It doesn't always take a hurricane or tornado to turn your house upside down, sometimes it just takes a RED HOT real estate market! With mortgage interest rates being at an all-time low, consumers are entering the real estate market with a frenzy and the mad rush is causing quite a stir. Bidding wars are back and prices are climbing at record speed; some markets experiencing more than 30% in home values this year alone! That's great news if you're a seller...it's not so great if you're a buyer and if you aren't careful, your property will likely be worth a whole lot less than what you paid for it and you could find yourself financially upside down overnight.
The real estate frenzy we're experiencing today looks a whole like the frenzy we saw just before the bubble burst in 2007. As difficult as it is to believe, history always repeats itself so it's not a matter of IF, it's a matter of WHEN - and it looks like the time to lather, rinse, and repeat could be now. Although we probably won't be placing blame on the lenders this time around, the end result will be the same for many unfortunate homebuyers...stuck owing a whole lot more on a house than its value when the market settles back down to the "norm"....aka upside down.
Most people don't remember the days when homeowners had to bring money to the table in order to close on a property, but I sure do. I worked with plenty of sellers back in the old days...throughout a soft market we found ourselves in LONG before the real estate boom of the 2000s...where the market declined almost overnight and LOTS of people were forced to pay up if they wanted/needed to sell just to cover the contract with their lender. That's before bail-outs and short sales were ever even thought of.
Real estate IS a good investment but it's ONLY good if you're in a GOOD equitable position when you want or need to be. You and I can't control the real estate market BUT we CAN control how we look at the investment. If you're one of the (un)fortunate ones to be buying at the top of the market, then you need to focus on gaining equity as fast as you possibly can. How do you do that if you can't control the market? You get your hands on a financial GPS that will help you pay less in interest (yes, even less than you contracted for on your new mortgage) - by focusing on paying less in interest, you can focus on paying MORE toward principal within the same budget! Follow the GPS to your financial destination and before you know it you'll owe a whole lot less than its value in any market! Frankly, THAT'S THE ONLY THING THAT MAKES SENSE FOR CONSUMERS...especially the ones buying at the top!
Having debt is not a bad thing, but debt/loans/mortgages are supposed to be used as financial vehicles to accomplish the goal when we can't pay cash. Mortgages were never intended to be a LIFE SENTENCE no matter how attractive the interest rates are! The sooner we pay down the principal the sooner we have OPTIONS...options to reinvest and to build wealth...finally!
If you have a mortgage...especially a NEW one...we need to talk. You have the keys to your dream home and I have the keys to financial freedom!