Archive | Personal Finance

Taxpayer Tea Parties: Pointless protesting or ardent point?

Posted on 26 April 2009 by Jacob Jasperson

There has been a lot of talk in the news lately about these so called “tea parties” around the country. A few of them even took place right here in Wisconsin. I had the opportunity to attend the rally in Madison, and since most Marquette students did not get the chance to attend I thought I would relay the basic message back to the campus. After all, we wouldn’t want people to think that Marquette is a community that is sheltered from the happenings of the state of Wisconsin…

First, some history: The original Boston Tea Party took place on December 16, 1773 and was the result of a number of issues. The first of such issues was the notion of taxation without representation; the Tea Act of 1773 was the main issue of dispute between the colonists and the legislature.

The colonial resistance to the Tea Act had little to do with high prices or taxes; in fact the price of legally imported tea was decreased by the Tea Act. It had much more to do with the notion of taxation without representation. Colonists were not willing to pay taxes levied on them by representatives not of their sovereignty. It was for this reason that the Tea Act was opposed, and why the colonists refused to accept the tea and ultimately destroyed it.

The call for a taxpayer “tea party” rally became nationally recognized when Rick Santelli, commentator for CNBC, promoted the idea of a “Chicago Tea Party” on the floor of the CME Group in Chicago. He said that the government was “promoting bad behavior” and made several other comments critical of the Obama administration. Support ensued from all around the country, and tea parties began popping up nationwide.

Wisconsin had several tea parties within the state: Racine, Appleton, Eau Claire, Fond du Lac, etc. The largest one, however, was in our state capital. Over 8,000 people gathered to protest the high levels of government spending that has been taking place. The event had a great line up of speakers: Congressman Paul Ryan, Wisconsin Americans for Prosperity Director Mark Block, radio talk show personality Vicki McKenna, Pastor David King of the Milwaukee God Squad and many more.

Immediately following the event, all members were asked to visit their local representatives’ offices and take one tea bag to each of their elected officials: one for their state assemblyperson, one for their state senator and one for the governor.

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Regardless of your political position, I think we can agree that 8,200 people is an impressive display. Perhaps our elected officials should pay closer attention to what their constituents are saying… ????? ????

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Credit Union vs. Banks: Where should you put your money in hard times?

Posted on 31 March 2009 by Jacob Jasperson

It’s the age old question: where do I put my money? I want it somewhere it’ll be safe, but I still want it to grow. But I don’t want to lose any of it. And I don’t have time to manage it. And I want it available when I need it. Which is now.
Historically, we’ve turned to banks for this sort of thing; a nice safe checking account or a money market. Yep, that’s where I’ll go – the local money depository. I know my money will be safe there, and for the safety I’m getting I can’t expect any better return…right?

Maybe not. One often overlooked establishment in the financial sector is the credit union. Credit unions often times have better rates than banks on loans, checking and savings accounts.
But for those of us who are unfamiliar with the concept, let’s run through the basic differences. First of all, who owns it? A bank is owned by shareholders of the bank – investors. The bank, in turn, does what any good corporate citizen does: it tries to make the investors happy.

A credit union, on the other hand, is owned by the members of the credit union, very similar to a mutual company. If you are a member of the credit union, you own part of the credit union. So, in theory, instead of trying to please investors, the credit union is trying to please you.

Since we’re talking about mutual companies vs. stock companies, where do the profits go? In a stock company (the bank), the profits go back to the investors in the form of higher stock prices. In a mutual company (credit unions), the profits go back to the members of the credit union, in the form of lower loan interest rates and higher dividends.
A common misconception is that credit unions are not FDIC insured, and so people are often weary to invest. However, all federal credit unions must be FDIC insured.

Let’s take a look at some local banks here in Milwaukee: US Bank and Wells Fargo. The average interest rate on a savings account is 0.1 percent at US Bank, and 0.05 percent at Wells Fargo. If you wanted to open up a money market at US Bank, their best rate is 1.20 percent; and you need to have $100,000 or more in that account to get that rate (the lowest bracket is 0.25 percent). With Wells Fargo, you can get a 0.15 percent rate, but only if you link that account with another account at Wells Fargo.

Now let’s look at some local credit unions. Landmark Credit Union has a premier checking account with a 7.25 percent rate. Their money market has a 0.3 percent rate; still not great, but better than US Bank and Wells Fargo. Prime Financial Credit Union has a checking account with no minimum balance and a 3.01 percent interest rate. Their lowest money market has a rate of 0.5 percent , the best of any we’ve looked at.

As a disclaimer, please do not accept these rates as set in stone, as rates tend to fluctuate over time. Do not take a copy of the Warrior into the local credit union and expect them to give you these rates. Check with your local financial advisor before making any changes in your portfolio. What you can do, however, is call some banks, call some credit unions and get some quotes. The more information you have, the more intelligent a decision you can make.

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Stimulus Package Deal: Did Partisanship Stop at the Water’s Edge?

Posted on 29 January 2009 by Jacob Jasperson

The “American Recovery and Reinvestment Act” of 2009, the proposed government stimulus package,, is set to be introduced sometime in the very near future. The legislation is supposed to focus on job creation, state and local stabilization, infrastructure and energy efficiency, among other things. How effective was the new administration at getting what they wanted into the proposed legislation?

Some brief points of the bill are as follows:

$454 million aimed at modernizing Agriculture Research Facilities
$350 million for Watershed and Flood Prevention Operations
$2.825 billion for broadband loans and loan guarantees
$3 billion for the Edward Byrne Memorial Justice Assistance Grant (anyone know what that is?)
$400 million for “Science” (that’s really what the bill says)
$4.5 billion to improve, repair, and modernize Department of Defense facilities
$250 million for the Mississippi River and its tributaries
$335 million for HIV and sexually transmitted diseases prevention programs

The bill isn’t all pork, however. There are several good provisions, including money allocated for small business tax relief. But the real question you probably have right now is, “so what?”

I don’t know how many of you are planning on getting jobs in the next 6-12 months, but if you are than this bill will directly affect you.
I don’t know how effective this piece of legislation will be at increasing jobs or capital. I don’t know how effective it will be at lessening the burden that many American’s are shouldering right now. I don’t know how effective it will be at increasing government transparency (another main portion of the bill). That is all to be determined, based on the final language of the bill and the response of the market. But if the aim of the Obama Administration is to create jobs and lift us out of this recession, I doubt that increasing our funding of “science” is going to accomplish that.

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Top five reasons the auto industry is insoluble

Posted on 21 November 2008 by Jacob Jasperson

With news in the past week that GM, Ford and Chrysler, the big three, would be seeking part of the financial industry bailout to stay afloat, one has to wonder what exactly is going on right now in this economy. This economy that was built on the foundation of “life’s tough, so what?” This economy that manifests itself in profits and losses, every man, woman and child for themselves, take what you can get and give nothing back. When did we let ourselves get to the point of having companies that were “too big” to fail?

I know there are many out there who feel the auto industry deserves to be saved; we can’t afford to lose all those workers, those workers can’t afford to lose their salary and allowing the big three to go under will devastate the economy.

All valid arguments, but I would like to add something to the debate. The auto industry is insoluble. I’m sure if you’ve been watching the news or reading a newspaper you’ve heard that argument. I would like to outline here the five reasons the auto industry in the United States cannot be saved.

1. In a global economy, let others do it better. Adam Smith would be rolling over in his grave if he heard about the auto industry in America. Capitalism is all about the most efficient producer producing (i.e. absolute advantage). Let’s be honest here, Japan makes a darn good car. And they can do it for relatively cheaper than here because they don’t have to pay union wages or benefits. This does not mean, however, that they cheat their employees or deny them a fair wage; for one thing, Japanese wages don’t have to include healthcare costs.
2. U.S. auto makers make bad cars. Gas guzzlers, poor designs, unreliable. The last few models to come through the big three have been better, but you can’t make up for years of poor manufacturing. People have a much longer memory when it comes to bad products. This is the U.S. auto industry reaping what they’ve sowed.
3. Pension costs add $2500 per car. I can buy a car cheaper than that! OK, maybe not, but still, you get the idea. Pension systems are terrible and not built for long term use. Any normal business would see that IRA and private accounts are clearly the way to go, and make the transition. The big three wasn’t able to do that.
4. GM has 7,000 dealers compared to Toyota’s 1,500. This goes hand in hand with my second point: not only do domestic auto makers make bad cars, they make them in all varieties. Toyota’s small numbers of large dealers make them better equipped to advertise, market, and sell their product. Why doesn’t GM simply close some of these stores? Many of them are protected by state laws, making them very expensive to close.
5. Ford burned through $7.7 billion in cash in the third quarter. Does anyone think another $25 billion is going to make any difference?

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The Community Reinvestment Act: Mixed results

Posted on 23 October 2008 by Remington Tonar

Over the past few months the American public has been inundated with information on the current financial crisis, which will surely burden global economies for years to come. Certainly, there are a multiplicity of factors that contributed to the economic downturn that we’re currently experiencing; one of these factors is the issuance of sub-prime mortgages. However, there is an aspect of the sub-prime crisis that has been discussed by numerous economists, but has not garnered much media attention. This aspect, is the attempt of the government (including both Republicans and Democrats) to alleviate racial and socio-economic discrimination by mandating that lending firms give out loans to sub-prime borrowers.

One often unmentioned way that government regulation contributed to the sub-prime crisis is the enactment of the Community Reinvestment Act (CRA) of 1977. According to Russell Roberts, a professor of economics at George Mason University, in 1995 the CRA was strengthened, leading to a massive 80% increase in the number of loans given out to lower income households. In the last few years of the 20th century, companies like Bear Stearns and Countrywide lent billions of dollars in CRA loans to sub-prime borrowers. Soon, these companies were securitizing these mortgages, packaging them into collateralized debt obligations (CDOs), in order to further capitalize on the government’s mandate – and increasing demand for sub-prime mortgages. Fannie Mae and Freddie Mac backed these loans, being pushed to do so by the Department of Housing and Urban Development, which in 1996 mandated that over 40% of their mortgage guarantees had to be issued to people or households who made below the median income in their geographical area. Eventually this mandate increased to above 50%. The Community Reinvestment Act, along with the Department of Housing and Urban Development’s mandate, forced lending firms to make loans that many knew might never be repaid. Coinciding with these regulations was the cultural push for higher home ownership percentages, i.e. demand for houses was increasing as well.

Of course, as demand for home-ownership increased, so did the number of sub-prime borrowers who sought mortgages to afford the houses that they felt society demanded they have. With the strengthening of the Community Reinvestment Act came a new push by the government to have lending firms issue sub-prime mortgages to make sure that all people, despite their income, could afford homes. Mandates by the Department of Housing and Urban Development forced Fannie Mae and Freddie Mac to finance these sub-prime mortgages, which the CRA had made possible. Bear Stearns, Countrywide, Fannie Mae and Freddie Mac are all familiar household names today. Many will blame the greed of these entities for the issuance of sub-prime mortgages and their subsequent securitization. Undoubtedly, greed played a huge part. However, beyond human avarice, government regulation also played a huge role in causing the sub-prime mortgage meltdown.

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Election 2008: Political economics 101

Posted on 23 October 2008 by Jacob Jasperson

With the election drawing near, and many voters still undecided (even here at Marquette) the Warrior thought it would be a good idea to shed some much needed light on the two candidates, particularly their economic policies and the impact it would have on Marquette students. All information and statistics has been taken entirely from the two candidates websites, unless otherwise noted.

Perhaps the focal point of Senator Obama’s economic plan has been tax cuts for the middle class, not the wealthy. In fact, it’s in the first paragraph of his economic plan, along with stagnant wages and rising prices. There are several points to Sen. Obama’s plan; in the interest of time, I chose the three points that I thought most directly pertained to Marquette students:

Windfall profit taxes on big oil
$50 billion to jumpstart the economy
End tax breaks for companies shipping jobs overseas

The windfall profit tax he proposes would tax excessive profits that oil companies make in order to fund his $1,000 emergency energy credit. This credit would be given to “American families” (though this term is not clearly defined) to help pay for rising energy bills. While the $1,000 may be a nice supplement for families, the tax used to pay for it would drive up the cost of oil, leaving American families with higher bills to pay in the end.
Senator Obama’s $50 billion plan to jumpstart the economy is actually a plan to protect one million American jobs that are in danger of being lost, according to his website. It is broken into two parts; $25 billion for a State Growth Fund, and another $25 billion for a Jobs and Growth Fund.
Senator Obama also mentions later in his website the need to create a National Infrastructure Reinvestment that would be in charge of funding road, bridge, and other infrastructure repairs. Senator Obama plans on allocating $60 billion over three years, which would negate the usefulness of the Jobs and Growth Fund (designed to do the exact same thing, as per his website).

The last point I want to talk about is a little misleading. Senator Obama wants to end tax breaks for companies that ship jobs overseas. While I agree that we need to encourage producers and manufactures to keep jobs in America, I don’t think we will be successful by taxing them more than is fair. The tax break Sen. Obama is referring to is the difference that companies need to pay when they ship their products from other counties into the United States. If the tax on the country of origin is less than the tax rate in U.S., the company must then pay the difference between the two – but not the whole tax. Ending this practice would in essence be an over taxation, and would discourage trade with the United States. On the other hand, one part of Senator Obama’s plan that makes a lot of sense is his worker retraining program. He wants to increase funding for worker retraining, which will be crucial in this age of globalization.

Much as the focal point of Senator Obama’s plan is middle class tax reform, Senator McCain has preached tax cuts across the board, in conjunction with decreased government spending. This is perhaps the single largest ideological difference between Senators Obama and McCain – big vs. small government. The three main points of Senator McCain’s plan that I want to talk about are:

Government reform
Better Healthcare
Supporting Small Businesses

Government reform has been a hot button topic in the campaign cycle. Senator McCain states on his website that he wants to bring the budget to balance by the year 2013, before the end of his first term in office. He cites several ways of doing this; reasonable economic growth through lower capital gains tax rates and corporate tax rates (to keep jobs here in America), a one year spending freeze on all non defense, non veterans discretionary spending, and fiscal discipline. The one year freeze I find particularly interesting; a good idea perhaps in theory, with question marks on the application side.

Another hot topic in the campaign has been healthcare. Senator McCain seeks a market approach to fixing healthcare; he wants to lower costs through competition and technology improvements. He also specifically cites smoking on his issues page, stating that he wants to increase smoking cessation programs – perhaps an unpopular idea among hard line conservatives, but one I find to be intriguing. He also talks about transparency in healthcare costs. This is something you can appreciate if you’ve ever received a hospital bill.

Finally, Senator McCain talks about supporting small businesses. One of the main points he makes in his small business section is that by lowering the costs of energy, we can eliminate much of the overhead these small businesses pay. He goes into greater detail in his energy section, but does strongly support drilling domestically for oil, along with increased nuclear energy and clean coal. Senator McCain also supports decreasing the corporate tax rate from 35% to 25%, a move he says will help American stay competitive in this global economy. While I agree lower corporate tax rates are essential for growth here in the U.S., it certainly isn’t essential for small business growth, as many of these businesses are organized as a sole proprietorship or LLC. He also takes time to mention free trade in his small business section, which he feels will open the United States up to more business opportunities, rewarding the small business owner looking for that niche.

Senators Obama and McCain have economic plans as different as any I’ve ever seen; both have good points, and both have bad points. We have two very different approaches to solving our economic crisis, and you as the voter get to decide which one is the best. Don’t take that responsibility lightly. Get informed on the issues that matter to you; the economy, trade, labor, social issues, whatever you are passionate about. Apathy in life will only get you so far; to quote an episode of the West Wing, “Decisions are made by those who show up.”

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Tough Economy…Maybe I’ll Go to Grad School

Posted on 09 October 2008 by Jacob Jasperson

Most of us have invested a great deal of time and resources into our continued education with the hope that when we graduate it will return great dividends. And since we all attend Marquette University, we have invested significantly more than others; again with the hope that, in the long run, it will pay off.

And now, for some of us, the hour is at hand. The real world beckons. Just one little problem…well, maybe not so little…the economy stinks. Investment banks are collapsing, mortgages are defaulting, companies are laying off employees left and right. Not the image of confidence you want in your head when you go in for an interview. To give you a bit of an idea about how rough the market is, here are some facts:?

According to the Bureau of Labor Statistics, in the past three years 8.3 million people have lost their jobs. 43% of those lost a job they had held for at least three years, and compared to the previous three year period, a significantly smaller percentage of those workers found jobs again.

Wisconsin lost 23,000 private sector jobs in the past year, according to the Wisconsin Department of Workforce Development.
According to the Economic Policy Institute, 8.4% of Wisconsin is underemployed (which includes unemployed residents seeking but not finding work, discouraged workers, and part time workers trying to find full time jobs).

Ok that’s the bad news. And while you can’t single-handedly turn the economy around (contrary to the belief of everyone that runs for president), the good news is you can do something to prepare for it and make sure the time and money that you, or your parents, invested in yourself does not go to waste.

1. Plan, Plan, Plan. You need to be actively following market trends, figuring out what careers are hot (health care, computer programmer, teacher – surprised?) and which ones are not (anything at all related to investment banking…just kidding). Careers with a lot of potential and room for growth are the ones you want to be pursuing.

2. Double Major. This is so easy to do in the College of Business, and it can be extremely helpful down the road. At the very least, it makes you more marketable to employers.

3. Market Yourself Effectively. Revise your resume; talk about your skills. You need to be able to quantify to employers why you are an asset to the company. You need to show the company that you are more than simply a labor expense, especially in a tight economy. Point out your strengths, skills, and what you bring to the table.

With a little extra work, you will be able to conquer the job market and start getting that paycheck in no time.

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Stop keeping money under the mattress

Posted on 24 September 2008 by Jacob Jasperson

Financial instability, turmoil in the market, rising prices, falling stocks, mergers, foreclosures, the Four Horsemen of the Apocalypse; all signs of a market on the brink of the R-word. We won’t say the R-word here at “The Warrior”—it’s never a good idea to mention it out loud. But if you watch the news at all or listen to the radio or really are alive in any way you’ve heard analysts mention their likely dooms day scenarios.

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Most economists would agree that we are currently not in a recession. The generally agreed upon definition of a recession is an overall slowing of the economy. We run into a few problems here because there are many measures of the economy and hardly anyone can agree what a slowing is. So we turn to the National Bureau of Economic Research, a non-profit, non-partisan organization which assigns dates and lengths of recessions in U.S. history. They define a recession as, “a period of declining output and employment.” Whether we are currently in a recession, sliding into a recession, or coming out of a recession is really all semantics at this point; if you polled Americans they would all agree the economy is somewhere they don’t want it right now.

Therein lies the problem: consumer confidence. One of the key indicators of economic well-being, it has been far from stellar the past few years. Blame it on whomever you like, but it needs to change. We at “The Warrior” want it to start right here at Marquette. It’s no secret that the key to success is buy low and sell high, and what better time to buy than right now. Stock and home prices can’t get much lower, and every indication is pointing towards the economy rebounding in a few years or so. That makes this the perfect time to invest. But what to look for in an investment?

Real estate, despite what the market experts are telling you, is a good investment opportunity. There is a limited supply, and even though demand is down now it has to pick up eventually. Real estate is a great long term investment; that is if you have a couple hundred thousand dollars lying around. On second thought, don’t invest in real estate unless you have a lot of capital.

When looking for stocks, you want a stock with a high yield and low price. You also want a stock that gives out dividends. Why? The same reason money now is worth more than money in the future – you can reinvest. Diversify, diversify, diversify. You don’t want to put all your money in tech stocks and then find out that Silicon Valley burned down last night.

Finally, look down the road. It’s not a bad idea to start a Roth IRA account now, even if you can only afford to put a little in at a time. That’s the beauty of compound interest.


Don’t listen to CNN or CNBC all the time. Remember, they get paid to tell people what they want to hear, and for some reason people want the end of the world scenario right now. You can get a leg up on everyone else if you start now.

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New meal plan: do the numbers add up?

Posted on 10 September 2008 by Jacob Jasperson

Marquette has finally implemented a new meal program, due in large part to the fervent and consistent complaints that students brought to the Office of Residence Life. The Marquette meal plans represent a fairly competitive market, if we assume that each individual meal plan represents an actual firm (setting aside for the moment that we, as the consumer, actually have no choice who the University chooses as its food service provider). Students, as the consumers, must make a determination on the pros, cons, costs and benefits of each meal plan. Too many students, and in many cases parents, select a meal plan based on flat cost, without calculating the actual relative value per meal swipe. Now, although it’s too late to change which meal plan you have purchased, keep the following calculations in mind for next year.

By the numbers:
Carte Blanche: $1800 per semester, $50 Dining Dollars
Block 175: $1620 per semester, $100 Dining Dollars
Block 125: $1490 per semester, $150 Dining Dollars
Loyalty 50: $285 per semester, $0 Dining Dollars

If you do the math, the Block 175 shakes out to about $8.68 a meal, factoring in the dining dollars. The Block 125 is about $10.72, and the Loyalty 50 is about $5.70 per meal. The carte blanche is, quite obviously, impossible to calculate since you can eat as much as you want.

As with any all-you-can eat option, this is clearly the best choice if, a.) Money is no object, and b.) You make sure you use it enough. If you purchase the Block 175 or Block 125, bear in mind you are paying an outlandish premium for meals. At $8.68 or $10.72 per meal, respectively, you’re better off investing $40 at Sabor and eating all you can there. Considering what your swipe gets you with the new Meal Exchange program and the overall quality of residence hall food, the cost-per-swipe of both block plans seems outlandish. The Loyalty 50 is a nice choice for upperclassmen who don’t like to cook; $5.70 is a little more expensive than what you could make yourself, but not unreasonable as dining out comes.

Ultimately, the Carte Blanche is the best deal, if you can afford it, as it is a much more economical allocation of your resources. The Loyalty plan isn’t bad either if you’re a junior or senior, and with the Meal Exchange option and the new Café Italiano in Schroeder (see Arts & Entertainment for a review), these two plans are solid options for anyone looking to dine on campus. For underclassmen who purchased either block plan, my advice: go big or go home, get the all you can eat carte blanche next time around.

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Buy or rent?

Posted on 16 April 2008 by Barrett Willich

The vast majority of Marquette students has or will rent an apartment for their junior and senior years. Every month, students write a rent check to the slumlords who make a huge profit off of their condemnable buildings. After graduation, as students move off campus and into the real world, they need to think about whether to buy a home or keep writing rent checks. There are many advantages and disadvantages to each option.

But first, for those of you who are leaving the friendly confines of Schroeder, Straz, Mashuda, or Carpenter and moving off campus for the first time, here are a few things to keep in mind when renting. Find out what utilities are included. Does it include water, garbage, heat, electricity, or cable? All of these things add a substantial cost to the apartment. Also, be sure to read the lease. Many landlords have huge restrictions on the number of occupants, kegs/parties and pets (which I find ironic, because four guys can do much more damage to a place than a Labrador).

Now, for those of you who are moving to the real world, there is more to consider than just pets and kegs. Personal situations must be assessed to determine if it is appropriate to buy or rent.

First, can you afford to buy a place? Purchasing a home involves fees, down payments, taxes, mortgage payments, repairs, and more. Typically, renting is much cheaper and assumes less risk. As a side note, if you find a rental that is just a little out of your price range, you can try to haggle. If a building has lots of vacancies, landlords may lower their prices to fill the space.

Second, you need to assess your time horizon. If you are going to spend one or two years in your new location, then move somewhere else, renting is your best choice. If you are staying for a longer time, more than three to five years, buying may be a better choice. Some reasons to hold off from buying short term are fees and the mortgages payment structure. The longer you live in the house, the more those fees are mitigated over the years. Mortgage payments are structured with high interest payments during the first few years. This means you are not building up as much equity in the first few years as you do later on.

If you determine that buying a place is appropriate, you should hire a real estate agent and look for a mortgage broker. A real estate agent will know the area and can show you homes in your price range. Find someone you like who comes across more like a professional than like a used car salesman. A mortgage broker will help you set up the financing. Usually you should go with the mortgage broker who can find you the lowest rate.

Both of these people are salesmen and they work off of commission (meaning they only make money when they close a deal). In their eyes, it is always “A great time to buy.” Therefore, you should learn about the market on your own to decide if it is a wise investment. Research the local housing market, the general housing market and the financing market.

Buying a house is the biggest financial decision most people will make in their whole lives. Educating yourself is paramount.

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