Quote:
Originally Posted by diarmadhi
Actually now is one of the best times to buy if you are looking to get into a house. Especially if you just buy something that you can afford to pay on! The housing market is going bust because people bought homes they couldn't afford and used ARM's or interest only loans to finance them (adjustable rate mortgage). An ARM allows low payments up front that get larger after a certain period of time (5 years or 10 years usually). Interest only is the same effect only even lower payments.
Example
30 year fixed loan on $200,000.00 @ 6%
payments roughly $1,100.00 (not including taxes or insurance ect..)
5/1 Arm loan for $200,000.00 @ 6%
payments roughly 800.00 (not including taxes or insurance ect..)
After 5 years you owe the balance of the loan in 12 payments
payments after 5 years = $12,666.00 per month for 1 year
Interest only loan for $200,000.00 @ 6%
payments of $550.00 (not including taxes or insurance ect..)
After contract period you have the option to refinance and buy the home OR you have the option to leave (your basically renting from the bank).
These odd loans allow you to buy more than you can afford but only for a short period of time, after which you need to either sell the house or refinance. The downslope comes when everyone went and got an odd loan at the same time period (within a year or few years) and then EVERYONE needs to sell or refinance at the same time (within a year or few years) and you flood the market with houses for sale, guess what. Your back to supply and demand and a glut of houses for sale lowers the prices and then people cant even get what they originally paid for the house.
If your smart and do a standard 30 year fixed rate mortgage and you can afford it you can get A LOT of house right now for a low price and your set for the next 30 years.
Personally i have a decent rate and a 30 year fixed loan, my payments are the same they where the last 4 years. I can afford to make the payments so as long as I don't lose my job I'm set for 30+ years.
|
Well the fact that im still in college so im screwed as of right now. If I was out of college I would still probably go about purchasing a home in the same way that way if I buy a 350k house I will only have to finance 262500.