Tuesday, October 09, 2007

Poor Planning / Better Planning

I keep hearing on the news that the housing market has slowed way down. Not only that, but many people are in danger of losing their houses because they got adjustable rate mortgages when they got new home loans, and now that the interest rate is going back up, their payments are going up too. They can't afford to pay their mortgages! I keep wondering why they didn't notice that mortgage rates were going up and go ahead and lock it in at a reasonable rate. Of course, I also wonder why their real estate agents told them they could afford so much house. Wait, I know that already - the size of the commission.

Why do people continually want more than they can really have? Why not use a mortgage calculator to figure out what the payment would be at any given interest rate and then plan accordingly, no matter what your real estate agent says. If you can't afford the payment if the rate goes up a few points, then don't buy that house! There are plenty of houses out there just waiting for a buyer, surely one of them would have fit into the budget better.