Comments on: 6 Surefire Ways To Avoid a Mortgage Meltdown

By: We (still) didn’t get the house, but check out the carnival! | Beyond Paycheck to Paycheck

Fri, 31 Jul 2009 13:35:03 +0000

[...] much to consider when it comes to housing. One interesting post by Squawkfox, 6 Surefire Ways To Avoid a Mortgage Meltdown is featured in this week’s Carnival of Personal Finance. It certainly gives you plenty to [...]

By: Bret

Bret — Mon, 27 Jul 2009 16:09:16 +0000

This is a great post and the best advice is to save the difference between your rent and mortgage. We did this for two years and it not only prepared us for the cost increase, but it allowed us to double our down-payment.

One thing we didn’t count on was our utilities doubling. When you buy a house, you get a lot more costs that used to be included in the rent. The worst was the water bill, which can be pretty costly in So. Cal.

Back in the good old days, banks wouldn’t let you get in over your head with a huge mortgage. They had front-end and back-end ratios and they were strict about enforcing them. Then, they started lending a half million bucks to anyone with a pulse. It was all very greedy of the banks and it bankrupted a lot of homeowners.

By: Carnival of Personal Finance: The House of Rose Edition

Carnival of Personal Finance: The House of Rose Edition — Mon, 27 Jul 2009 10:19:27 +0000

[...] from Squawkfox presents 6 Surefire Ways To Avoid a Mortgage Meltdown, You’d be financially wise to crunch the hard numerical data before signing for that big [...]

By: Sara

Sara — Thu, 23 Jul 2009 04:42:19 +0000

I hate renting – I love my peace and quiet which I have never had in even the most carefully chosen rental properties. All three of the homes I have bought I have had my peace and quiet – two of them were townhouses in the heart of the city!

Because I knew I was going to buy each time I moved, I actually rented higher than my mortgage payment for a short lease – which really prepares you for the higher bills and unexpected repairs that the house brings.

My favorite advice is not to fall in love with a house. There is so much time to get the “perfect home”. Get an acceptable home that you are mostly happy with. That you can walk away from if the price isn’t right. And never never pay full price that the seller is asking.

By: Chris

Chris — Wed, 22 Jul 2009 15:37:10 +0000

Good article – what always make me laugh about on-line mortgage affordability calculators is how after inputting a few basic numbers about salary, down payment, mortgage rate, etc., they churn out a huge number that convince you that your first home will be a mansion.

In my opinion, these calculators are especially dangerous for young couples buying their first house who are planning to have children. There is a real danger of buying a certain value of home based on double-income, and then a baby comes along. New parents are initially faced with reduced wages from maternity leave (some companies top-up but usually only for a short period).

Then comes the decision to either have one parent stay home (more reduced income), hire a nanny, or put the child in daycare. Whichever choice occurs, this is a huge expense for most young couples and one that lasts for several years. When my wife & I bought our first house I was worried about the mortgage payment, now 3 years later and with three kids our childcare expenses dwarf that expense. In a nutshell, if you are a looking at a house, but also planning kids, think long-term when figuring out what you can afford!

By: John @ Hard Work Blogging

John @ Hard Work Blogging — Tue, 21 Jul 2009 15:26:19 +0000

Great post. I was working on a post on the biggest risk in buying a home vs renting. Seeing this i rewrote my post to include and reference yours. Great job.

My article that links to this one is on my name link.

By: Kirk S.

Kirk S. — Tue, 21 Jul 2009 02:56:22 +0000

The best advice on here is to practice with the mortgage payments. By figuring out what your mortgage will be and trying it out for 6 months or whatever, you will see what it was like. When I bought my first house, even though I was renting out a room I felt that I was house poor because of all the unexpected expenses. Please ask the people around you with houses (or condos or whatever) what some of the expenses they are paying that you don’t expect (insurance, water, heat, etc.). It can be a real eye opener!

By: Kathryn

Kathryn — Mon, 20 Jul 2009 20:58:09 +0000

Timely post. Hubby begins a new job next September and we’re moving 3 hours away. We really need to practice our mortgage. The cost of housing is significantly higher where we’re headed but the salary won’t change much for the first few years at least. Great post.

By: Carl

Carl — Mon, 20 Jul 2009 19:17:00 +0000

D. Advocati – Not quite sure I follow your argument, but if you take the money you’d save by getting a smaller home and investing it, you’ll certainly beat inflation. $25,000 at 5% over 30 years will come out at over 100K. Inflation will erode the value of any cash, but as long as you’re not stuffing money in a mattress, it should be easy to mitigate this.

By: Las Vegas Custom Loans

Las Vegas Custom Loans — Mon, 20 Jul 2009 18:17:17 +0000

Not every situation can be grouped in with yours, however, your raw guidelines are a great place to start if you’ve never experienced home ownership. All of these points can be summed up into one statement – don’t buy above your means. Not only is this important in homes, but with buying cars, monthly spending on credit cards, purchases for your children, large electronics purchases, frivolous beauty costs, clothing, eating out, etc.

We each know what our means are and whether or not we are making frivolous purchases. Take the TIME to learn how to be a home owner – it isn’t a consitutional right to be a homeowner. It’s earned through proper preparation and proper spending habits overall with constant monthly savings. Having all the cash for your downpayment is not the only requirement. Good credit is now just as equally important!!!