Ideally, nothing! It really should be a part of your entire plan, unless home ownership is not a priority to you.

Should it be a priority?

For many people it is, but like nearly anything on the planet it really comes down to solid understanding of the individual choices you could make, and why you’d make them. This is probably slightly different advice than you’ve heard other places, so I’ll tell you why I say what I say.

More important than anything else is, why are you buying a house?

If your answer is because it will be worth a lot more in future years, know the historical appreciation rate for your market, and the likelihood that people will want to move there in the near future.  The appreciation rate must be higher than inflation for your investment to grow and actually BE worth more in the future.

If your answer is that you and your spouse and three kids need some place to live, then you’re not thinking of it as an investment, which is probably a good thing.  I don’t ever factor in your primary residence in your portfolio, because I don’t expect you’re going to sell to invest. You need a place to live. Rental real estate is a completely different discussion.  I’m a landlord myself, so I’m not saying that real estate investing is a bad thing – far from it.

So, given that, what is the definition of a good investment, a.k.a. an ASSET?  Simply put, an asset puts money INTO your pocket, while a liability takes money OUT.
If you own a home for 10 – 30 years, it’s highly likely you’ll replace the roof, the water heater, the furnace, the carpet, the flooring, and many other things over that period.  That’s not making you money, so it’s not an asset.  In fact, the only way you can get money out is to refinance or sell, so in many cases it’s not a good idea to pay your mortgage down faster than the schedule calls for.  Understand, it’s a case-by-case thing, and you need to have that reviewed.

So, getting back to the first question, buying a house should be a part of your investment plan.
Yet another reason why starting to plan and save and invest early make things a lot easier!

You want a house, and there are many ways to get the down payment saved for if you’re patient.

You want to provide an education for your kids, and of course, someday you want to MAKE WORK OPTIONAL.
By the way, you can’t borrow for that last one, so that should be your number one priority.

The good news is, it’s do-able.
Let’s get started figuring it out today.

Contact me for advice assistance, Email me at: John@financialideasblog.com

1.888.379.4352  Extension 1000

Read more at: http://www.whattoinvestinnow.com

Technorati Tags: Buying a home, Debt consolidation, Home buyer, Invest in a home, Invest young, real estate investing, what to invest in now

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Back up...What did you say?!?

As in, United States Department of Agriculture?
We’ve heard of USDA Prime Steaks, but USDA Sub-Prime Loans?
What are you talking about?

We’re talking about a previously almost unknown and little-used program founded in 1949 to encourage the development and sales of homes in mostly rural parts of the country by, see if this sounds familiar, not requiring any down payment on the loan.

Just like the “low-doc” and “no-doc” and “interest only” loans of the mid-2000s, over which we still have a major hangover and which have certainly contributed to the record number of foreclosures we’re seeing, any loan which requires no down payment means nothing at risk for the borrower except the possibility of bankruptcy or having a foreclosure on their record, and lots of people don’t know how bad those can be unless they’ve been through it.

When the program was first founded it made a lot of sense, but even in the current market, where lots of plans to increase business by not requiring down payments has all but completely blown up in the past two years, this program was bound to be discovered and amplified in a way that was never intended, so that since we began the financial crisis which seems to be trying to end, the program has attracted interest way beyond what it ever had before.  Through September of this year, we’re looking at almost four times the number of USDA-guaranteed loans than were approved for all of 2007.

What does all of this boil down to for us?

DON’T DO IT!

Yes, I know, if you live in an expensive part of the country it takes forever to save up a down payment.

If you go bankrupt, it takes ten years before that’s no longer on your record, too.

That’s all you need to know about USDA loans.!.

Instead, decide right now to live within your means, which includes saving and investing 20% of your gross income in a combination of your 401K and other market investments, some of which might eventually be in real estate investments if they are appropriate for you.

If your means aren’t enough, you can talk to me to figure out what you might do to increase them, but whatever you do, please be patient.  Good investing is a lot more like watching paint dry than winning at the roulette table.

Too bad that doesn’t make for a very good movie!

To get in touch with me make an appointment @ http://www.whattoinvestinnow.com

Technorati Tags: Debt consolidation, Dept of Agriculture, How to Invest Stock, Interest Only, Prime Loans, Rule of 72, rule of 72, Sub Prime Loans, USDA, young investors

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