Don’t Make Your First Home A House of Cards

It kind of looks like the whole worlds economy is going down the tube lately.  How did this happen?  Where did we go wrong?  Who is to blame? Yada, yada, yada.  I hate to break it to you but the world economy is on the brink of collapsing because of the US housing market.  It’s true! You see for the past 5 years or so, as a result of easy money and complete disregard for credit risk, home prices have been going up at an alarming rate.  Yes alarming but nobody bothered to sound the alarm or warn anybody because we were all to busy making money, and in the case of the home owner, spending money like there was no end in site.  All a home owner had to do was refinance every two to three years with cash out to wipe out their high interest credit cards and pick up a couple of hundred dollars a month in cash flow.  I can’t imagine what people were telling themselves as they met their trusted mortgage officer for the third time in 5 years to do it again.

Here is the bottom line if you are a first time home buyer today.  Don’t ever use your home as a bank, save for a down payment, protect your credit score like you would your own new born baby, and never go over 90% loan to value on a refi.  Owning your first home is great but it’s not worth it if you are house poor as a result.  I hope the home buyers and home owners of the future learn from the home owners of the past and don’t end up building another house of cards.

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