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28 Aug

Warren Buffett lists tips for home buyers

Posted in Mortgages, Real Estate on 28.08.11

One of the most respected men in business gives home buyers some tips to adapt to the changing landscape of the real estate market. We can surely learn a lot of lessons from this tips coming straight from billionaire and philanthropist, Warren Buffett:

Smart way of owning a home

As a homebuyer you need to thin of three things: long term ownership, affordable monthly payments, and fixed mortgage. Buffett was asked how his holding for manufactured housing has done well in the rough market. The business guru shared that they focused on realistic down payment and opted for manageable fixed monthly installments based on the buyer’s income. These elements blended well so people can keep their home unlike other schemes which led to foreclosures and the mortgage bubble burst.

Your dream home may lead to a nightmare

Buffett also cautions homebuyers that trying to purchase your dream home that will have a very high monthly with an adjustable rate mortgage may mean a dream that leads to a bad ending. Warren Buffett explains that a dream house can be a terrible nightmare when the buyer is looking way beyond what his wallet can manage and when a lender gives into the fantasy of the buyer.

Homes will increase in value is still true

Buffett was invited in in Congress for an interview and for him to share his thoughts about the mortgage bubble burst. He said that the “liar loans” led to the economic crash because lenders and borrowers corrupted the basic premise of how prices of homes will go up and that it will never go down. Lenders allowed unqualified buyers to get homes or multiple properties which are way beyond what their bank account can handle.

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