June 15th
Uncategorized

Protecting Yourself In A Down Market

After much consideration, I made the decision to buy a house in October of 2006. My timing was not ideal. Just a few years later — as we all know — the bubble burst, values declined and my income as a Realtor tanked. Amazingly enough, however, I actually survived. I had done some financial planning […]

After much consideration, I made the decision to buy a house in October of 2006. My timing was not ideal. Just a few years later — as we all know — the bubble burst, values declined and my income as a Realtor tanked.

Amazingly enough, however, I actually survived. I had done some financial planning and protected my downside.

Here are some things I did to protect myself:

  • Bought a home in a very good location to minimize the risk of a sharp decline in value
  • Put 3 months of mortgage payments into a savings account for rainy days
  • Prepaid my HOA fees for two years

But I didn’t do everything exactly right. here are a few pieces of advice I should have followed but didn’t:

  • I should have been more diligent about making sure that I had a sound financial structure, including a funded retirement plan, sufficient term life insurance and a will that named a guardian for my daughter
  • I should have investigated San Francisco’s Housing Authority for single parents. They actually have home buying programs for people like me
  • I should have calculated that I could really afford the mortgage, payments, property taxes and insurance, making sure that they were no more than 25% of my reduced income
  • I should have made sure that ALL my monthly debt payments, including the house payment, did not exceed 40% of my gross monthly income
  • I should have made sure that I had established a good emergency cushion, just in case.
  • I should have had my CPA show me what all this meant on an after-tax basis. That’s more than I could do on my own.
  • And finally I should have stepped back and made sure that this home was a long-term solution for my needs, not only financially, but socially, emotionally, etc

Please don’t hesitate to call or email me for more information residential real estate in San Francisco or to share a cup of coffee.


Posted in Uncategorized .

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