JoeTaxpayer

A while ago, the New York Times offered an interactive graphic,

which allows you to enter all the variables you need to determine whether you come out ahead buying vs renting. You are able to enter the price for the house, rent of a similar house, down payment, interest rate on your mortgage, along with the assumed increase in home value or monthly rent. Note: you may click on the image above to be taken to the Times’ web site.

Joe

written by JOE \\ tags: Home, home value, interest, interest rate, Mortgage, new york times, Renting

The New York Times offers an interactive page offering beautiful graphs of the change in home prices in different parts of the country.

Clicking on the image above will take you to the Times’ site where you can view the changes in the region you wish.

Joe

written by JOE \\ tags: Finance, Home, investment, money, Mortgage, new york times, Subprime

There’s an attraction to the interactive sites suggesting you plug in your age, sex, etc, and see details related to your category peers. From CNN/Money I found;

Yes, I am 45-54. The site also offers median net worth based on your income. Click on the image to be taken to the site to see where you stand. Keep in mind, net worth figures generally include the value of one’s home and median is not the same as average. Median means half the population considered is higher, half lower.
Joe

written by JOE \\ tags: cnn money, Finance, Home, income, Investing, median, money, net worth, Retirement

The debate continues about how the subprime mess occurred. Let me tell you how it would not have occurred:

• Maximum Loan to value: 80% any higher requires PMI (Private Mortgage Insurance)
• Debt ratio permitted: 28/36 - This means that one’s mortgage payment and property tax cannot exceed 28% of one’s gross monthly income and all one’s monthly debt burden cannot exceed 36%.
• Income must be verified, i.e. ‘no doc’ loans not allowed.
• ARMs must be qualified at the maximum adjusted payment 3 years hence. This would insure that a year or two of rising rates would not be an economic time bomb.
• All documentation must follow the loan, no matter how it’s sold or repackaged

Would these rules eliminate foreclosures? Hardly. People still lose their jobs, and if unable to find work soon may be unable to make payments. People get sick and are unable to return to work, their disability pay not adequate enough to pay the mortgage. The rules above were broken, and the subprime mess resulted. Follow the rules above and it would take a 20% decline in prices for the lender’s capital to be at risk. With the permitted debt ratio above, a family earning $60,000 can pay $1400/mo toward mortgage and property tax. A $1200 payment can support a $200,000 loan at 6%, 30yr fixed. 20% down, and this results in a $250,000 home. Now, the median price of a home is $206,200 per the latest CNNMoney report, down from $219,300 in the prior quarter. Seems reasonable to me.

Joe

written by JOE \\ tags: Business, Financial Services, Home, loan, Money Management, Mortgage, Personal Finance, United States