Bobbi Rebell discusses the financial planning involved in putting in a competitive offer. She is a personal finance expert and author. Rebell says not to stress to much about the hot market, and don’t get caught up in the pressure and pay for something you can’t afford.
ZILLOW SAYS THAT’S BECAUSE THEY REACHED A LEVEL WHERE THINGS BECAME UNAFFORDABLE. JOINING US TO TALK ABOUT THE FINANCIAL PLANNING INVOLVED IN PUTTING IN A COMPETITIVE OFFER IS TALLY, PERSONAL FINANCE EXPERT AND AUTHOR BOBBY RABEL. ANYONE HOPING TO BUY A HOME HERE IN THE RALEIGH AREA SPECIFICALLY MAYBE SHAKING THEIR HEADS AT THIS PROJECTION. WHAT ARE YOU TELLING FIRST-TIME HOME BUYERS THEY MIGHT NOT BE ABLE TO MATCH THE UPFRONT MONEY THAT MAY COME WITH AN OFFER? >> THANK YOU FOR HAVING ME. I’M SHAKING MY HEADS AS WELL AND I’M HERE IN NEW YORK CITY. THE FIRST THING I WOULD DO THOUGH IS DON’T GET TOO DISCOURAGED AND FOCUS ON WHEN YOU WANT TO GET YOUR OWN FINANCIAL HOUSE IN ORDER. TAKE A LOOK AT HOW YOU’RE DOING FINANCIALLY AND MAKE YOURSELF OPTIMIZE AS POSSIBLE. INCLUDING LOOKING AT THINGS LIKE YOUR DEBT TO INCOME. GET RID OF YOUR DEBT, SO IF YOU HAVE THINGS LIKE STUDENT DEBT, CREDIT CARD DEBT, THINK OF WAYS YOU COULD PAY THAT DOWN AND GIVE YOURSELF MORE FINANCIAL FLEXIBILITY. USE TECHNOLOGY TO DO THAT AND ASK SOMETHING LIKE WHAT YOU COULD CONSIDER BECAUSE IT WILL HELP YOU ORGANIZE YOUR DEBT AND MAYBE GET LOWER RATES IF YOU COULD LOWER YOUR INTEREST RATES ESPECIALLY NOW BEFORE POTENTIALLY RATES ARE GOING UP MORE. THAT’S A GREAT THING AS WELL. SO FOCUS ON YOUR OWN HOUSE. >> EARLIER TODAY WE TALKED ABOUT HOW CASH IS KING WHEN IT COMES TO REAL ESTATE. SO HOW DO YOU PAY DOWN ON YOUR DEBT? AND AS WELL AS THEY WILL COME UP WITH CASH. AND COMING UP WITH THE DOWN PAYMENT IS A BIG CHALLENGE FOR SO MANY PEOPLE ESPECIALLY WITH THE HOME PRICES RISING. IT’S LIKE YOU FEEL LIKE YOU’RE PLAYING CATCH UP ALL THE TIME. 3 TO 25 YEARS FOR PEOPLE TO LOOK AT. YOU HAVE TO MAKE SURE IT’S RIGHT FOR YOU AND WHEN TO LOOK AT YOUR ROTH IRA IF YOU HAVE ONE AND YOUR 401K IF YOU HAVE THAT. THEN FINALLY YOU COULD CONSIDER FHA LOANS. A COUPLE OF POINTS QUICKLY WITH THE ROTH YOU COULD POTENTIALLY TAKE OUT $10,000 IF YOU HAVE TO HAVE HAD IT FOR FIVE YEARS, YOU HAVE TO HAVE NOT OWNED A HOME FOR TWO YEARS. BUT YOU’RE GOING TO TAKE IT OUT AND YOU WON’T HAVE TAXES AND PENALTIES. WITH A 401K YOU COULD POTENTIALLY TAKE OUT UP TO $50,000. THE GOOD THING IS YOU’RE PAYING THAT LOAN BACK, YOU’RE PAYING YOURSELF THE MONEY, SO YOU’RE GETTING THE INTEREST FROM YOURSELF, BUT YOU HAVE TO REMEMBER THAT IF YOU LEAVE THE COMPANY, YOU’RE GOING TO HAVE TO PAY THAT MONEY BACK REAL FAST BEFORE YOU PAY TAXES, OTHERWISE UNCLE SAM WILL GET IN THERE TO GET SOME. FINALLY THE FHA LOAN GETS YOU ACCESS TO A LOWER DOWN PAYMENT. IF YOU QUALIFY, YOU MAY BE ABLE TO PUT DOWN AS LITTLE AS 3.5%. AND THEY ALSO HAVE A LOWER BAR LOAN WHEN IT COMES TO YOUR CREDIT SCORE, BUT THERE IS ALSO SOME ADDITIONAL FEES, SO MAKE SURE YOU READ ALL THE FINE PRINT WITH THAT. >> WE HAVE A FEW SECONDS LEFT. WHAT IS YOUR ADVICE TO PEOPLE WHO MAY WANT TO SEE THAT $400,000 HOME, BUT THEY REALLY CAN’T AFFORD IT? AND THE PRICES KEEP GOING UP. WHAT DO YOU TELL THEM? >> I WOULD TELL THEM PLEASE NOT GET UPSET ABOUT THIS. THERE’S A LOT OF PEOPLE HYPING THIS UP FROM YOU KNOW REAL ESTATE AGENTS AND LENDING ORGANIZATIONS AND YOUR FRIENDS AND FAMILY MAY BE ENCOURAGING YOU TO GET IN THERE BECAUSE WHAT IF THEY ARE ALL GONE? YOU MENTIONED THOSE MARKETS HAVE COME DOWN A BIT. THEY’RE GOING TO COME DOWN. PLEASE DO NOT GET CAUGHT UP IN THE HYPE WITH A LOT OF COMPETENCY WITH THE HOME. I DON’T WANT PEOPLE TO STRETCH TO GET INTO SOMETHING THAT THEY CANNOT AFFORD BETWEEN MORTGAGES, REAL ESTATE TAXES, AND THE ONGOING COST OF OWNING A HOME. IT MAY BE TIME TO JUST HIT PAUSE AND RENT AND FIND OTHER PLACES TO LIVE THAT MIGHT MAKE MORE SENSE FOR YOU, BUT PLEASE DON’T GET IN OVER YOUR HEAD. >> THESE ARE TOUGH TIMES. >> AND AUTHOR BOBBY RABEL, THANK
