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'Can I Afford It?' Home Edition

Thursday, 17 Jun 2010 | 10:25 AM ET

Home prices are down and your motivation to buy is up. But, Can You Afford It? Many realtors are saying you have to buy now because real estate prices are increasing. Suze doesn't think so!

Before you think about buying a home, here are two questions Suze says you should ask yourself:

  • What is happening to the price of real estate in my area?
  • Are mortgage interest rates increasing?

Here are the forces, she says, that need to be in place for real estate prices to rise:

  • The demand for homes must be greater than the supply. With all the homes for sale, all the short sales & foreclosures out there, the supply still far outweighs the demand in most places.
  • Employment is increasing. There are jobs for people and reasons people move into the area & need to buy homes.
  • Mortgage Rates decrease or are low

Currently, mortgage interest rates are low but Suze believes they will increase shortly. So, if you are about to buy real estate, she says you should lock in the interest rate now.

Now that you have the basic rules, share your opinion on whether the following people can afford to buy or not. Then watch Suze's answers on a special CAN I AFFORD IT? HOME EDITION of The Suze Orman Show, Saturday, June 19th at 9p ET on CNBC.

Here are a few you will see on Saturday's show.

Do You Think These Home Buyers Qualify?

Caroline, 25, and her fiancé graduated college a couple of years ago. They just got engaged and are looking to buy their first home.

How they would pay for it:
The couple is thinking about using 3-5 percent of their savings as a down payment.

  • Income: $6,700/combined
  • Expenses: $3,646/mo., rent $1,650/mo.
  • Debt: $46K Student Loans @2.48% - 6.8%
  • Savings: $21K Liquid, $9K Investments, $715 Retirement

Would you approve or deny?

Will Suze approve or deny? Find out on the Can I Afford It? Home Edition
of The Suze Orman Show, Saturday, June 19th on CNBC, 9p ET.

Debbie's Luxury Home

Debbie, 48, and her family have lived in their Bay area California home for 12 years. It's at the top of the market in their neighborhood. The home they want to purchase would be at the low end of the luxury area where homes are valued at $2 million to $10 million. She believes buying this home would offer better appreciation.

How they would pay for it:
Debbie and her family want to sell their current home and net approximately $1 million — $1.2 million, using that plus $500K — $600K out of liquid savings for a down payment. They would finance the rest.

  • Income: $25,995/mo. take home; $3,400/mo. rental income
  • Expenses: $25,685/mo.
  • Mortgage Debt: $493K interest-only adj. mortgage @1.75%, and $251K 30 Yr. Fixed @5.75%
  • Savings: $740K cash, $982K investments, $314K retirement

Would you approve or deny?

Will Suze approve or deny? Find out on the Can I Afford It? Home Edition
of The Suze Orman Show, Saturday, June 19th on CNBC, 9p ET.

Laura's Villa in Greece

Laura, 55, lives in Denver and would like to buy a retirement home in Greece. She is thinking of retiring in 10 years and has family members that live in Greece. Laura owns her primary residence, but has an equity line of credit on it.

How she would pay for it:
Laura would like to use 10 percent of her liquid savings and finance the rest.

  • Income: $3,885/mo. take home
  • Expenses: $1,992/mo.
  • Debt: $5,400 HELOC @3.5%
  • Savings: $591K Liquid, $502K Retirement

Would you approve or deny?

Will Suze approve or deny? Find out on the Can I Afford It? Home Edition
of The Suze Orman Show, Saturday, June 19th on CNBC, 9p ET.

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