Tara-Nicholle Nelson, a Broker in San Francisco, is one of my favorite real estate/mortgage bloggers. Here is what her article in Trulia.com has to say about minimizing the risk in home ownership.
“Not so long ago, in a not-so-distant land, owning a home was thought of as the safest ‘investment’ around. Fast forward to the present day, and home ownership seems super scary to many people who can afford homes, and would like to own them, but are paralyzed by the fear of buying a lemon, or having a mortgage catastrophe.
Here are 4 simple steps to minimize the risk that you’ll become the main character in a homeownership horror story.
1. Stick with a fixed-rate mortgage. Recent data shows that adjustable rate mortgages, or ARMs, are increasingly popular, rising from 9 percent of the mortgage market in the fourth quarter of 2010 to 12 percent in the first quarter of this year. This might seem crazy to some, but in financially aggressive crowds, the lure of low, 3 percent#ish# interest rates on ARMs is enough to overcome any qualms. As well, today’s ARMs tend to have lower lifetime interest rate caps and require payment of principal, so they don’t adjust as violently as the subprime interest-only and option ARMs that contributed to the foreclosure crisis.”
Continue: 4 Steps to Minimize the Risk of Owning a Home: