If you are in your 20’s, you may be getting the wrong mortgage. This can be primarily due to the lack of experience. You just haven’t bought real estate before. I remember in the time leading up to the last real estate cycle crash/reset, there was a ton of 100% financing. You have the biggie, the 80% loan then you are other loans bringing you to 100% LTV – Loan to Value. Some of the smaller loans were as if you went to a loan shark. While they weren’t the knee breaking kind of lenders, they were known to foreclose very quickly. Today, most of the real estate lending is on the up and up. Most of the current real estate loans written are of the “30 year fixed” variety. If you are being sold anything else but a 30 year fixed loan with a set interest rate, you will need a detailed explanation. If you don’t want to offend the lender selling you that loan, call me and I’ll be happy to offend and find out why your lender wants you to sign off on an Adjustable Rate Mortgage (ARM).
What about the 30’s? What is their deal? Those of you in your thirties is not thinking about the future according to the research conducted by Bankrate and RISmedia. I get that, when I was in my thirties, time flew and I thought I was invincible. Even when almost dying on the police motorcycle, that did not stop me from personal advancement. Sit down and think if you were 40, and could travel back 10 years in time, what would you tell your 30-year-old self?
Home buyers in their 40’s and 50’s: They are even more invincible, at least they consider themselves to be from a financial point of view. They are set and salaries are most likely locked in with a set increase or two in the future. They are looking at their current situation and they want to expand their horizons, sometimes a bit too wide. Being mortgage poor is horrible, take it from me, if you haven’t been there, you don’t want to go there. At this stage in your life, you want a financial planner. A financial planner who knows more than you and who’s worth more than you (remember that).
60’s and up – Vacation houses. Some equate these to RV’s and those types of investment. Before you buy a timeshare or vacation home, you really need to consider all the options. Write out a list – Pro’s on one side and Con’s on the other side. With a vertical line separating them. Sit down with those whom you trust and especially the ones that are going to be contributing financially and emotionally. Work out the list and consider each negative and each positive. Maybe you are the type of people that will get their money out of it and wear it out. But, you could also be the other type, wishing you had never bought it.
Real Estate is something where the “human factor” is always going to be involved. However, how much the “human factor” is going to be compensated, that will be the differentiation point. Doing it better for less seems to be Walmart’s business model. However, if you want a high-quality shirt that will last a long time, Nordstrom pops into mind. There is a lot of talk about the real estate agents going by the wayside, suffering the same fate as the travel agent.