Saturday, May 16, 2009

Second Thoughts

Okay, I just read this and now I'm feeling really nervous about buying a home. If this economics writer for the New York Times can screw up, what does that portend for me and N???

Posted by Linda Mar at 6:08 PM

1 comment:

Anonymous said...

Funny - how it never occured to that guy who wrote the article to just sell the house.
Buying a place is a scary thing. You'll be fine if you are smart and can actually afford the house to start with. Be smart. Regardless of what the economists are saying, this economy is no where near the bottom. House values are going lower still, inflation, unemployment and interest rates are going to increase ... double digits for all would not be a shock. My two pieces of advice:
1) Get a 30 year fixed rate loan now, rates are really good and chances are very good that your rates are going to go up with an ARM, and/or you will have to refinance at a much higher rate. Also, if there is more slippage in real estate values, your ratio (debt/equity) could do you in. I would plan on being there 8-10 years and you will be OK. Everything should bottom out long before then, but it will come back much more slowly than before.
2) Destroy the credit cards, keep the one with the lowest interest rate for emergencies. Part of the reasons people got in so deep - they ran up their credit cards on stuff they couldn't really afford, and would take an equity loan to pay them off. Now no one has equity, and they don't have the money because they bought a ton of stuff they couldn't afford in the first place.
If you go into this with open eyes, you will do fine. You're smart. Follow your instincts, and hit up Uncle Jim for advice - they are pretty good with finances.
Congratulations!

Love,
-Bill

May 23, 2009 at 9:58 PM

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