What is best option ( Related to Mortgage & Line of Credit)
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Location: Mississauga - Square One
Posted on: 13-11-08 13:51:26
Yeah ur rite Seenappa....
Today an analyst has a price target for Notel as ZERO.... they are predicting bankruptcy for the company...
So many people being layed off... CI Financial, RBC, Linens and things are closing their doors for ever... and u all know the saga of the Auto Industry (which will have ripple effects in the other industries as well)......
At this time, if we can secure our jobs ... we will come out of this mess in flying colors......I urge all the fellow desis to be careful in their spending and to draw a line between "I need" and "I want" during this economic turmoil
Location: God's own country
Posted on: 13-11-08 16:56:27
Quote:
Originally posted by seenappa
For instance, Nortel was 'The' stock to own couple of years ago. It was at 124$ per share. Yesterday, it was at 80cents/ stock.A penny stock to be precise.
seenappa
Just a clarification.
2 years ago, Nortel shares were consolidated based on 10:1 ration (It was consolidated but the ratio could be wrong). So this meant that if you had 1000 shares before consolidation, after consolidation, you would be left with 100 shares. The aim of consolidation was to make the stock attaractive to big institutional investors. It has a 52 week high of $18.
So based on the consolidation, Nortel stock is worth just 8 cents now when compared to the high of $125 during the dot-com boom days.
Peace by TK
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I am a Gents and not a Ladies.
Thanks all for contributing
Here is some response from my friend after checking your replies
For praticm-
His need was 1800-2000 sq ft even when he bought existing home say 8-10 months ago
But that time house market was sellers & in general house prices was costly
So he could afford only 1200-1300 sq ft that time
So need is still same.
You are right down payment will be more say around 60K but not certainly 80K, as he is getting some amount from existing home
For investpro-
No PM from you at my email address
can you send again, if don't mind?
For all-
The house at present, he is negotiating was around 450-460K almost 8-10 months back ( with upgrades)
Now builder is almost ready for 415-420K with most of upgrades
So my friend's logic is if he can't afford or buy this time a big house, then it will never be. As house prices is almost certain to go up after few months. Of course it may be after 6-8 months or even after one year.
This time is the LOWEST market can go. He feels house prices will not go further down
Of course, all things said about DEBTS , Mortgage, interest rates are CORRECT
Lets say economic situation & house market stabilise soon in say few months, but then house prices will go UP again & he can't afford to buy a BIG house
Thanks again, will write more after discussing with my friend soon
Just a last question? does it make any difference where my friend is located in Canada?
Quote:Ah, then the need is not 2000 sq ft, but the desire is.
Originally posted by mumdxbcan
For praticm-
His need was 1800-2000 sq ft even when he bought existing home say 8-10 months ago
But that time house market was sellers & in general house prices was costly
So he could afford only 1200-1300 sq ft that time
Had the need been 2000 sq ft, the 1300 sq ft would not have worked for him.
By living in the house for last 10 months, your friend has proven that his need is only 1300 sq ft.
He is clearly expanding his "needs" simply because real estate prices have fallen.
By previous statement still holds - if prices fall further, his "need" will change again.
He might as well admit the fact that he wishes to upscale and speculate and deal with it accordingly.
Quote:This is contrary to all indications.
So my friend's logic is if he can't afford or buy this time a big house, then it will never be. As house prices is almost certain to go up after few months. Of course it may be after 6-8 months or even after one year.
This time is the LOWEST market can go. He feels house prices will not go further down
Your friend is perhaps the only person in recent days who feels that RE market has bottomed and is ready for a re-bound.
Historically, RE markets have never, ever rebounded within a few months of falling.
RE trails equity markets by at least 2 years, if not more.
Recall the previous significant RE recession was in the early 1990s, i.e. over 15 years ago and it took several years for RE to recover.
Even if we were to accept your friend's position that RE market is going to rebound within a couple of months and he's ready to take out a HELOC loan, then his best strategy is to NOT sell his current home.
Take out a HELOC for $40K, take the 10% down payment he has and buy the new house (assuming he has good credit) on a variable rate, open mortgage.
Then wait a few months for RE prices to go back up (as he expects).
THEN sell current house, pay off the HELOC plus current mortgage.
He should still have a surplus because the current house price should have appreciated so he should make more than 40K in equity (less expenses).
Take that extra profit and throw towards the new mortgage.
If he wants to speculate, then this is the way to do it.
Quote:
Lets say economic situation & house market stabilise soon in say few months, but then house prices will go UP again
And it is equally likely that I will play James Bond in the next film.
Quote:Yes, mortgage rates and lending practices differ slightly across provinces.
Just a last question? does it make any difference where my friend is located in Canada?
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by pratickm
Ah, then the need is not 2000 sq ft, but the desire is.
Had the need been 2000 sq ft, the 1300 sq ft would not have worked for him.
By living in the house for last 10 months, your friend has proven that his need is only 1300 sq ft.
While I agree with your explanation of difference between need and desire - it may not hold entirely true in this case. I will give you my example:
My need presently, I am sure, is a house of about 3200-3500 sft since I need 4 bedrooms and one study, apart from separate dining and living room (because of my lifestyle - I have a lot of weekend parties at my home) and I have good furniture which is presently totally crammed up. My desire is to have a 5000 sft house where I can have a separate room to be made as media room where I can have a nice home theater and projector and a small dance floor. But presently I am living in a 2600 ft house which is affordable to me.
Speaking about having lived in a house of 1300 sft does not mean that that was the need. I know if I have to, I can also live in a 1000-1300 ft apartment and I still will be able to stretch my legs fully - but that does not mean my need is 1200sft apartment - because then almost every family's would be the same.
Another of my neighbour and friend is actually now trying to upgrade from his 2400sft house to 3200ft house - even with one of his two children gone to university in another town (meaning thereby the need has actually decreased). His life style is very similar to mine, and he always had the need and wanted to run a part time office from home, but only now he has the affordability - so he has started looking for a bigger house.
His desire ofcourse is have a 10k sft house with a pool etc!!
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Chandresh
Advice is free – lessons I charge for!!
Location: Mississauga - Square One
Posted on: 14-11-08 15:36:27
Thanks for updating ur friends point of view....
However, I disagree with the fact that the house prices are the LOWEST now...... Everyday you hear big companies laying off people.......which is contagious to the other industries in the near future...... and the ongoing turmoil has taken the crap out of the consumers confidence.. which will further drive the prices overall (commodities and housing) so the this is just the beginning of the bigger pain yet to come..... all financial papers and news are talking about the recession, depression and deflation.........I suggest that your friend should do a little more homework by reading news more often before he makes this big decision......which could save him his hard earned money
Location: carl sagan's universe
Posted on: 14-11-08 16:36:45
And here I am desirous of downsizing to a 1600-1700 sq ft home!
Oh well
