OC Register…NOW the risks are ‘front page’ news
If you didn’t see this weekends Marketplace section in the OC register, you should check it out. Here is the link to the main article that was on the front page of the Marketplace section: Subprime’s grip slips. This is the section that normally had articles about the unstoppable OC real estate market and how you should ‘buy today’.
I found the picture that was the backdrop for this article very interesting. Not only was it in color, but it was 9.25″ by 16.25″. Here is a smaller version of the picture: 
as you can see, it is an ‘orange’ holding a house from going over the edge. How fitting…as OC real estate gains are ‘in the bag’!
I almost spit my OJ across the paper when I saw the quote that was highlighted beside the article:
I think that deserves a classic Top Gun “BULLSH!T” cough!! Are you kidding me? Come on people, this isn’t rocket science. These guys had NO problem getting rich when the getting was good. Sure, it wasn’t completely their fault by any means. But don’t tell me that you don’t have any interest in putting people in homes they can’t afford. If you didn’t have that interest, you wouldn’t allow things like stated income for 100% interest-only loans. You would require a pay stub or W2 every once in a while.
I remember people buying 600-800k homes with 6-10k in the bank. Really! I saw all of their accounts and was amazed that lenders would do it. If you only have 6k in savings, you don’t need to be buying a plasma TV, much less a 600k new home!
After you read the article, check out the ‘buying it in…’ section. This link just so happens to be the ‘buying it in Mission Viejo’ section. I like this house because it is a $620k home which is about the ‘median’ home price in Orange County. This section gives 3 options of how to ‘afford’ this house. Granted they use these archaic standards such as 33% of income on a housing payment as well as this thing called a ‘30 year fixed’ loan. I don’t know what that means, but 30 years sounds scary. I’m going to sell it in a year for a 6-figure profit anyway… I just read a great book called “Getting Rich in Real Estate the Casey Serin Way”. I highly recommend it!
Anyway, back on track. Well, here are the numbers they arrived at to buy this ‘median’ priced home:
———————
24831 Daphne West, Mission Viejo 92691
Year built: 1973
Bedrooms: 4
Bathrooms: 2.5
Home size: 2,180 square feet
Lot size: 4,680 square feet
Sale date: Oct. 13
Last sold: Feb. 13, 2004
Last price: $620,000
FINANCING
Three ways to buy a $620,000 home, based on interest rates as of noon Thursday, no points and $4,000 in closing costs.30-YEAR FIXED
Loan assumes 5% down payment, 7.00% interest (7.02% APR).
Down payment: $31,000
Loan amount: $589,000
Monthly payment: $3,919
Req’d. annual income: $181,185
Cost as % of income: 33%30-YEAR DUE IN SEVEN
Loan assumes 10% down payment, 6.75% interest (6.77% APR).
Down payment: $62,000
Loan amount: $558,000
Monthly payment: $3,619
Req’d. annual income: $165,702
Cost as % of income: 33%
30-YEAR ADJUSTABLE
Loan assumes 20% down payment, 1.5% interest (7.61% APR). Adjusts annually with a 7.5% cap per adjustment and a life ceiling of 9.95%, tied to 11th District Cost of Funds, plus a 3.45% margin.
Down payment: $124,000
Loan amount: $496,000
Monthly payment: $1,712
Adjusted payment: $3,500
Req’d. annual income: $152,566
Cost as % of income: 33%
Payment fully indexed, based on current rates.
———————
I highlighted the required annual income required to responsibly purchase these houses, and it seems to be just a smidge higher than the median income of Orange County. Actually, even 2 people earning the median income of Orange County would be hard pressed to afford 1 median priced home. But don’t worry, the lenders would NEVER (cough-cough) want to put somebody in a house that they couldn’t afford.
But not to worry…people have been saving large amounts of money and using this savings for large downpayments! These large downpayments mean smaller mortgages and therefore not as much income is needed to support them. So it all makes sense.
On a not-so-important side note, I saw an article today that said the savings rate is now at a level similar to the Great Depression. (Well crap…there goes my ‘everybody is saving’ theory…along with my blogging credibility) The savings rate was negative .4% in 2005 and negative 1.0% in 2006. This was the lowest savings rate in 73 years and only the 2nd time ever with 2 years of back to back negative savings rates. The last 2 years of negative savings rates were 1932 and 1933. I really think saving money is over-rated and not that big of a deal really. My house has gone up in value so much and I just got a new HELOC so I’m off to Fashion Island and South Coast Plaza. I’ll check out the comments later…
Stay Tuned…
SoCalMtgGuy
February 2nd, 2007 05:09
Hey, SoCal, while you’re over at Fashion Island pick me up 10 iPods and one of those huge massage chairs. I’ll just write you a HELOC check when you get back.
February 2nd, 2007 08:36
SoCal,
always nice to have you back. Yesterday, re the neg savings rate, I made a point of watching the nightly news on ABC and NBC, flipping back and forth to see what kind of coverage they might give it. Each gave it about 2 minutes–with a “correspondent” to explain the situation. NBC countered the apparent bad news with the good news that Americans had plenty in their 401Ks and the rising stock market, balances not counted in the “savings” report. ABC did even better, interviewing some middle-aged woman in a mcmansion who said savings as such unnecessary, since her home had risen 400% in value. No mention of stalled sales, falling values, and any other clouds on the horizon. Not even a throw-away line about “appreciation” being all hot air until you have cold, hard cash in hand. Nope, both correspondents at worst suggested that down the road a few years, we might have to revisit this issue and see if any problems develop. It is really beyond belief–even if you watch the evening news–already a minority of Americans–you are getting seriously misleading information. Ben’s blog posted yesterday that in Wayne County-Detroit-forclosures are now hitting one in 21 families…and this before the Pfizer layoffs have even taken effect. These are Great Depression numbers–but most Americans, unless they live in ground zero, are getting no advance word of the economics on the ground. As this ramps up, imagine the shock for the many Americans currently being lulled along with the Goldilocks economy jawboning.
February 2nd, 2007 08:58
SoCal, nice to see you writing again. I’ve noticed a sea change lately here in OC (Newport) in last 4 or so months - people are finally “getting it” that prices are going to crash like in the past. Not everybody, but many people who a few years ago were confident that housing “never goes down” and “everyone wants to live here”.
Now that pictures like this (which truly speak a thousand words - which probably tell the story better than 1000 words) are being published in the Register, I can’t help but think that most people here will soon “get it”.
February 2nd, 2007 09:21
They will ‘get it’ when they “don’t get” that new HELOC or 2nd mortgage. They will be clutching an ‘old’ appraisal and wondering why the new one is an ‘easy’ 6-figures less than the old one.
Like I said…2007 is just the beginning.
SoCalMtgGuy
February 2nd, 2007 09:39
Great read as always. Love the personality that comes through your writing. It’s so nice to finally see all this unfold.
In one of your sentences “I don’t know what it that means, but 30 years sounds scary” needs to be fixed (I think).
Thanks again.
Mel
February 2nd, 2007 10:18
Sorry, I get IT now. Just emphasize the IT!!!!
February 2nd, 2007 10:22
About a year ago I was out with some old college buddies for a drink, talking about the old times and what the future might hold. The topic of housing came up, as it always does, and one of my younger friends was discouraged about how expensive the market was, he rents in Fullerton. He asked if he would ever be able to buy something. I said, absolutely!!
This at a time when it appeared to the layperson that prices were never going to retreat. I’m sure at the time I did not make hime feel any better, since prices were still going up, and all his other friends did nothing but talk about how much their house is worth now. Fast forward to this past weekend and its a totally different story, and my fiend has a totally different attitute. I think what many people dont realize is the cyclical nature of housing, especially in So Cal. These cycles happen every 10-15 years on the spot. It never fails, and its always for some reason or another (job loses in defense), (high inflation increases rates), and this time around (subprime lending run amuck created this mess).
What will it be next time? My guess is as good as yours.
I told my friend however, not to be so happy, because while prices might fall substantially, it was going to be MUCH more difficult to borrower money.
This is the trade-off I explained. I you want to buy a house, you will have to earn it. That means cash savings, a high credit score, and stable job with good income. These are going to be the standards of the down cycle, as they usually are. No more free rides folks, at least not for a while. But rest assured, in the next 10-15 years, we are sure to see the lax credit environment resume. Hopefully, many wise readers of this blog (who bought at the bottom) will be able to say, YES, I own a home, but we bought it back in 2010, the old fashioned way, with 10-15% down and a 20-30 year fixed mortgage at 9%. You will be refinancing that loan you took out in 2010, in exchange for a 10 year fixed at 3% (new low rates), while others are taking out 60 year arms with .25% start rates, zero down, on 600k starter condos in Santa Ana. These are the cycles, and they reward those borrowers who are fiscally responsible and exercise retraint and patience.
If history has tought us anything, its that a fool and is paper wealth are soon parted, and those who work hard and save, will win out over the long haul. Good luck, and be safe this SuperBowl Sunday.
February 2nd, 2007 10:24
SoCal: love the sarcasm at the end! Man, this thing is looking uglier with each day. 1932 and 33 were the two “worst” years of the Depression if I remember correctly. The very fact that we are in the same savings range now is scary. spike66 is right about the nightly news, it will only lead you down a fantasy path. Everything they report is highly censored. I’m not a huge tech fan, but I thank god for the internet and blogs like yours. These are pretty much the only places you can get real info and intellectual debate. I’ve probably learned more on these blogs than I did in 4 years of college (business major). If you look back in history, this is playing out very similar to busts of the past. Everybody is partying, and now we’re seeing the usual douche bag bankers coming forward and saying they never saw these defaults and foreclosures coming. As you have pointed out so many times, it only takes common sense to see that the price to income ratios are far too out of line and will need a nasty correction to stabilize. Hope your new line of work is still treating you well. Happy new year!
February 2nd, 2007 10:52
SoCal… can you comment on this forum thread..
http://forum.brokeroutpost.com/loans/forum/2/90674.htm
Seems to me that, despite all we hear about tightening standards etc… the lenders are still cranking out the toxic loans… Or are thes scenarios not toxic? I really know nothing about this stuff. Except what I’ve learned here!
February 2nd, 2007 11:13
plysat,
There have always been ‘exotic’ money loans around, just NOT on a massive scale and marketed to the ‘general public’.
That said, this is not going to tighten up over night. Things are tightening some…but don’t think the industry is going to choke itself by slamming the door on all these types of loans.
Many people are still going to try and refi before the depreciation can’t be hidden in appraisals anymore.
Just be patient and stay tuned. You cannot have increasing property values and negative savings rates continue to exist at the same time. It can happen for short periods of time, but eventually things get stretched so far…that they break.
Stay tuned…I still have more shopping to do at South Coast Plaza
SoCalMtgGuy
February 2nd, 2007 13:53
Socal,
Do you have any thoughts on how the collapse of the subprime market will impact the overall housing market?
February 2nd, 2007 16:30
The subprime market IS the housing market (or at least was). This credit crunch in progress will forcibly remove 25% of potential buyers. Combine this with the sudden wariness of the more financially adept and the market comes to a screeching halt. I just read on one of the blogs that the south Florida barrier islands (Lucie county?) had ZERO sales in January of houses priced between $600k and $2.3M, even though that price range represents 58% of the standing inventory. I guess that would be infinite (or NaN for math geeks) months of inventory…
February 2nd, 2007 16:37
SoCal,
Good to have you back. In terms of the OC article I did read it. What I kept echoing through my mind while reading was “why weren’t you saying this for the last three years?” All of a sudden, standards matter? And this isn’t because lenders suddenly have become ethical and care about the well being of their clientele. They’re being forced by larger institutions and local government agencies realizing the risk involved and losing their appetite for subprime products. Even in one of your examples:
Down payment: $62,000
Loan amount: $558,000
Monthly payment: $3,619
Req’d. annual income: $165,702
Cost as % of income: 33%
Now when was the last time someone gave $62,000 as a down payment? And add this to a rookie home buyer? I’m not assuming someone selling their California Equity Giant (CEG) and moving into another place. Any first time buyer does not have this cash reserve; and this isn’t anecdotal because simply looking at the savings rate that was announced this week we realize that nothing is being saved and everything is being mortgaged. I hear bagpipes in the background, is that you piper?
Dr. Housing Bubble
http://drhousingbubble.blogspot.com
February 2nd, 2007 16:54
On the whole affordability matrix: Most (all?) option ARM’s (choice #3) come with a clause that says if your loan balance is 115% (or 110%-120% it varies) due to negative amortization, then the loan fully indexes. So, the 1.5%/7.61%APR loan is essentially negatively amortizing at ~6% per year. So, along about month 30, the payment goes from $2,141 a month, to $4,510 per month (which would otherwise have necessitated a $167,240 income.
Pitty the poor buyer who could only afford the $1,712 monthly and not even the $3,500 payment. Suddenly the price goes from $2,141 a month in month 29 to $4,510 per month in month 30!
Ouch.
February 2nd, 2007 16:59
First time poster, long time reader (always wanted to say that.) Anyway, I find your blog very helpful. Currently, my wife and I rent in Redondo Beach. We are looking to relocate to the OC. Better schools, further away from LA etc… Anyway, we are in our early 30’s I make six figures (low) and my wife is a stay at home mom (old school mentality). We have about $160,000 cash to put down on a house. I however cannot commit myself to do it. My accountant said it would be a good idea to buy; $8000 more on our tax return. Any thoughts out there? I truly believe we have made the best decision thus far. Like the appraiser guy said savers will be rewarding in the long run. I just want a home for my wife and kid!
February 2nd, 2007 17:23
RB Renter,
Rent in OC, question is to get a long term lease or short term. But a good statergy would be to rent from a flipper who is loosing an arm and a leg. You might be able to buy the same home on a short sale down the road from a bank. (if you like the home)
So right now you will be able to get a good deal on renting. And I have mixed feelings on how the rental market will go. 1st with so many foreclosures ahead the people being foreclosed on will have to rent, so rents will go up. But then the other side of my shoulder argues that there is so much vacant property and many homes will go up for rent and people will leave causing rents to go down more.
I don’t know, but patients is the key
February 2nd, 2007 18:26
i am guessing that overall rents will be depressed over the next few years. there is a lot of new capacity of rentals coming on the market, and if the collapse of the housing market materializes (like we all think it will) it will put downward pressure on incomes and therefore on demand for high-priced rentals. combine that w/ the inevitable condo deconversions and we’ll see better rental prices. and either way, it’s still a lot cheaper and less risky than buying in a bloated market.
February 2nd, 2007 19:16
Facist Valley and South Coast Plaza used to give me the hives. So much sensory overload. And that was in the 80s!
By the way, don’t miss this little homily about how bad it is to be debt free. By god, you’re un-American!
http://finance.yahoo.com/banking-budgeting/article/102344/Being_Debt-Free_May_Not_Be_That_Great
February 2nd, 2007 19:21
Rb renter…
YOU ARE DOING THE RIGHT THING!!! Let me ask you this: does spending several hunderd thousand dollars to save 8k on taxes sound worthwhile at this time??
You are heads and shoulders above most people. Just 6 years ago, the median home price in the OC was about 219k. Once this thing really gets going, we will see a LOT more houses in the 300’s again. THEN you can put a nice chunk down, have a manageable mortgage payment, and be able to enjoy life and provide for your familiy in a RESPONSIBLE manner.
Be patient…I KNOW it is hard.
Stay tuned…
SoCalMtgGuy
February 2nd, 2007 20:03
RB Renter-
We are renting, after selling our home. IMHO, its not the time to buy yet. The market is in transition. Your little one can’t be that old yet, so have some more patience. Even if # 2 comes soon, you can make due to save some serious dough.
Even Chrisopher Thronberg (Beacon Economics- was associated with UCLA Anderson School Of Business) has done a 180 since becoming independent, and says 40% by year end (2007).
If you buy to soon, you’ll regret it. This finance bubble is global, and its historical.
Your family and ours will be better off it we wait. Nothing wrong with good stay at home moms. Refreshing to hear.
I’m in the biz, and I pratice what I preach. I can’t help but be honest, buying to soon is financial suicide.
February 3rd, 2007 11:58
When I was deleting spam, I accidentally deleted a post here. Sorry to that poster.
The main point of the post was:
You can get a lower interest rate…
You can’t get a lower purchase price…
February 3rd, 2007 12:20
Some comments about the house on Daphne you mentioned above:
The house is in the older Aegean Hills area of Mission Viejo, so you don’t have access to the lake area. The house backs to Muirlands Blvd. (probably lot’s of traffic and noise) and you also get to hear the trains rolling by about 1/4 mile north.
The house sold for $620,000 per the article (and public records). List price was only $605,000 and guess what the financing was? Yep, 100% financing (80% 1st and 20% second).
February 3rd, 2007 13:20
SoCalMgtGuy,
re my earlier post on the lack of hard information available to those small numbers of Americans who follow the nightly news broadcasts…MDBill on Ben’s blog posted a great piece on a speech Bill Moyers gave on what he called the “plantation mentality” of the corporate news media…specifically, how much is withheld or edited to protect corporate interests. Not the “investigative journalism” some of us grew up with, but how little outside of the endless churn of “entertainment” news that serves as distraction from reality.
Also, the crucial importance of the blog world and it’s free ranging information…i.e. yours and Ben’s blog and patrick.net, for example.
Well worth the read.
http://www.commondreams.org/views07/0118-20.htm
February 3rd, 2007 18:55
I’ve been trying for a while to pull mortagage deeds and home sales transaction records for Orange County. Please can anyone post a link to the site(s).
February 3rd, 2007 22:25
“Man, this thing is looking uglier with each day. 1932 and 33 were the two “worst” years of the Depression if I remember correctly. The very fact that we are in the same savings range now is scary.”
We all agree that housing is collapsing, but let’s not exaggerate. You’re probably like me and save a large chunk of each paycheck, pretax. Millions of people max out their 401k’s, but that money isn’t counted in these statistics.
“Most working Americans sock away a portion of their paycheck each month into a 401(k). This comes out of pretax income. But since the savings rate is derived by subtracting personal consumption from disposable income — that is, after-tax income — the money built up in these accounts isn’t counted. Yet, 401(k) and similar savings plans totaled about $3.2 trillion at the end of 2005.”
http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=255226488990121
February 4th, 2007 12:54
FROM txchick57:
This is interesting (comments plus the original post) http://www.creditslips.org/creditslips/2007/01/pity_the_poor_m.html#comments
February 4th, 2007 13:55
Hey all! Good post, SoCal, glad to see you again. By the way, did anybody read about the bonus the CFO of Countrywide got for selling all those ARMs?
Just a little wrinkle: Any financial institution that is publicly traded, can enhance its Stock price by booking more Points and Fees. They do not have to book good loans, just lots of them. Management bonuses are paid based on the Stock price.
The CFO of Countrywide received a $19,000,000 bonus for 2005 for his “contribution” to the company with all the hybrid loan programs he developed. Angelo Mozello, CEO, sells their loans to Wall Street saying “don’t worry, all of our appraisers are insured”.
Well, who are they gonna blame this time? I’m betting same as last time, you & Me, OCAppraiser, where’s SoCalAppraiser? He’ll no doubt get a good laugh from this too. After all, the appraisers probably Did want people to get loans they can’t afford, right? I’ve always read and learned in Fraud classes, to Follow the Money - It just doesn’t go in the appraiser’s pocket in enough quantity to convince me that’s where the fraud lies — After all, for a while there, the cycle was UP and nobody knows when Down starts til a few months after it’s Started that way….
In FL they are still Deep in denial - glad to see bloggers from farther west are tipping to reality - do me a favor and email some of your Sunshine state friends to Wake up!
Doreen Campbell - South Florida
Starving Forensic Appraiser
February 4th, 2007 15:30
“We have no interest in putting people in homes that they can’t afford” — Some Executive VP
That executive was from New Century. I spoke to a New Century customer some time in 2005. At the time she owed $63,000 on her home. I checked to see if she qualified for a reverse mortgage a few months ago. She is a senior citizen on a fixed income. To my horror, not only did she refinance one time on a forward mortgage, she had refinanced twice! The borrower refinanced with Argent for $102,800. She then refinanced with New Century 7 months later for 100% of the value of her home. She got a 1st mortgage form $110,400 that is most likely a 2/28 ARM with a starting rate of 7.99% (fully indexed 12-13%). The second mortgage is in the amount of $27,600. It is a fixed rate but most likely that rate is in the 13-14% range. Most likely this borrower has a housing payment equal to her income.
I have another New Century customer I am working with where her house payment is more than her income. Again, why are these loans getting approved when borrowers don’t have the means to pay them back?
If the rumors are true and these subprime lenders are getting hammered in the secondary market,
http://calculatedrisk.blogspot.com/2007/01/tanta-on-scratch-and-dent-loans.html
it will be very interesting to see who survives.
February 4th, 2007 22:13
I gotta say there are a lot of people out there that still do not get it! I was at the gym this morning and overheard a conversation between two guys. One of the gentlemen was a financial planner and the other guy was near retirement and had money to invest and was asking questions. He asked if high rise condos in Las Vegas was a good idea.. the financial planner said he did not know but he had a number of his clients investing in RE in Henderson Nevada. I think Henderson is right next to Las Vegas. The beat goes on….
February 8th, 2007 16:36
…and it begins:
“Indexes slip as HSBC, New Century warn on bad loans-
NEW YORK (Reuters) - U.S. stocks fell on Thursday as warnings of losses stemming from bad home loans by two of the top three U.S. subprime mortgage lenders hurt shares of home loan companies and banks like Citigroup Inc.
Britain’s HSBC Holdings Plc and New Century Financial Corp. disclosed mounting losses from defaults on mortgages to Americans with shaky credit histories, driving their shares down sharply and punishing the broader financial services sector.
Investors are unconvinced that the U.S. housing market has stabilized after its worst decline in many years…”
~http://news.yahoo.com/s/nm/20070208/bs_nm/markets_usa_stocks_dc_2
February 8th, 2007 16:55
New Century Stock went DOWN 36% today in price!!!!!!!
February 8th, 2007 18:52
I think only TrimSpa had a worse day than New Century.
February 9th, 2007 11:53
One thing the news reports usually leave out: the reported national saving rate is the “net” rate, meaning total national saving minus depreciation of fixed capital.
Another thing they leave out is that businesses account for a much bigger piece of gross saving (before depreciation) than households do these days. I couldn’t find any ‘06 data on the federal BEA web page, but in ‘05 gross saving (net saving plus consumption of fixed capital from BEA table 5.1 in the National Income and Product Accounts) by businesses was about 8.5% of GDP, and gross saving by households was 2.1% of GDP.
Gross household saving as a fraction of disposable income (which itself is always less than GDP) was never less than 8.7% from 1955 to 1992, but has fallen off the cliff since then, and the 2.9% figure for 2005 was the lowest since 1934.
February 9th, 2007 13:29
New century went as low as another 15% drop today only to end at 5% below yesterdays 36% DROP. It is all coming in to roost.
First FED and Countrywide will follow
February 11th, 2007 10:30
SoCalMtgGuy,
Wow!!! and Thank you very much for the Mortgage Bubble article you published.
The mortgage fraud epidemic that plagues the US has far reaching economic ramifications which are only now starting to materialize. This effect is felt more deeply in higher valued markets, such as the OC. I spent 15 years as a QC manager for a large, So Cal based, national lender out there before moving back home to So Fla, the other mortgage fraud capital of the US.
As mortgage industry insiders, we saw this stage being set years ago, with lenders and Wall Street investors alike seeing the writing on the wall but relishing in the proceeds of these loans. “Don’t ask, don’t tell” should no longer be unwritten policy at these companies, presumably responsible for not only great economic contributions, but who are responsible for financing peoples lives and dreams, or irresponsiblly destroying them for a profit.
Cindi Dixon, Director
Mela Capital Group, LLC
Mortgage Fraud Investigations and Training
954-675-2319
PO Box 670035
Coral Springs, FL 33067-0035
Cindi@MortgageFraudQC.com
http://MortgageFraudQC.com
Please visit our DISCUSSION BOARD for the latest mortgage fraud news and to anonymously report mortgage fraud. http://MortgageFraudQC.com/blog/blog.html
February 12th, 2007 11:24
OC Register needs to have an article regarding New Century Financial considering it is located in Irvine. The fun is hitting the OC.
Maybe giving everyone a loan wasn’t such a hot idea considering $1 trillion is resetting this year.
Dr. Housing Bubble
http://drhousingbubble.blogspot.com
February 16th, 2007 14:57
Lou Minatti: We all agree that housing is collapsing, but let’s not exaggerate. You’re probably like me and save a large chunk of each paycheck, pretax. Millions of people max out their 401k’s, but that money isn’t counted in these statistics.
Marty Feldstein says that 401(k) plans are covered in the definition of household savings.
February 17th, 2007 07:13
Confused:
You should be proud of yourself and are in great shape. A few thoughts:
I would invest the 160K in some good sound inflation safe investments (i.e, gold, gold stocks - I invest in Canadian mkts, but this is not for the inexperienced) and sit the housing thing out for a couple years. Even when you do buy, I still wouldn’t necessarily liquidate my investments if I could borrow at a good solid fixed rate. Your mortgage money is (probably) still the cheapest money you’ll ever borrow and your investments may easily outperform the net rate that your mortgage is costing you. Remember too, you always have a perpetual property tax lien on your house so it’s not as though you’re ever really safe from losing it even if you don’t carry a mortgage.
I would also use that money to fund every IRA and college savings account in sight. Remember, you can withdraw money from these funds without penalty for education expenses and medical expenses if the need arises.
I also think everyone is right around here about the rental bargains in store for you in the near future. I’m not one of those people who thinks renting is as good as buying; there’s nothing like being able to truly live in something that is yours and to feel a sense of community with the people around you who are doing the same. So I think you’ll get your dream house in the long run and due to sound decision making you’ll buy it at a price most people could only dream of.
February 18th, 2007 11:04
hckcjptp…
hckcjptp…
February 28th, 2007 13:33
e7b79d7c6211adc2f2a1…
e7b79d7c6211adc2f2a10d873a62885ce7b79d7c6211…
March 4th, 2007 09:13
You got the *cough*cough* Bull bit, but it was Animal House (10 years before).
How many times I’ve thought of that segment while hearing these clown-meisters!
November 20th, 2007 13:29
Hail
What do you think about this? When it happens?