Rafael Scarfullery's Blog

Read my thoughts and/or quotes from writers that help us become better human beings.

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Location: Charlottesville, VA, United States

Visit my website: http://www.RafaelScarfullery.com.
Watch my music videos: http://www.youtube.com/user/rafaelscarfullery.

My main goal in life is to fulfill my purpose on earth and help to fulfill other people's purposes, too. I want to make a little positive contribution and make the part of my world a more peaceful and loving place. I love music and it's the principal channel through which I carry out the above goals. I'm professionally and thoroughly prepared in several music areas: composition, orchestral/choral conducting, performance (classical guitar and organ), college teaching, and church music.

In my website, www.RafaelScarfullery.com, you can watch my music videos, listen to my CD's and buy them, see samples of my compositions, buy scores for downloading, download free scores, read about my music career, read my thoughts and other people's quotes that help us to become better human beings, and much more. If you'd like, send me your feedback. I'd love to hear from you!

Thanks for visiting!


Wednesday, March 14, 2007

Real Estate at Risk

Nowhere in the world can you buy a house so easily. Just in the USA. I suppose. Sometimes even with no downpayment and even if you don't make enough money to pay the monthly bills. In other countries you must have at least 20% or 30% of the total price of the house as a downpayment and prove that you have sufficient income every month to pay the loan.

Nowhere in the world can you see so many foreclosures. The reason behind this, according to Steven Pearlstein in a Washington Post article from today, is the greed from investment bankers and mortgate brokers. According to him, these are the various kinds of loans we can take:

1. The balloon mortgage: the borrower pays only interest for 10 years before a big lump-sum payment is due.
2. The liar loan: the borrower is asked merely to state his annual income, without presenting any documentation.
3. The option ARM loan: the borrower can pay less than the agreed-upon interest and principal payment, simply by adding to the outstanding balance of the loan.
4. The piggyback loan: a combination of a first and second mortgage eliminates the need for any down payment.
5. The teaser loan: qualifies a borrower for a loan based on an artificially low initial interest rate, even though he or she doesn't have sufficient income to make the monthly payments when the interest rate is reset in two years.
6. The stretch loan: the borrower has to commit more than 50 percent of gross income to make the monthly payments.
7. Even the NINJA loan: No Income, No Job and No Assets.

Why are they doing these? Because they make money by selling the mortgages. It doesn't matter to them if people aren't able to pay the loans.

The Bible admonishes us not to have debts for more than 7 years. Dave Ramsey, founder of Financial Peace University and Christian financial counselor, urges us to avoid the debt trap. He advises buying a house only when we have a good downpayment, enough cash in our emergency and savings funds (3-6 months of salary), and don't have any other big debts. If you'd like to know his Christian and conservative approach, go this website: http://www.daveramsey.com.

Be aware of the buy now, pay later mentality. One never knows what will happen later. The Bible states that the 'borrower is servant to the lender'. So be cautious and only buy if you have enough cash and can pay back on a regular basis. Let us not become slaves.


Anonymous Republica Dominicana said...

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6:57 AM  

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