Comments on: Housing Crisis? How About Buying a House You Can Afford!

By: Flip That House Real Estate Cashflow Game. | 7Wins.eu

Flip That House Real Estate Cashflow Game. | 7Wins.eu — Thu, 12 Jun 2008 01:13:17 +0000

[…] on Real Estate � Blog Archive � O.C. home-price drop bigger than early 1990s. - OCRegister.comHousing Crisis? How About Buying a House You Can Afford! � My Budget 360 Tags real estate investing flip this house real estate flip real estate flip house flip property […]

By: Angie

Angie — Wed, 05 Mar 2008 18:59:34 +0000

I think the most important step is to be realistic in what you can and cannot do. I’ve seen so many first time home buyers jump into something they cannot afford only because they have big dreams.

By: neighbourhoods in Toronto

neighbourhoods in Toronto — Mon, 25 Feb 2008 22:53:55 +0000

I’ve just read an article where the author stated that the crisis was unpredictable and it caught economists by shock. I like your opinion better and I think it is more realistic and well-founded. I agree that housing is one of the best investments we can make over our lifetime, if we buy at the right price with conventional financing. However, I don’t think that the situation in today’s market is suitable and even with your great advice, it would be an unwise decision to buy a house now. Here in Toronto neighbourhoods supply raises and demain declines. I am convinced that best thing to do is just wait.

By: Karan

Karan — Fri, 22 Feb 2008 11:29:11 +0000

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By: Max

Max — Sun, 17 Feb 2008 19:30:15 +0000

Housing Crisis? How About Buying a House You Can Afford! is a quite interesting post but quite difficult to understand for me -

By: Expat

Expat — Mon, 21 Jan 2008 05:21:33 +0000

I have graduated from schadenfreude to evil glee. Perhaps I can hire these “homeowners” as maids and gardeners when I buy their McMansion at auction for 45% of the peak price?

You see, I have been renting for all these long years. And doing this bizarre thing called “saving”. Can you even guess how much I was laughed at for my stupidity all these years?

By: kenneth

kenneth — Mon, 21 Jan 2008 03:53:54 +0000

my specialty is international finance, to be more specific, international capital flows. as long as any attempt to increase the money supply worldwide continues, there will be bubbles of some sort manufactured to take up this excess liquidity. the super rich create these bubbles, get in early, sucker the chumps in, cash out, and move to the next bubble. the folks who come in late are left holding the bag. this is a recurring cycle, it has happened many times in the past, and will continue in the future.

By: Roland Carrillo

Roland Carrillo — Sun, 20 Jan 2008 23:15:45 +0000

Wow… personal accountability, responsibility, buying what youc an afford?? What crazy logical thinking… its a sad day when it takes a credit crisis for people to start acting rationally with their use of credit and finances.

I have been a loan officer for 5 years now and I remember when these things were important in buying a home. I personally am happy to see a return to common sense, even though it will come at the suffering of many. There were too many speculators, get rich quick and crazy homebuyers and owners the last few years. There was also no lack of uneducated, unregulated and unethical players in the mortgage inustry ready to take any loan regardless of benefit to the buyer. They knew one thing… payment sells.

Many I worked with barely (or did not) understand negative amortization, leverage, credit scoring or other important factors. They sold whatever carried the lowest payment (easy sale) at the highest gain (more profit) without regard to the pros/cons to their clients. I am actually pleased to see these players leaving the field. It was at times hard to compete selling sound financial advice (fixed rates, low DTI, down payments) amongst the clamor for low rate, 100%, stated income financing.

The option ARM, subprime ARMs and stated income options HAVE THEIR PLACE. They are great tools if explained and used properly. As Aaron and Sven pointed out, the coming Option ARM recasts will likely be far worse. They were sold with the highest pre-pay penatly, LTV and margins in many cases as these costs were not felt immediately by the borrower.

It was easy to make these loans LOOK far better than 30 year fixed when selling on payment… but 3-5 years later when the owners are 20-30% upside down in mortgages with no options to sell or refinance and payments skyrocketing, they will realize the true cost.

I hope that people (and the country, the US government is on the same path) wake up and watch their spending/saving habits. Its not just homes, but autos, plasma TVs and vacations that we spend money on with no regard to the future consequences.

The best outcome will be if we finally make financial education a requirement from K-12th grade and raise the bar for licensing in our industry.

By: Mo

Mo — Fri, 18 Jan 2008 21:47:21 +0000

Amen. Personal Accountability for your actions. Period.

By: Sven

Sven — Fri, 18 Jan 2008 19:34:36 +0000

I agree with Aaron that the Option ARM problem will prove worse than the “subprime” problem. A subprime 2/28 that goes from 6.5% to 10.5% “only” goes up about 46% in payment, whereas an Option ARM payment will have more than doubled from the teaser payment in year 1. And more of the Option ARMs were done as “Stated” for people who couldn’t qualify. While the house values have been dropping, the loan balances have been rising. Some of the subprime people can refi onto FHA loans. Many of the Option ARM people are upside-down & without any hope whatsoever. California will take the brunt of it.