Home Ownership

When I was in the mortgage biz, I learned a lot about the real estate industry, most of which was labeled in acronyms. PITI, DTI, LTV, FHA, VA, RD…and the list goes on and on. So you probably wouldn’t think that one of the most important things I learned had nothing to do with finance, but that was the case.

Their house was beautiful. We pulled up expecting a small ranch like our own, but found ourselves sitting in a three-car driveway, in front of a three car garage. Really? How many people need a three-car garage?

My mom really enjoys the televisions show "Leverage." Hedge fund managers on the other hand tend to enjoy the financial type of leverage. You've probably heard of terms like "Leveraged Buyouts" on TV, but most of us haven't really though about what leverage means in that context. So, when talking about finance, what is leverage and is it good?

Leveraging Things

Most economists claim that the economy is turning around, however slowly, and many people are considering purchasing a home. The harshness of the economic downturn has left a wide variety of potential home buyers: those relocated by a change in work, previous owners who have had to change residences, first-time buyers, etc. While these individuals, families and couples may all come from different lifestyles, they may also have the same question: Is now a good time for me to buy a house?

As I mentioned in previous posts (See “Sweat Equity” and “The Modern Oregon Trail”), my husband and I moved back to Iowa from Seattle in 2005 and set ourselves up in a farmhouse. The house needed a lot of work: The Pepto Bismol pink and neon green walls matched by ugly linoleum were really icing on a crumbling cake. The electrical was knob and tube, and the plumbing was antique. The kitchen was non-existent. Seriously.

My mortgage and I didn’t always get along.  We had fights, and my mortgage often made me want to cry.  Recently, however, we came to a truce and decided to play nice with each other.  The following is our love story.

The mortgage – let’s call him Bob – and I met over a three-bedroom ranch in small-town Iowa.  We instantly fell in love.  Bob offered me the ability to own a home with the ease of an affordable down payment and low monthly payments, and I offered Bob hefty interest feedings…I mean payments. 

All of us would like to have a feeling of security and control over our finances. So, what’s keeping us from getting there? The idea that you have to make a lot to save a lot is a myth. Whether you make $15,000 or $1.5 million, you can save and invest for your future. Just as with any great journey, sometimes the only thing holding you back is getting started. And my guess is you're already investing more than you think!