From: j@vacantspace.com (james)
Newsgroups: misc.invest.real-estate
Subject: Re: Buying a principal residence
Date: 13 Nov 2003 08:11:24 -0800

In my opinion John is giving good advice borrowing at 2X annual
salary;

Purchase a home because it meets the needs of your family and one that
that you are prepared to stay in for 10years+.(you my sell earlier but
assume 10+ years)

The purchase criteria for a family home do not equal purchase criteria
for an Investment property.

Do not rush to buy just to get a foot on the property ladder (ignore
warnings that you have to buy now or will forever miss out) wait until
you are ready and have sufficient funds. Save every cent you can until
then.
 
Do not put all your savings down as a deposit save so you have a
cushion to tide you over in the event of a job change (no income for 6
months).

Do not buy on the assumption that your house price will rise in the
short-medium term.

Take responsibility for your own decisions do not rely solely on
mortgage brokers or realtors who are often commission driven.

Break any one of these rules and you will find yourself in difficulty
at some point down the road. Follow these rules and you will make
money on your property if you decide to sell it.

 


  


"John A. Weeks III"  wrote in message news:<121120031534173571%john@johnweeks.com>...
> In article , Canzie
>  wrote:
> 
> > "... According to my personal responsibility formula, you shouldn't buy a
> > house that has a value of more than
> > twice your annual income...."
> > 
> > 12 years of being in the mortgage business, literally thousands of closings,
> > I can't recall anyone ever being at or below that ratio.
> > 
> > Very rarely do I see someone below 3 times their annual income.
> 
> Yeah, that is why there are record numbers of personal bankruptcy
> cases, mortgage defaults, people who are "house poor" (ie, cannot
> afford anything other than the monthly house payment and have
> no furniture and never go out to the movies), and folks who have
> run up tens of thousands of dollars on credit cards just trying
> to staf afloat.
> 
> Just because some silly mortgage broker will give you a loan that
> is way outside of what you can afford does not mean that it is a
> good idea to accept that loan.  In fact, some brokers want you to
> get in over your head so they can forclose on you, take everything
> that you own, make tons on money of the fees, and then turn around
> and do it all over again to someone else.
> 
> While it may be tempting to buy that starter castle, you are far
> better off buying something that you can really afford.  If you
> do buy that mini-mansion, the only sure winner in the deal will be
> the loan companies--they will get it up front in the fees, get
> you every month in PMI and high risk interest, then get it from
> you in the end when you lose the whole nine yards.
> 
> -john-