Sage Advice For Shy Buyers

Link To This Post

BusinessWeek Online reporter Peter Coy has a well-thought piece on what first-time buyers should consider as they attempt to wade into the current housing market. A lot of it may seem elementary to those who read these pages regularly, but I know plenty of intelligent people who are completely unaware of even the most simple aspects of home buying. Perhaps the wisest thing I found in this piece was his advice on borrowing:

Don't borrow the maximum you qualify for: Some young people think that just because a lender will give them $500,000, it must be safe for them to borrow that much. Not necessarily, says Shah. Lenders know that most borrowers will do almost anything to avoid a default, so they feel safe doling out lots of money.

But think about it from your own perspective: Do you really want to be eating surplus cheese and sitting on milk crates so you can keep making extreme monthly mortgage payments?

I can't begin to relate how many of my friends needed to hear that advice a couple years ago, not that they would have listened. Be sure to check out the entire piece at this link.

— The Boy in the Big Housing Bubble