Your Exceptional Life

We’ve been in a roaring economy for the last six or seven years. Real estate has been rolling since 1997. Last year the brakes were thrown on and many people were caught flat footed. The line we were fed was “Don’t worry, you can always refinance it out in X years”. Then the rules changed and you couldn’t refinance it out, and people were stuck with a designer mortgage product on their home that they didn’t understand and the person who sold it to them probably didn’t understand either. Mortgage rates went up, the product adjusted and it was game over.

I look at these as a bad business decision. People chose homes that they really couldn’t afford and gambled. And lost. I know there is a certain sector that have lost their homes because of job loss, but that’s not our focus today. My advice has always been and continues to be, if you can afford the mortgage, do it. If not, wait. Simple advice. I don’t like ARM’s never have. I’ve always hated that World Savings Pick a Payment product that buried so many people. Judging with what happened to Wachovia, I think I was right. And I don’t like teaser rates. I’m a fixed rate old school gal. Fixed rate never has prepayment penalties because they aren’t loaded on the back. They’re old school mortgages. They’ve worked for years in this country and they’ll work today.

There’s been a lot of talk about people using their homes as ATM’s. I’ve never been an advocate of that either. The only unsecured debt I believe that should be rolled into a mortgage is home improvement debt. Twice I took out a second on my last project. I used it exclusively on the house and when the work was complete, I refinanced it out into the first. Why? Because the goods and services purchased went back into the home. Buying a car with a home equity line is fraught with peril in my book. Yes, you can write off the interest, but it’s way too tempting to buy more car than you can really afford and that’s when things start to come apart at the seams.

One of the things we see a lot of in the REO business is personal property left behind. I’ve had houses where it required three or four TRUCKLOADS to get the personal property out. We’re talking 30-50 cubic yards of junk. I have to document all that stuff photographically. When I’m taking these pictures I always think, what if these people hadn’t paid all this money for all this junk they didn’t even care about and paid the mortgage? Then I think it’s part of the culture of this country. Buy, buy, buy. It’s the American way. If we spend an hour watching something on television we are tempted for up 22 minutes with different products. After 9/11 President Bush took to the airways and told America to go shopping, go to Disneyland and take a vacation. Apparently we did. Maybe some of us should have stayed home.

I don’t think the attitude in the financial sector of sell sell sell has helped America or Americans. I think that everyone needs to understand the financial products they are getting involved with. Some people are not cut out to own their own homes and they’re better served by renting. That’s good because other people are cut out to own investment property. And other people are cut out to live check to check. And other people are very happy buying their property at a young age and paying the mortgage every single month for 30 years and living happily ever after. That’s what makes this country great. Everyone is different. What makes my life exceptional may not even be on the radar of someone else’s life. What makes your life exceptional may not inspire me to get out of bed. That’s what makes us all so interesting and that’s what makes this country great.

We need to pick mortgage and investment vehicles that make sense for our situation, not Bob up the street or Joe around the corner. We’re all different. Now is a great time to be looking at investment property, if that’s your interest. I love to show investment property that is consistent with each individual’s long term goals. Not Bob’s or Joe’s, or anyone else’s. Just yours.  It’s also a great time for first time buyers who have been sitting on the sidelines to get into the game.  There are some great properties out there.  And there’s some junk.  I’ll show you the difference.