Important Charts to Consider

Interest rates are at an all-time low! Imagine buying a house in the 80's like many of our parents did, those rates are insane! I know it is hard to read, but it shows rates being as high as 17%!

I love this chart. If you look at some of those numbers, a 100,000 dollar loan's monthly payment is cheaper than my rent! This chart is a real eye-opener!

Loans: What is important to you

Before I took my real estate classes, I was clueless about how to finance a house. You always see commercials on TV spouting off different numbers for this and that and those numbers almost always have a * attached to them. I thought I would give a quick rundown of some basic types of loans you may encounter when purchasing your first home.


Great question to start out with: What exactly is a mortgage? If you have ever played the board game Monopoly, you've seen the word mortgage. To put it simply : "You have a certain amount of money. The home costs a certain (larger) amount of money. The home mortgage loan covers the distance between the two." Types of Home Loans  


Ok, so your mortgage essentially helps you pay for your home. Now most of us will encounter mainly two types of loans, fixed-rate mortgage  and an adjustable rate mortgage. 


Fixed Rate Pros and Cons

• Interest rate stays the same over the lifetime of the loan (usually 15 or 30 years), therefore your payment will never change
• Since it is fixed, the economy cannot effect this loan, however, you will be paying a higher interest rate for that security

Adjustable Rate Mortgage (ARM) Pros and Cons

• Low fixed rate 3, 5, or 7 years (lower than a fixed rate loan)
• However, after this introductory period, you cannot predict whether your interest rate will rise or fall 

This is just a very quick rundown of loans. For further reading, I would suggest this article: Fixed Rate Vs ARM

If you have any further questions about loans or the process, my preferred banker can give you a free consultation. Please do not hesitate to ask me! Rates are amazing right now!


Also, my very good friend Mark Davis works for American Bank up in Columbus and he has all the info you could ever want on loans. His contact info:

Mark Davis |Mortgage Banker

American Bank

National Lending Center

150 E. Campus View Blvd  Suite 200
Columbus, OH 43235

Toll Free: 866-209-7652 | Local: 614-441-9233

Fax: 1-800-785-1583

Cartoon of the Week

Bet you didn't know: When buying you should add "Dishwasher" to your contract because it is not considered "fixed to the property". Some dishwashers are portable.

NPR: Professor: Now Is The Time To Buy A House

http://www.npr.org/templates/story/story.php?storyId=129800154

I am a big fan of NPR (National Public Radio), and they usually have great guests on there. Host Guy Raz talks to Karl Case, a professor of economics at Wellesley College and inventor of the Case-Shiller housing price index, about whether it's a good idea to buy a house in the current real estate market.


I know you are thinking, I don't have time to read that...sooooo...here's some key excerpts for the busy folks.

RAZ: So is it a good time to buy now, in your view?  
Prof. CASE: Well, it certainly is the best time we've seen in the last four, five years, and maybe in my lifetime (I bet this dude is old also). And if you look at some of the property values that are out there, one of the things that people forget is that a house is a consumer durable good. It's not just an investment.

RAZ: Now for decades, Karl Case, you know, homebuyers were told to spend a bit more than they could afford. Buying a home was the safest investment you could make. Will that advice, in your view, still be valid?

Prof. CASE: Well, I don't think it was ever valid, but I don't think it will be valid in the future. You buy something you can afford and you can make the payments whether you, you know, to promise to pay. You want to look forward with a realistic outlook and take on payments that your income can handle.

My thoughts :  I think it is pretty cut and dry. This is a great time to be buying a house, people are (sadly) being forced to sell in some cases cheaper than what they bought for. However, that doesn't mean you should feel bad buying it at a great price! Also, note my underlined sentence up there, before people were taking the advice to spend a little more because in the long run it would payoff,  Prof. Case points out, don't bite off more than you can chew.

Source: 

http://www.npr.org/templates/story/story.php?storyId=129800154