure be experiencing global warming if local news professional can’t even predict rain, temperatures in the weekly forecast?

Okay that is all that is on my mind.  Looking forward to every ones thoughts. 

Is it the lender or the buyers fault?

Everyday you hear about tons of people who are walking away from their house because  they can’t afford their house payment in this Real Estate market.  I know some people were stupid and got into loans where they could not afford the house.  Other got greedy and thought they could do a quick flip.  Now I have been reading stuff on how the Fed Reserve wants lenders to step in and help out the borrowers.  I think this would be okay considering some that actually bought the houses got suckered into loans that the lenders knew eventually would come back to burn them.  Also these lenders did these bad loans not just once but over and over to put tons of cash in their pockets.

What about people like myself who pay my mortgage on time?  If the lenders are going to give them a deal shouldn’t I be getting one as well - for being responsible?  If they lower their interest rate or principal owed on the loan shouldn’t everyone get the benefits of that?  Or do only the non-responsible get the rewards of the bail out?  I think it should be fair that if you are only going to help the distressed that they responsible should get some sort of benefit as well. 

I am very interested to hear all your thoughts on the Real Estate market.
 

Personal credit maxed out

I watched a documentary last night called “Maxed Out“.  A co-worker of mine gave it to me to watch.  It was a good documentary about personal finance, but at the same time it was pretty sad.  This show was about people who are completely “maxed out” on their own personal credit. 

Some people have paid interest for 20 years and for some reason still can’t get caught up.  It also goes on to show all the people out their how they keep spending and buy stuff that they can’t afford using their credit cards.  It was a good eye opening story of people all over the United States who are hurting because they never understood how their credit cards worked and credit in general.  This documentary talks about real estate, credit cards, foreclosures, bankruptcy, credit collectors, and so much more. 

I would encourage people to watch it just to see what is going on in the world.  After watching this flick it makes me realize that I need to be even more careful in the financial decisions that I make.

I hope renters are saving

I was thinking about people who are renting right now and hope they are saving tons each month.  Let say a hard working couple makes about 5k a month.  I know some make way more and some make way less.  What if people who are renting that pay about 1k in rent a month and try save about 2K a month for a down payment on a house.  They will still have about 2k to pay other bills as well.  They are going to have a pretty good down payment in the future.  If they do it for a year they will have 24k saved up where as if they were in a house with a 2k mortgage they would be losing money since the Real Estate market is not so hot.  I think it is a pretty good idea to save as much as possible so when it comes time to buy a house you put enough down to actually have a affordable payment versus all these people out there that have thousands of dollar mortgages. 

I know that seems like alot but a thought if people were not spending like crazy and actually saving this could be possible.

Just a thought I had…