Tuesday, May 09, 2006

The Current Finance Market

It seems that homeownership is now exceeding the grasp of an increasing number of people (I can't imagine why. Just because rates are rising and prices are over the moon....). According to the Census Bureau, homeownership was 69% in Q4 2005, down from 69.2% a year earlier, and the first time since 1994 that a year hasn't ended higher than the year before.

Still planning on buying? I'd recommend you plan to do it the old-fashioned way. Save up for a down payment and closing costs. Buy what you can REALLY afford, not what some mortgage jockey says he can get you into. Creative financing will bite you in the bum. Interest rates are rising, so any ARM will just go up. Interest-only loans have balloons, and if the market softens, that balloon will just go "pop." Plan on being in the house for awhile, 7-10 years. And don't forget all the incidental expenses of home ownership. For example, you'll need insurance, and insurance rates are rising dramatically (You didn't think the insurance companies were simply going to eat their hurricane losses, did you?).


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