| The United States of Foreclosure - Subprime fiasco to trigger ...
The stock market is about to crash. The only question is whether it will quickly fall down the elevator shaft or follow the jerky flight-path of a man pushed down a stairwell. Either way, the outcome will be the same; stocks will nose-dive, the dollar will plummet, and the bruised US economy will be splattered on the canvas like George Foreman in Rumble in the Jungle. Troubles in the sub-prime market have just begun to materialize and already 38 main sub prime lenders have gone kaput. Foreclosures have reached a 37 year high, and an estimated 2 million homeowners will be put out on the street in the next few years. And that's just for starters.
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First time home buyers beware
While buying your first home is exciting, it's also an event that's high on the stress scale, according to Chartered Accountant Philip Maguire, partner, Caledon Mills Consultancy Ltd. in Toronto. "First, make sure you can afford a house by preparing a budget. This is one of the largest purchases you will ever make, and you are assuming a significant financial obligation." Chartered Accountant Dwayne Oberle, president, First Choice Financing in Waterloo, says it's important to get your mortgage structured in the best possible way, right from the start. "Mortgage interest consumes a huge part of your monthly payments and adds up over the years. Talk to a financial institution or mortgage broker to help determine what you can afford and the best mortgage for you." Once you've drawn up your budget - including mortgage payments, property taxes, utilities and an extra 10 per cent for unanticipated expenses - Maguire advises you compare it to your monthly revenues and ensure you have a buffer.
Everything in the garden is lovely. It's just a shame about the house
Ben Bernanke says he's not too worried about the chaos that has erupted in America's wobbly 'sub-prime' mortgage market. Overstretched buyers may be losing their homes, scores of gung-ho lenders may be going bust, and prices may be plunging in prime real-estate hotspots, but the central banker can take a sweeping view - and, so far, Bernanke reckons the problem is 'largely contained'. He may soon be forced to change his mind. An alarming study by Ivy Zelman at Credit Suisse suggests sub-prime is only the tip of a very nasty iceberg. .
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