Archive for the ‘Chapter 1 – How to get into a home you can't afford’ Category
I’ve re-named the chapter to “How to get into a home you can’t afford”.
This is really about what happened to many people who got themselves into situations where they just didn’t know better. We show you how the balloon payment works as well as the neg am loan. People got in way over their heads, which was fine as long as property values kept going up. When that stopped, people got into trouble and then.. foreclosures. The banks have themselves to thank for not doing a better job of informing lenders of the risks on some of these fancy financing options they offered. Of course the borrowers could have done more due diligence!
In the chapter I walk you through how the numbers work and I show you a few difference scenarios. When I am finished there will be a place where you can click to watch a video tutorial on how to set up your effective interest table in Microsoft Excel so that you can calculate your own payments. I use this to demonstrate what people were really getting into financially when they took these financing options. If people in the past had shown you the numbers the way I am showing you now, there is a good chance many people would not have gotten into these situations and we may have been able to avoid this mess we’re in. Of course if you have the money, now is a great time to buy, but no more 100% financing, balloon payments, or negative amortization loans!
In the first video tutorial I walk you through a Microsoft Excel Tutorial on how to set up your effective interest table.
- This lets you calculate you interest and payments for the entire term of the loan.
- I show you how to set up the table.
- How to write simple formulas in excel – nothing more complicated than addition, subtraction, multiplication, and division.
- We will also show you how to format the table to look nice, which makes it easier to read and understand.
- Finally we will demonstrate how to use the powerful goal seek command to calculate the monthly payment.
In the last section of this chapter we illustrate the following using a link to an interactive video tutorial embedded right in your E-book:
- How to set up your books in QuickBooks as an individual home buyer.
- How to record the purchase of your home – we’ll look at a sample purchasers final settlement statement and book the entry in QuickBooks.
- How to calculate your monthly payments (a review of the previous video)
- How to record your payments in QuickBooks.
- An analysis of the Mortgage Payable and Interest expense.
It’s a GREAT first chapter walking you through the basic financial part of buying a home. Can’t wait to release this!!
The first chapter of the book will be on purchasing your first home. I’ll go over some of the important things to know about how to determine what price you can afford by looking at your income and going from the monthly payment you can afford to the total price of the home. This will help you narrow your search down based on knowing the total price of the home you can afford. I will also talk about some important things you should know about inspection – what the inspector knows and what he or she doesn’t know. We’ll set up a template in Microsoft Excel that will enable you to do the math on the costs and then I will show you how to record the purchase of your home in QuickBooks. This will of course include how to set the property up on a set of books and how to track any improvements you make to the property.
In Chapter 2 we will start to see what this looks like in the context of renting out that home.