Elisa B. Coyle

To buy or to rent, that is the question.  There are several factors leading to that decision. This is a quick introduction in how to proceed in yours decision making.

Before you start, grab your household budget, ask family and friends for recommendations and ask yourselves about how homeownership will affect your family.

After addressing the issues mentioned above and presumably you have come to the conclusion that buying your first home now is for you.  Below are a series of items you need to consider:

1) What are your needs, size, area, condition of house, storage space, etc.

2) What are you willing to maintain regularly on the property?

3) Where do you want to be located?

4) What can you afford?

In calculating how much you can afford, remember to be realistic.  The crisis we are in right now was affected heavily by the over reaching of the consumer and unrealistic income to debt ratios.  Remember, it is prudent to be more conservative when you are looking for your first home, to insure that it will be a rewarding experience.  Below are some of the pertinent points of calculating what you can afford:

1) What is your monthly income.  (The housing expense ratio uses your gross income) 

2) Take 28% of your total gross income and that is what your housing payment should not exceed.  One point ot remember is that 28% needs to include not only the principal and interest of the loan, but the taxes and insurance payments as well.  This will protect you in the long run.

3) Take your other debt ( monthly payments to loans, credit cards, etc.) add it your basic housing costs and divide it by your total gross income.  That percentage should not be more than 36%.

Once you have assessed this information, you should have a fairly good idea about whether you can afford to buy a home and what price range you should be focusing on in the market.  Your next step is to find a broker and get yourself pre-qualified for a loan.  Once these steps are done – happy house hunting!

To say, "Our industry is in an uproar!",  is an absolute understatement.  I have spoken before about perspective of the market conditions and the like, but I feel I need to address the ridiculousness of our standards and protocols for operations. 

The sub-prime lending practices that contributed to the mess we are in right now were so lax that it created a mess that needs cleaning up and desperately so, however, now that everyone is aware of this necessity they are jumping off the deep end in the other direction.  Don’t get me wrong, I believe standards need tightening, but sometimes a little of something is better that a lot of everything.  The new appraisal requirements and education requirements for not only lenders, but borrowers and real estate professionals are good in theory.  I do not have any arguments about the necessity of educating the masses with respect to real property purchasing.  It is obviously necessary.  That much has been proven.  The primary issue I have is with the new requirements for the ordering of appraisals.  Those requirements have tightened so much that it is impractical to function.  I realize many questionable appraisals have been performed and submitted, but tightening the belt to the point where no one knows who is to do what and limiting the order to a very select few is not necessarily the best option. 

I agree with tightening the belt, but come on folks jumping in the complete opposite direction is carrying things a bit far.  Moderation and small steps are the keys to a successful transition period.  I hope all those involved in the policy shifts remember that and we, as professionals, need to speak up and give our advice to those involved.