Sunday, August 31, 2008

A new blogger's log: Post 3

Week of 8/3
Still trying to figure out how to do tables. I spent hours trying to find hints on how to create tables without having to learn HTML. Finally broke down and decided to learn some HTML. Found a great site that has an on-line tutorial. Learning most of what I needed to know about tables took maybe 30 minutes! You can also try writing HTML code and have it validated there.

Table creation is somewhat laborious, so I started developing some techniques to make the process less labor intensive. Then I found a very useful site that generates the appropriate HTML code automatically. Only problem is there are some additional Blogger-specific table formatting issues. I was able to find some hints on how to deal with those, and all seemed acceptable, though not perfect, when I finalized my post. (However, subsequently I discovered even more formatting issues when the posts are distributed via RSS or e-mail. If I ever get my tables to look the way I want them to, I may do a special post on tables.)

The only remaining problem for the post was including a picture. The mechanics of inserting a picture are trivial in Blogger. The biggest problem was finding a suitable picture without violating someone’s copyright. I found a good source of free pictures at Public Domain Pictures.

Week of 8/10
I’ve started a list of ideas for potential posts. I have about 50 items on the list so far, in various categories. However, every time I start a new post, part way through, I find myself drawn back to housing. So, here I go again with another housing post. I just think there is a lot of misinformation about housing out there. I hope I can help.

Besides working on my next post, I am trying to get a better understanding of searching and search optimization. I haven’t really developed a formal strategy for my blog yet. However, already it is clear that because I don’t want to focus on any one area it will be difficult for me to develop a “following.” Therefore, I’m thinking a larger percentage of my traffic must come from searches than is typical for a blog. One very useful book I have found to help me address this issue is Search Engine Optimization (SEO) for Dummies.

I have some Google alerts searching for posts related to housing. This week, for the first time, one of MY posts came up! In addition, again for the first time, a visitor found the site via a search rather than via a direct link. My final milestone this week was my first visitor from outside North America and Western Europe. This is fun.

Week of 8/17
I have created a spreadsheet to track important SEO-related data such as the number of visitors, and my Google “page rank.” I’ve added the Google toolbar so that I can track page rank (Someday, I hope to actually have one). Another very useful piece of data is the number of inbound links to my site. This I am getting from Yahoo Site Explorer. However, virtually every new data source raises new questions. In the case of Yahoo Site Explorer, I am confused by a number of inbound links from sites that appear to be in the Soviet Union. When I go to these sites to find their link to me, I can’t find the link. What’s up with that?

Somehow, I manage to post “The Disadvantages of Buying a House” despite being distracted by SEO stuff.

Week of 8/24
I have yet to get a visitor via a non-Google search. That’s a problem. Google is, of course, my priority since they account for over 50% of all searches. However, I’m concerned about Yahoo and MSN. When I search for my posts using MSN I find nothing – which explains why I get no visitors from there. And, even though Yahoo Site Explorer seems to know about links to my pages, only one of my posts seems to be indexed. One potential issue is whether I should have included the “www” prefix in my initial URL submission. So, I’m resubmitting to both MSN and Yahoo to make sure they have the URL with and without “www.”

Friday, August 22, 2008

The Risks & Disadvantages of Buying a House

According to, "Nearly 12 percent of all Americans with a mortgage - a record 5.4 million homeowners - were at least one month late or in foreclosure at the end of last year."

According to, "21.8% of all U.S. homes, representing more than 20 million residences, were in a "negative equity" or "underwater" position ... in the year ended March 31 (2009)."

Risks and Disadvantages of Owning a Home

The many advantages to owning a home have been well publicized. However, the above satistics make it clear that owning a home is not without risk. To form a complete picture, you, the prospective buyer, need to consider the potential risks and disadvantages of home ownership as well. Understanding these disadvantages beforehand will give you a better chance of minimizing their impact and avoiding the fate suffered by these homeowners.

Less Flexibility

A mortgage is a long-term legal and financial obligation. More than likely yours will be for 30 years. Suppose two years from now: You have a great job opportunity, but in order to accept it you need to sell your house and move; or, you want to get married, or unmarried, and your new home is no longer appropriate; or, your financial situation has changed (e.g., what if you lose our job?) and you would like to reduce your home-related expenses. Because a mortgage is a long-term obligation, picking up and moving on short notice, for whatever reason, will be significantly more difficult. In fact,

Saturday, August 9, 2008

The Risks & Disadvantages of Low Down Payment Mortgages

Low down payment home mortgages expose buyers to more risk than many realize; high leverage substantially increases the risk of bankruptcy. This post explains leverage, and the impact that leverage has on 3-5% down payment mortgages. As a result, potential homebuyers with limited understanding of home mortgages will be more aware of the risks.

As in an earlier post, we are looking at a homebuyer purchasing a $100,000 home. He purchases the home with a 3% ($3,000) down payment, and takes a $97,000 mortgage. For this post, in order to simplify the analysis, let’s assume that it is an interest-only loan. Please note that we are assuming an interest-only mortgage only to eliminate the impact of the principal payments included in normal monthly mortgage payments. In the real world, an interest-only mortgage would generally not be advisable in this situation.

The Risk of 3% - 5% Down Payment Mortgages Can Be High Even in a Rising Market

A 5% Increase in Home Value
Home ValueBuyer's Equity
In 2 Years$105000$8000
At Closing$100000$3000
Change in $$5000$5000
Change in %5.0%166.7%

First, let’s look again at the impact of

risk in subprime low down payment home mortgages

The current version of this post is The Disadvantage of Low Down Payment Mortgages