How To Get Home

Two of the hot topics lately are affordabilty and sustainability. In short, can the borrower afford to get in a home (qualify) and can they stay in the home (avoid having to sell). As home prices have increased, many buyers have used non-traditional mortgages to help them bridge the gap between the cost of the home and what they were comfortable with in terms of a mortgage payment. I believe that both the low down payment option as well as the interest-only feature can be the right product FOR CERTAIN situations - not for everyone. I will address the advantages and risk with the interest only products in a dedicated post to follow.

PMI Mortgage Insurance Co has put out their Winter 2007 Economic Real Estate Trends in which they describe the different markets around the country. There is a lot of good info here, but it comes down to 3 quick realities.

1. Affordability will remain an issue in certain markets as real estate price growth has outpaced wage growth.
2. Low down payment mortgages will continue to be popular as borrowers will find it difficult to save 20% down payments.
3. Sustainability will become a bigger issue as more buyers struggle to keep up with their mortgage.

Take a minute and read over a post from the Affordable Housing Institute on the realities of affordability. If you bought more home than you can afford, you may have to make some tough decisions. If your non-mortgage debt levels continue to rise because your spending is outpacing your earnings, something will have to give. The decision process might be accelerated if you took out some type of Adjustable Rate Mortgage that is going to reset soon.

1. Make sure you understand the terms of the loan that you took out - how long will it be fixed/interest only.

2. Know when your adjustment will come, if any and how much your payment could go up.

3. After working through your budget, see if this payment adjustment would be an option for you.

Please feel free to call me on this subject if you want to go over the terms of your mortgage. The long-term affordability of your home and the payment associated with it needs to be reviewed as you go forward in life. Think of it as a mortgage check up if you will. Your financial health is very important and your mortgage is probably the largest investment/debt that you will ever undertake.

Here is a very interesting article on moving from areas that are not affordable and finding parts of the country that are.