Watching The Bubble Burst
(CBS)
For months now financial experts have been warning us that the hot housing market was a critical component of the American economy, and we’re finding out the hard way they were right.
A little over a year ago I was living in the house of my dreams. We borrowed 90% of the money needed to buy the house; 80% was a 10-year adjustable rate (ARM), and the remaining 10% was an adjustable rate that could go up at any time. For a while we were okay.
Then that Fed rate started going up, and so did our ARM. Over a five-month period it increased the cost of our monthly mortgage by nearly 40%! In retrospect we were lucky that we got in trouble making a monthly note back then and were able to get out without any permanent damage.
We rented a house while we sorted out our finances, and found a smaller house a bit further away from Lake Michigan, and we will try again. We still believe in the American dream -- but we realized that scaling back our dream makes it much easier to sleep at night.
Posted by rmsdm4
Brilliant! It is great to see people who can curb their desires, act and think responsibly, and make intelligent financial decisions. We did the same. We paid-off our last home in 18 years and our current home in six years thus saving $180,000 in interest on our current home. Now, we have enough money to pay cash for cars, televisions, vacations and other things we want. A person does not need a doctorate in finance. A little common sense goes a long way.