2-22-06
For most people, buying a house is one of the true highlights of life.
That shows a maturity level. You have left home and actually grown up. Owning a home helps show others that you are getting serious about life.
For many people, buying a home is easy. You find a house you like, submit an offer, get financing and buy that baby.
Life is good, huh? But sometimes, people make the mistake of buying the wrong house or messing up with the financing.
If you buy the wrong house, this can lead to financial ruin if you lose your job, get divorced or something happens to the local economy that knocks the value of the home to less than what you paid for it.
This isn’t necessarily the case if you are still renting. You might get stuck for a few months on your lease, but won’t be nailed down for the next 28 years or whatever.
Some people also mess up the financing. They go to the first option available or try and get fancy and wind up with some kind of creative mortgage that doesn’t really meet their needs.
It has never been easier to get financing for a home, even if your credit is not so great. You can have bad credit and get a home, provided you have more money to put down and you don’t mind paying a little higher rate.
There are mortgages available that will let you borrow up to 125 percent of the value of the home. Sometimes, this is a good option if this is the only option available other than bankruptcy.
You can even get mortgages that feature interest only payments. Wow. What a deal, huh?
Uh, not so fast. This encourages a borrower to buy more house than they can afford.
If the local market is going up and continues in that fashion, you are okay. But if the market crashes, which it frequently does, and you still owe the same amount that you originally did, it is easy to owe more on the home than what it is worth.
A lot of financial planners and experts say to put down as little money as possible and I agree on that. This means you will have money available for an emergency and will have funds available to make the house payment or whatever.
There are several mortgage companies that will allow you to get away from paying PMI (which is an insurance that the borrower must pay if they borrow more than 80 percent of a home’s value) by doing an 80-20 loan.
You have a first mortgage on 80 percent of a home’s value.You also have a second mortgage on the remaining balance. You don’t have to pay PMI, which doesn’t go against your loan, but you do have an additional payment and the second loan is typically at a higher rate.
That shows a maturity level. You have left home and actually grown up. Owning a home helps show others that you are getting serious about life.
For many people, buying a home is easy. You find a house you like, submit an offer, get financing and buy that baby.
Life is good, huh? But sometimes, people make the mistake of buying the wrong house or messing up with the financing.
If you buy the wrong house, this can lead to financial ruin if you lose your job, get divorced or something happens to the local economy that knocks the value of the home to less than what you paid for it.
This isn’t necessarily the case if you are still renting. You might get stuck for a few months on your lease, but won’t be nailed down for the next 28 years or whatever.
Some people also mess up the financing. They go to the first option available or try and get fancy and wind up with some kind of creative mortgage that doesn’t really meet their needs.
It has never been easier to get financing for a home, even if your credit is not so great. You can have bad credit and get a home, provided you have more money to put down and you don’t mind paying a little higher rate.
There are mortgages available that will let you borrow up to 125 percent of the value of the home. Sometimes, this is a good option if this is the only option available other than bankruptcy.
You can even get mortgages that feature interest only payments. Wow. What a deal, huh?
Uh, not so fast. This encourages a borrower to buy more house than they can afford.
If the local market is going up and continues in that fashion, you are okay. But if the market crashes, which it frequently does, and you still owe the same amount that you originally did, it is easy to owe more on the home than what it is worth.
A lot of financial planners and experts say to put down as little money as possible and I agree on that. This means you will have money available for an emergency and will have funds available to make the house payment or whatever.
There are several mortgage companies that will allow you to get away from paying PMI (which is an insurance that the borrower must pay if they borrow more than 80 percent of a home’s value) by doing an 80-20 loan.
You have a first mortgage on 80 percent of a home’s value.You also have a second mortgage on the remaining balance. You don’t have to pay PMI, which doesn’t go against your loan, but you do have an additional payment and the second loan is typically at a higher rate.
posted by Craig Hall | 4:11 AM
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