Don't do it!

Dear Dave,My husband and I have been married for three months, and we’re debt-free. Right now, we’re trying to save up a 20 percent down payment for a house. I work for a real estate company, and they’re really pushing us to take advantage of a first-time homebuyer deal. The program offers 100 percent financing, no money down and no private mortgage insurance. They say it’s a great deal. What do you think?Stacy

Dear Stacy,You guys are off to a great start! Don’t blow it now. Those people are wrong. I grew up in the real estate world, and this is a bad idea.

Slow down. It’s great that you guys are young and debt-free, but you need to do things that are smart for you. And for you, smart includes a couple of things. First, make sure you have an emergency fund of three to six months of expenses in place. Then, keep saving up for a big down payment.

You know, when I hear the advice you were given I just want to smack somebody. Haven’t the mortgage lenders learned anything from the last few years? Nothing down, interest-only and sub-prime loans are a big part of the reason for the financial debacle in this country. A house is not a blessing when you’re broke, and a bargain is only a bargain when you’re ready to buy!

I always recommend waiting at least a year after you’re married to buy a house. It takes that long to decide how close you want to live to your in-laws! Plus, you want to spend some time getting used to each other, and knowing each other even better, before making what will be your largest asset purchase.—Dave

Dear Dave,We hear all kinds of numbers relating to the economy every night on the news. To be honest, I have no idea what most of them mean. Can you tell me more about the Dow Jones Industrial Average?Ken

Dear Ken,The Dow is an index of the stocks of 30 selected companies. We’re talking about outfits like Wal-Mart, Coca-Cola and Nike – some of the big boys. The percentage that the stock prices of these companies rise or fall as a group, on any given day, is the Dow Jones Industrial Average for that day.

Technically, this index is not a good representative of what the stock market is doing because it only takes into account 30 companies. The S&P is a much better measure of what the market is doing, because it represents the stock-price activity of 500 companies.

Let’s say you’re watching the news, and a reporter tells you the market just went down 300 points and it was at 10,000. That represents only a three percent change, and that’s not big news – regardless of what some of the “experts” say.

Great question, Ken!—Dave