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.
I have begun to write an e-book on Accounting for real estate. The idea is to create a sort of ‘video pop-up’ book. What this means is that for example I will write up a section on a certain aspect of accounting for real estate – such as planning your purchase.
- The e-book will of course contain screen shots of tables in excel and QuickBooks and other programs where appropriate and then those screen shots will be linked to video tutorials that will play on the web.
- These video tutorials will walk you through how to do what is being described in the book. So you will REALLY LEARN not just how to understand the accounting, but how to use this knowledge in a practical application.
Tomorrow I will be finishing the About section and beginning the first chapter. This first chapter will take a look at how to get into a home like the one shown on this page. Each week on this blog I plan on posting the image of another “Dream Home” from one of my favorite websites www.dreamhomes.us. I go to this site for inspiration on a regular basis. The only thing stopping us from getting into a home like this is thinking we can’t get into a home like this.
My first chapter will show you how to go through the numbers to figure out what your payment will be on a $5,000,000 home.
- I will walk you through understanding all of the dynamics of purchasing a home –
- The accounting for your purchase
- What happened to a lot of people who bought homes and lost them in the real estate crash.
- What did the lending industry do wrong accounting-wise?
- Where did the lenders go wrong on the accounting, and where did the home buyers go wrong?
- I’ll share a personal story about how an unscrupulous mortgage broker tried to get me out of a really good loan situation on my own home and into a disaster that would have cost me my home had I listened to her. How I knew better than to sign her loan docs.
In the final part of my first chapter I will side track a bit into what kind of income one would need to be earning to realistically afford something like this. So hopefully my readers can set their sights high. The reason people who make it big do is because they think big. Really big! Why can’t you? Don’t worry about how, just worry about thinking “I can. It’s possible.” Just don’t rule it out.
HEY CHECK THIS OUT!.. If you sign up for our video club I will send you the e-book for free when it is finished – expected date of release is 1/1/2010. The video club membership gets you a monthly e-mail with a catalogue containing links to every video tutorial we put out there including all of the full length video tutorials in our main site’s learning center.
My first E-book will be on Accounting For Real Estate, using QuickBooks. This will be the blog that will stand behind the book and hopefully invite people who are specifically interested in real estate to join in on the dialogue here.
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