I was just talking on the phone today with an old friend of mine - 16 years and counting - a guy in stock promotion.  That means when a young company wants to issue stock, he puts it over to the guys on Wall Street.  Let's just say he has the gift of the gab, and he can be very persuasive.  It's a good quality to have, if you're a stock promoter - or you have anything to do with the Securities Industry.

I think you'd have to have your head under to rock not to know that the markets lately have taken a beating.  The past year has been particularly rough on just about everyone who's invested anything.  So while my friend and I have been known to knock back a few beers, our camaraderie brushes more than the personal from time to time, and we often touch base on topics financial.  This is where you come in.  He and I couldn't possibly chew the fat about Internet commerce or international trading without bringing you into the fold.  After all, I'm not writing this stuff for my health.  The whole reason for SectorMatic is to help folks sort out the daily news and take it to the bank, and maybe even have a few yuks on the way.  So here's what this guy, my friend, and I talked about today.

All across the United States, times are tough for some while in certain pockets of commerce, things are buzzing with deals to be had.  Energy runs high when a sector bottoms out in a valley, and there are markets where you can barely keep such good news under wraps.  For instance, right now there are millions of people looking to buy real estate - either as a residence or solely for investment.

 Over the last few years, ridiculously low interest rates have made it more affordable than ever to buy a home.  Doubt me?  Think back to the '90s when 8% on a mortgage was cheap.  Now, we've already seen what cheap interest rates can mean if prudence is not employed.  If you're a tabloid reader, you've probably already caught wind of that scandalous expose by Denny Andrews, Confessions of a Mortgage Insider.  Clearly the no-money-down option has bottomed out.  This ill-famed mortgage category is what brought the lending industry to its knees in the first place.  

Whether or not a person has been left high and dry by the mortgage industry fiasco, real estate investment is not for everyone.  Yet for the most part, when people stop and give it some thought, buying a home makes a lot more sense than renting a home or an apartment.  The long term benefits are clear.  Also there are many intangibles that go along with home ownership.  With your own piece of terra firma and the key to your very own front door, suddenly pulling weeds beocmes a joyous endeavor and the intricacies of waste water management is a fascinating topic.  I kid you not.  I've seen the most chic of swinging singles turn smug and middling within a season of chasing the deed.  I'm just sayin'...

Now, in order to buy a house, you’ll need to have some cash, enough for closing costs and a juicy down payment.  Your down tends to be around 10% to 15% of the price or the value of the property - 20%. to be on the safe side.  If you aren’t able to put 20% down, you’ll need to buy some private mortgage insurance, which will cost you more in terms of your monthly payment.  Whatever you opt, start tucking away some cash for your goal.  You'll find you've got what you need in a very short time.  Factor in your closing costs.  In most cases, the closing costs will run you around 5% of the property price.  Before you purchase the home, you should always get an estimate.  An estimate won’t be the exact price, although it will be really close.  You should always plan to save up a bit more money than you need, just to be on the safe side.  It’s always best to have more than enough than not enough.

You’ll know you're ready to buy a home when you know exactly how much you can afford.  You've got to be willing to stick with your plan.  When you buy a home and get your monthly mortgage payment, it shouldn’t be any more than 25% of your total monthly income.  Although there are lenders out there who will say that you can afford to pay more, you should never let them talk you into doing that - stick to your budget instead.

Keep in mind that there is always more money involved with home ownership besides a mortgage payment.  You also have to pay for utilities, homeowners insurance, property taxes, and maintenance.   Frankly, maintenance is a big one.  Surprise jobs can run you tens of thousands of dollars.  Owning and caring for a home takes a lot of responsibility.  If you’ve never owned a home before, it can take a bit of time to get used to... but, oh, the rewards can be sweet!

Buying a home will require a bit of commitment on your part.  You should always strive to get the best possible deals, which means knowing your credit and where you stand in the eyes of the lending industry.  This way you can get the best interest rates.  You don’t want to buy a home with bad credit, simply because you’ll pay a lot more money for the home.  If you take the time to fix any credit problems and save up some money - you’ll be able to get a much better home for your money. Remember: when Opportunity knocks, it's always a good idea to answer the door. ...Yeah, like that!

To see current data on Housing & Mortgage Markets, check out SectorMatic Money Site. With literally THOUSANDS OF ARTICLES and A WORLD OF PRODUCTS, your chances for genuine happiness are rapidly approaching the infinite. Hey, we aim to please. SectorMatic - it's for you!

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Until next time,
Jack Schmidt
Spokesman

SectorMatic Money Site
Everything for the Big Spender on a Budget

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