MORTGAGE RATES REPORT

What's The Cost Of Renting?

Does buying REALLY make sense?  In this goofy real estate market there really are some costs associated with renting instead of buying a home.  Opportunity costs but costs nonetheless.

Why are folks buying homes today?

1- They're cheap. It's going to go up in price. It won't be for awhile but still a good reason to buy .
2- You can write off your mortgage interest.  That's not true for most home buyers today.
3- A fully-amortizing loan is like a forced savings account.  Illiquid savings account but I'll buy that.
4- The US Government is bribing people to buy homes.  We'll harvest that $8,000 tax credit.

Let's run some numbers.

June was considering a Pacific Beach condo for $278,000.  She currently pays about $1,000/month in rent.  She's considering this condo purchase with a VA loan because she's a veteran of the US Army.  Her total payment, including the property taxes and HOA fee, would be about $2200.  June's a nurse who makes $80,000.  She's single so she currently takes the standard tax deduction of $5,700. She plans to hold the home for five years and expects to sell it for 15% more than today's price; she'll net $296,000 after sales expenses (in 2014).

What is the cost of NOT purchasing the Pacific Beach condo today?

1- Let's assume June's right about the appreciation.  She stands to make $18,000 in five years; that's about $300/month.

2- June doesn't fully benefit from mortgage interest deduction.  If she stays put, she can write off $5,700/year (479/month).  She will have paid about $75,000 in interest over the next five years or $1250 per month.  When we back out her standard deduction ($479/month), her benefit of buying the home is that she can write off an extra $771/month.  She'll also be able to deduct her property taxes (289/month) for a total MARGINAL income deduction of $1,060.  That saves her about $365/month in income taxes.

3- June will pay that loan down to $257,000.  That builds equity up of about $350/month.

4- The effect of the $8,000 legal bribe is about $133/month, over five years.

5- June's closing costs are $6,000. Amortized over five years, that's an added expense of $100/month

June's opportunity cost of NOT buying, exclusive of appreciation, is $748.  Subtract that from the $2200 payment and her payment "feels like" $1452.  She gains $352/month by renting instead of buying.

The big question is...will June make 15%, over five years, by owning this home?

or...can June negotiate a lower price, by about $45,000, so that her monthly payment drops about $350/month?  At $233,000, June is actually losing money by renting.

VA Home Loans: Seller Can Pay Veteran's Debt To Qualify

We've talked about seller contributions towards closing costs but did you know the seller can pay off a veteran's debt to qualify?  The seller contribution is limited to 4%.  Typical VA closing costs in San Diego total about 2-3 % of the selling price; that "extra" 1-2% could be used to "buy the rate down" or to retire the veteran's debt for qualification purposes.

Here's a real life example:

One of our borrowers was buying a $380,000 home in Mira Mesa.  The seller agreed to pay 4% of the sales price towards closing costs ($15,200).  Closing costs for a 5.25% VA loan were about $8,000 while a 4.75% VA loan would have had $16,000 in closing costs.

We opted to accept the higher rate and use the extra $7600 in seller contributions to pay off the veteran's car loan; this eliminated a $500 payment from the veteran's debt-to-income ratio.  The borrower earned about $83,000 annually and would have had a debt-to-income ratio of 48% which exceeded to VA guideline of 42%.

When we paid off the car loan (using the $7600 in "free" seller contribution), the debt-to-income ratio dropped to 41.6% rendering the loan APPROVED.

Sometimes, you gotta be a juggler to get loans approved in this market.

FHA & VA Mortgages Are Assumable

One of the benefits we often forget, when describing VA home loans and FHA mortgages, is they are assumable.  What this means is that a buyer can "take the payments over" from a seller, if the existing loan is a FHA mortgage or VA home loan. 

First, let me tell you why this is exciting:

Today, a VA home loan rate will be around 5%.  I believe that inflation will kick in, sometime in the next 6-18 months, causing mortgage rates to skyrocket to 6.5% or higher.  Left unchecked, inflation could drive mortgage rates into double digits by 2012.  The good news is that home prices will probably jump up, too (if runaway inflation is present).

How hard will it be to sell a house in five years, with mortgage rates at 10% ?

Pretty tough...unless you can offer the buyer a below market interest rate.  Let's assume a San Diegan buys a $300,000 home today and finances $306,000 with a 5% VA home loan.  His payment will be $1,642.

That same veteran looks to sell that home, in 2014, for $400,000 but VA home loan rates are at 10%.  The new buyer, looking to finance $408,000 at the market rate of 10%, would have a payment of $3580; that's over twice the original payment.

What would happen if the selling veteran, held a $100,000 second mortgage, for 25 years, at 12%, and allowed the buying veteran to assume his 5% VA home loan?

The payment on the second mortgage would be $1,053. Add the (now) 25-year, original VA home loan, at 5% payment of $1,642 and you have a financing package that is about $900 cheaper than a $408,000 VA home loan.

Now, here comes the bad news:

VA home loans are only assumable to other veterans (that limits the market).  Technically, any deed transfer would trigger a due-on-sale clause causing the original VA loan to be called.  Pragmatically, that doesn't happen.

Unless the original loan is formally assumed, with VA approval, the selling veteran will have his VA home loan eligibility tied up.

Even with a formal assumption, the selling veteran is still responsible for the original loan payments for the first five years.  You had better be certain that the buyer is credit-worthy.

The seller is stuck with a note, not cash.  That note could be sold on the secondary market but prices are typically about 70 cents on the dollar; that could cost the seller some $30,000 in profit.

The same rules apply for an FHA mortgage, too (except that neither the buyer nor seller needs to be a veteran).

On balance, the assumption of a VA home loan or FHA mortgage could be an excellent selling feature.  Low prices and historically-low mortgage rates make these loans a consideration when comparing them to a conventional loan.

As of March 1, 2009, The 4.5% Mortgage Rate is Finally Here

We have finally reached that stated goal of a 4.5% mortgage rate and you can get it...if you like the terms.  Here's the rub:

• it's for a fifteen-year, fixed-rate mortgage and...
• it costs 1.25% in points and...
• the loan amount has to be for $250,000 to $417,000 and...
• you have to have a 700 credit score or higher and...
• all of your monthly debts (including the new payment) can't exceed 40% of your documented income and...
• you must have at least 20% in equity if it's a purchase transaction or....
• you must have at least 20% in equity if it's a refinance of your purchase loan (no cash out) or...
• you must have at least 40% equity if it's a refinance where you took cash out of the house.

Lots of restrictions but it's here.  Contact me if you want to give it a go.

PS:  This might not be that bad of an idea if your rate is 6% or higher.  If you took out a $300,000 loan, at 6%, for thirty years, your payment is $1798. Refinancing your mortgage to a 15-year loan, at 4.5% would raise your payment to $2294.  That's only $500 a month. 

That's an extra $90,000 that you'll pay towards your mortgage over 15 years.  If you bought your home in 2006, you still have 27 years left.  If we could knock off 144 payments at $1798, you'd save $259,000.  So...

It costs you $3750 in points PLUS another $3000 in closing costs PLUS the $90,000 extra (the higher payments).  Pay out $97,000, over fifteen years, and save $259,000?  Hmmm, maybe you'd do better in your 401-k.

Then again, maybe not.  I'm just sayin'.

I'll run the numbers for you if you contact me.

Don't Fret About Foreclosure. You Can Make A Comeback.

Can’t afford your mortgage?  Call your lender and ask them to modify the loan to a payment you can afford.  The lender representative will ask you for a stack of paperwork and try to get you to keep paying “something…as a sign of good faith”.  After three or four months, you may receive an offer to reduce your rate to 2-3%, for a five year period, to “get you over the hump”.

You still owe the money you borrowed, though.

The house is worth less than what you borrowed?  Ask for a principal reduction.  I tried helping distressed borrowers with the Hope For Homeowners Program; my efforts failed miserably.  Andrew Adams told me it would flop and it did.  We did SOME good (without the H4H program)…for about half the borrowers but the program was a flop.  Now, President Obama is trying to “entice” lenders to refinance your loan to 105% of its current value and empower bankruptcy judges to “cram a reduced loan amount” down the lenders’ throats.

I’m not so certain that will work, either.

The social ramifications of what Greg Swann calls middle class welfare are far reaching.  An angry cauldron, fueled by the resentment of the folks who are current on their mortgage, is bubbling over today.  Let me give you an example:

Two houses, on the same street in Santee, CA, were bought for $500,000, in the summer of 2006.  Eileen was a move-up buyer who plunked $150,000 down on her home.  Lou bought the home with zero-down financing.  Eileen refinanced her home loan to 4.75% last month, bringing about $35,000 to the closing.  Lou hasn’t made a payment in three months, has had his foreclosure stalled, and is hoping that March 4 will bestow a bailout upon him.

Eileen is pissed off and she ain’t alone.  What worries me isn’t whether or not the Obama mortgage plan is fair, it’s that the implementation of it could result in civil unrest.  Don’t get me wrong, the bailouts of the stupid banks who financed you are perhaps the greatest evil foisted upon our economy but now we’re pitting neighbor against neighbor.

Let me recap the “bailout” for you; not the banks but YOU.  The government tried to mitigate with a program that offered hope; FLOP.  Now, you can get your mortgage refinanced….maybe…IF, you can demonstrate that you can’t make your payment and miss a few of them.  If the lenders won’t play ball with this plan, you can voluntarily file bankruptcy and hold your breath that you get a compassionate judge to force the banks to give give you another shot.

There is another option. Let me show you an example of what I see in the same street:

Lou is paying $3,500/month for those mortgages (which he can’t afford).  Tanya is renting the house next door for $1,500/month.

Here’s the solution, Lou; walk from the mortgage.  Mail your keys to the bank and rent the house down the street. If the “teaser” payment was $2,500 (and you could afford that), save the $1,000 each month, for the next three years, and buy back your old house in 2012.  The FHA 203-b loan program allows borrowers, who have a foreclosure that is older than 36 months and have re-established credit , to obtain an approval.

Walk today and buy that same house back in 2012. Do you really think it’s going to cost a whole lot more than it’s worth today?

Consider a comeback if you will. It’s a great American tradition.

Spending Your Way To A Better Retirement?

In what I can only describe as gratuitous advice, Logan Jenkins of the San Diego Union Tribune suggests that the only way to save the economy is to open up your wallets and start spending:

We showed the terrorists by taking to the skies – and taking vacations. We expressed our courage by going out to restaurants, enjoying the good life.

Despite the dot-com bubble, we spent our way back to economic, if not emotional, well-being. (Thank goodness for cheap credit and the equity in our ever-appreciating houses.)

Well, that was then. In the wake of the subprime foreclosure epidemic, Wall Street's credit freeze and the nervous breakdown of the stock market, it's a million jobs and the portfolios and 401(k)s of millions of Americans that have been hijacked.

Okayfine, Mr. Jenkins.  I respect President Bush for telling Americans that we have "nothing to fear but fear itself".  What the President was saying is that we shouldn't let a terrorist attack prevent us from living our lives as we always had but something got lost along the road to Baghdad.  We violated one of the first tenets of governance inasmuch as it relates to macroeconomics; you can't spend money on guns and butter; that's exactly what we did.  We mounted an expensive war on terror on two fronts while enacting a tax cut and passing the largest medicare increase in history.  Imagine a Reagan Defense Department, with a Laffer-esque taxation policy, and a LBJ Great Society.  Throw in a Milton Friedman induced Fed, lowering interest rates and printing money and you have a recipe for stagflation.

The American Consumer, the ultimate narcissistic adolescent, rushed out and took cruises, bought fake boobs, and stuck a Mercedes in their driveway...all of it from the newfound equity in their inflated home.  In Mr. Jenkin's article, he quotes Mercedes-Benz of Escondido's Angelo Damante.  Mr. Damante remarked that times are so bad that even the liars are bitching about their financial woes:

This market downturn is unlike any other he's seen, Damante told me. No one, not even his annual new Mercedes customer, is immune from the clammy fear of the future.

“This is the first time in my career where people whose egos would never allow them to even say they were feeling the crunch – they're admitting it. That's the scary part.”

Mr Damante, however, reminds us that his product is a reward for success and should not be a symbol of conspicuous consumption :

Both a practical philosopher and an impractically generous philanthropist, Damante likes to describe the purchase of a sleek Mercedes as a well-deserved reward for success in life.

Let me interpret that for you.  Don't buy a Mercedes unless you can afford it.

While I agree that fear is hardly a paradigm from which to operate, this pregnant economic pause should beget the question, "What should I do now?"

The economy is shifting.  We're at the pinnacle of the shift away from the industrial age and towards the information age.  This means that traditional businesses of making and pushing product are giving way to gathering, interpreting, and using information.  We no longer make paper but push gigabytes in the new economy.  If you haven't figured that out and positioned yourself properly, it's gonna get worse for you, regardless of how much you spend.

Why would Mr. Jenkins offer such irresponsible advice?  Even he admits that his personal fortune took quite the hit this year:

Well, that was then. In the wake of the subprime foreclosure epidemic, Wall Street's credit freeze and the nervous breakdown of the stock market, it's a million jobs and the portfolios and 401(k)s of millions of Americans that have been hijacked.

The other day, my wife and I ratcheted up our courage and took a look at our life's savings. Big mistake. Our nest egg has been scrambled, diminished nearly 40 percent.

Aha!  Methinks I smell a motive.  Mr. Jenkins is a leading-edge baby boomer, some short years from retirement...

...if YOU take his advice.  Okay, Mr. Jenkins...you go first.

We'll spend our money when we're ready.

Photo Credit: www.worth1000.com

Can Option ARMs Be The Solution?

Remember the "sleazy Option ARM advertisements"?

They're back but with a whole new twist:

This is why I never did option arms.  This is part of the reason why we are in the housing mess we are in.  Yes, borrowers have to claim responsibility, but every Bank that pushed neg am as a financing alternative deserves the billions in write downs and losses in stock options that they are mired in.  I have no sympathy for them...only contempt!

Oh, brother!  If I see one more loan hack Monday morning quarterbacking this mess I'm gonna puke.  There is nothing wrong with negative amortization loans; there was something drastically wrong with the way they were prescribed. The "new neg-am" advertisements are "posited indignation" and they're just as sleazy as the original advertisements.  They prey upon the opposite of the greed motivation; fear. 

Let me try to break down the negative amortization loan for you:

• There is an interest rate charged; it may be adjustable monthly, annually, or for a specified period.
• There are payment options.  One option is LESS than the interest assessed for the month.  Borrowers have the "option" to pay the minimum amount or a higher payment.
• The difference between the lower amount paid and the higher amount assessed is added to the loan balance.  The loan balance rises or amortizes "negatively".
• If that balance rises to a pre-determined amount (usually 110% to 125% of the original balance), all bets are off; the loan becomes a fully-amortizing loan and the payment goes up...a lot.

Neither the neg-am loans nor the banks caused the housing mess; a supply and demand imbalance, combined with an adolescent nature towards understanding complicated loan products did.  I'm gonna help you out with this.  Neg-am loans are neither good nor evil; they're just financial instruments.  When prescribed properly, they can be a super-charged problem solver or liquidity builder BUT...you gotta do your homework, first.

When does a negative amortization loan make sense for you?

How about when you're looking to buy in a soon to recover market?  NAR Chief Economist, Lawrence Yun believes that a V-shaped spike is due in three markets:

Middle-America cities that performed evenly over the past few years – like Cincinnati, Milwaukee and the Kansas City, Mo., area – are likely to experience home price gains in the 20 to 30 percent range over the next five years, while markets like Miami, Las Vegas and Phoenix could see prices go up as much as 50 percent during that time period, Yun said.

If you're looking to buy a $300,000 home, with $150,000 down payment, in Las Vegas, you might consider buying a rental property in Phoenix, for $150,000, as well (geographically diversify). Spread the $150,000 over both homes and use a negative amortization loan to keep your payments affordable, for the recovery period.  You might sell the Phoenix rental for $225,000, in 2013, and use the extra $50,000 to pay down the Vegas loan under $100,000, in 2013.  That's what wealthy people do.  They buy low and sell high with other people's money.

If you're saddled with debt and no lender is going to let you refinance with "cash-out", you might need a negative amortization loan.  Let's assume you're paying $2,200/month on your $300,000 fixed rate loan and $800/month in $40,000 in consumer debt (credit cards).  In 3 years, your mortgage balance will drop to $290,000 and your credit card balance will drop to $27,000.  If you took out a neg-am loan, with a $1,400 payment, and applied the $800 cash-flow savings to your credit cards, you'll pay OFF your credit card debt in 3 years.  You will have INCREASED your mortgage balance some $15,000 but you'll be swapping 14% debt for 6.5% debt.

In the existing scenario, you'll owe an aggregate of $317,000 in 2011. With the neg-am loan, you'll owe an aggregate of $315,000 (on your mortgage) but your high-interest consumer debt will have been retired. Your credit score will most likely have risen, making your eligible for a MUCH better loan program.  Oh, you'll save a bunch of money on taxes, as well.

Finally, maybe you have no liquidity .  That's VERY dangerous !  Investing that $800 monthly difference can grow to a $35,000 nest-egg (assuming a 7% return). While the difference in mortgage balances will be $25,000 higher, with the neg-am loan, the investment account will have grown to $35,000; you'll be ahead some $10,000 and have what we call in financial planning circles, liquidity.

Oh...by the way...liquidity=safety.  When the dung hits the blades, cash in the bank is king !

Here's the advice for today; don't be swayed by the fear mongers of today; you weren't swayed by the greed merchants of yesteryear.  Do your homework, perform your due diligence, and call a mortgage adviser who has financial planning background.  He'll analyze ALL of your assets and liabilities, and tailor a loan solution specifically for your situation.

After all, aren't you special enough to warrant personal attention?

Small Steps Today Prevent Jumping Off A Cliff Tomorrow

Have you ever wondered the significance a seemingly minor decision had on your life?  I do. 

I moved out west, from Philadelphia, at the age of 25.  I had a pretty cushy life going in Philly town.  I worked as a securities broker and was favored by the management of my employer.  When other brokers left the firm, I was reassigned some of the best accounts.  I worked hard to gain that favor but it definitely gave me an advantage over the other new brokers.

I chucked it all for a move to Phoenix.  I wanted to live a warm climate.  It cost me a bunch of money, too.  One of my contemporaries just retired, from our old employer, after twenty years service as a stock broker.  That may very well have been my story, to...IF...I just stayed put in Philly. 

Retired at 42.  Sounds appealing, doesn't it?

The prescient Jeff Brown rekindled these introspective thoughts with his article "The Little Things Matter" :

So what small changes can you make to your investment strategy to have this kind of impact on your portfolio? Assuming your current agenda is capital growth, in anticipation of retirement – here are some tweaks you might consider.

• Is your equity to value over 65-70%?  Consider reinvigorating your leverage
• Time for a move? Seriously consider cheaper, out of state, growth regions
• Reassess your current position – don’t lose money via procrastination
• Have unused depreciation piling up?  It’s a gold mine – take advantage
• Unused capital today, can cost you six figure$ in retirement income --      really
  

For the record, that’s just the short list

The little things DO matter.  I learned the principle of systematic saving from my parents.  That's given me options in life, options to avoid some bad decisions.  Those little crumbs I've stored have built themselves into loaves of bread.  They're not quite big enough to feed me in my old age but substantial enough to give me peace of mind that I'm on the right track.

Battleships turn more quickly than rowboats.  Little adjustments, on the bridge, at the start of the trip, have a profound effect on the navigation.  Chart your course today so you avoid stormy seas tomorrow.

Jeff reminds us, the little things really DO matter.

Debunking Guttentag

Jack Guttentag is a Professor Emeritus at the well-known Wharton School of Business at the University of Pennsylvania.  He is also known as "The Mortgage Professor" on the internet and the founder of the Upfront Mortgage Brokers Association.

I always thought a lot of Jack until he advocated a price-fixing scheme in mortgage brokerage; his advice was anti-competitive and potentially costly to the consumer.  Needless to say, I've read him with a jaundiced eye since that advocacy.

Jack attempts to counsel a mortgage broker about why the concept of equity optimization is unsuitable for most folks.  This article reveals that "The Mortgage Professor" is completely out of touch with the realities of the housing market and the challenges of Generation X and Y.  In short, Jack advocates financial planning techniques that were suitable for generations that were protected by corporate paternalism.  Consumers over the age of 50 certainly would benefit from Jack's advice. 

Something happened on the way to the American Dream - a "good" corporate job no longer became an expectation.  Mass layoffs, termination of defined benefit pension plans, reduced health care benefits, and uncertainty of employment became the norm for Generations X and Y.  We watched our parents' life unravel as they were shuffled off to early retirement with a lump-sum of retirement money and no financial education.   Most of us have will work for ten different companies and have 2 or 3 distinctly different careers in our adult life.  Surely, this is a far cry from the mantra of "do well in school, get a good job, and pay down your mortgage; the company will take care of you."  Corporate America left Generations X and Y behind while they were devising a way to take care of baby boomers.

Housing, for Generations X and Y, is much less affordable than it was to our parents and older cousins.  The hyper-inflation in housing, caused by the baby boomers, has driven the cost of housing to an all-time high (as a percentage of income).  Members of Generation X and Y have a less likely chance of EVER paying off a mortgage than did their parents and older cousins.  If the premise of a fully-paid house is false, why fear the debt?  In reality, home equity can be an excellent tool for Generations X and Y to comfortably provide for their children's education and their retirement.

In Jack's criticism of equity optimization, he gives you the specific reason why you SHOULD be actively segregating home equity to achieve financial goals; arbitrage. Read his paragraph, "Shaky Premises of the New Wisdom".  He dismisses the advice as being suitable for only people in a "high tax bracket" who invest in a 529 plan.  Jack forgets two things:  state income taxes and life insurance contracts.  State income taxes add to the attractiveness of the equity optimization approach.  Life insurance contracts  are a vehicle that allows for the upside of the stock market with capital preservation.  The growth and subsequent withdrawal (when structured as a policy loan) are tax free.

State tax rates lower the after-tax costs of funds (the mortgage).  Equities, as a long-term investment, have continually outperformed most other asset classes.  Borrowing money from your house to invest in the stock market, then, becomes a LESS risky approach when viewed over an extended period of time.  Leveraging up the homestead to buy a high flier, penny stock, is not the approach.  Investing in a well managed account that returns an equivalent of a basket of stocks, however, is.

If you like the prestige of taking financial  advice from a Wharton professor, follow what Jack Guttentag is saying on the internet.  Understand, however, that your children won't have the luxury of attending Wharton because you won't be able to afford it. 

Unless you mortgage your house.

Are You Perpetually Poor or Willingly Wealthy?

"It's deja-vu..all over again."

- Yogi Berra

When you're on the wrong side of 40, you possess the luxury of having seen things before.  In many cases, it may be the third or fourth time you see them.  The recent flurry of "responsible lending posts", here on Active Rain, is no different than the criticism levied at the banking industry in the early 90's.

The virtues of an amortized loan can be extolled like some sage nostalgic advice. The truth is that amortized loans are fantastic...if you are a perpetually poor person.  Let me explain what I mean.  When I say "poor", I mean undisciplined.  This means that you generally can not be trusted with determining your own destiny. It means that you won't establish a side investment account to invest the difference between a fully amortizing and alternate amortization schedule.  If this is an apt description of your savings and investment habits, go with a 30 year fixed rate, fully amortizing loan.  Better yet, go with a 15 year, fully amortizing loan.  Work really hard to accelerate the amortization on your home with bi-weekly payment programs or money merge accounts.

Expect, however, to be perpetually poor in retirement.  Oh, you'll have a fully paid off house but you'll be broke.  Does that sound doubtful?  Ask anyone who's been used their primary residence as their retirement plan (you know who I'm talking about).  They've probably rationalized their Depression Economics thinking by selling the homestead and retiring to a more "retirement-friendly locale" (READ: cheaper).

Is that REALLY your dream in life? To pay off an asset you can sell so that you can trade DOWN in retirement?  Maybe you can move to a far-off country to live like a king in retirement!  Of course, you'll complain that you never see your grandchildren because it costs a small fortune just to visit you.

That's not what the willing wealthy do. The willing wealthy understand that the pitfalls of the Great Depression can be avoided and discipline is how it's done.  The willing wealthy do three things when purchasing real estate:

1- They borrow as much money as possible against the home so that the bank shares in the market risk of fluctuating real estate prices.  Oh...that's right, they invest the difference between, say a 20% down payment and a 5% down payment.

2- They use interest-only, or better yet, negative amortization loans to ensure that the market risk stays with the market - in the house. Oh, I almost forgot...they invest the difference between the 30 year fully amortized loan and the lower, alternate amortization loan payment.  Not only do they enjoy the benefits of arbitrage, they increase the liquidity of an otherwise illiquid investment. That liquidity will save their butt when the tough times come while the perpetually poor person will borrow money against his home at exorbitant rates.

3- They stick to the plan.

Fully amortizing loans are fantastic...for perpetually poor people.  If your motivation to buy a home is a "forced savings plan", think twice about buying a home.  Mr. Murphy has a funny little way of showing up and wreaking havoc on those forced savings plans.  He does it through death, disability, and unemployment.   Better to have some cash stashed when Mr. Murphy arrives at your door so you can slam it in his face.

So...what's the difference between perpetually poor and willingly wealthy?   You got it...discipline.   

Oh, proper financial advice goes a long way, too.