RECENTLY I have speaking with a number of callers who are in their prime age between 60-70’s and still are struggling to pay for their huge amount of mortgage payments that I strongly believe they will not pay off in their life time. Not only that, even their heirs might have problems paying these mortgages due to the high interest rates and the current declining value that has been ravaging the real market here in California and Nationwide. I see more family members coming home to their parents just to be able to survive and maybe save up. Its nothing to be ashamed of but maybe seen as a smart move now a days.
I would like for you to analyze your financial status, realize your long term capabilities in regards to owning a house. Not just own a house because your relatives own them too or because someone tells you that you can afford a home now and wait for the market to go up and sell them. I don’t want you to rely on renting rooms to tenants that are always paying late. People don’t consider the extra utilities and food that these renters are costing them. Let alone not being able to rely on them long term.
I see Grandma and Grandpa are struggling to survive living paycheck to paycheck just to keep up with a $3-4K mortgage payment. I am really disturbed by this notion that these elderly are completely stress out and slaved by their mortgage. I recently moved an older couple to an apartment house for $1250.00 and they are absolutely ecstatic and can’t thank me enough. They had a mortgage payment that is around $3200.00 without taxes and insurance and that is due to increase by next February. Now, that rental amount is completely affordable and they don’t have to worry about the yard, extra utilities, security and all the other expenses associated with owning a home.
I am always for homeownership so please don’t get me wrong. I don’t believe that you should get into a mortgage unless you absolute know your finances inside and out. Meaning, if you are currently renting for $1200.00 and you are being sold a home mortgage payment of $4000.00 a month. You have to go back one or two years and ask yourself, when I was paying that $1200.00 rent was I able to save any money, am I spending too much of food and entertainment or I am not able to save at all with my current rent. If you are not able to save because of you’re over spending and you are realizing that you can save on those extra activities then you might want to consider. But if you are just going about your life but not able to save, then you cannot even afford a $3000.00 mortgage. Here is a simple formula that lenders use to know whether you can really afford a home. Find out how much the total mortgage payments are including taxes and insurance, and then add up all your credit card debts, auto loans and any other installment loans. Then multiply that by 3X if you make that much then you can afford the house. Don’t use any liar Adjustable loans or teaser loans, fully amortize the loan and always be conservative. Don’t rely on possible renters who might or might not pay on time let alone steal from you sometime.
Homeownership is more overrated now because of affordability issue, now just being able to survive here in this economy is enough pasture to be proud of. But if you can qualify and afford to pay for mortgage payments and tired of renting! FHA has a many options for you to buy with as low as 1% down payment on a home. Please call for details.
Remember if you cannot afford the payments on your mortgage, don’t stress yourself get advice and seek for an answer, a legitimate permanent answer not a temporary or uncertain solution.
For the parents who have young kids or new parents with babies have you ever thought of how our children will be able to survive on their own once they are out of college? I had a deep discussion with your parents about how our kids will have to pay their own way thru college and graduate with a big load of college debts? I will discuss this in my next column.
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Every problem has a solution as long as you accept it. Please call me Kenneth Go at 1st Innovative Finance if you have any questions or concerns (562) 697-7028 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Thanks
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