All of them designed to get people into more house than they can afford.
Look, I understand the desire to have a nice home in a good neighborhood. But, taking on more debt than a family can realistically pay back is NOT the way to do it.
This newest scam – the Buy-Down – is similar to the Balloon Payment Scam of previous years. In this new scam, the sellers artificially reduce the payments for several years, then the payment resumes at its normal level.
The trouble is, to manage the reduced payments, additional money is added into the mortgage, making successful repayment even more unlikely.
Look, I get that people don’t want to be told there are basically only two choices in a retail market with rising home prices:
- Trim your Want List to bring the cost of a home down
- Fewer or smaller rooms
- Smaller yard
- Less desirable neighborhood
- Home needs more fixing up, not just cosmetic, but major – plumbing, electrical, roof, etc. And that’s assuming that you are willing or able to handle the fix-up with Sweat Equity.
- Accept that you will need to downsize OTHER parts of your life
- No extracurricular options for your kids
- Drive an older car with fewer options
- No more buying new – yard sales, resale shops, used appliances or hand-me-downs from family members
- Less free time – no eating out, manage your own yard without paid help, get a second job
- Raid retirement funds, put off retirement
I didn’t think the more expensive home was worth it. We found ourselves in a squeeze when we bought our first home, then couldn’t get local work. My husband had a long commute for 3 years, until we sold, and bought a more affordable home nearer a better job market.
From that, we learned our lesson – ALWAYS UNDER-Buy. Buy less house than the agents tell you that you’ve been ‘pre-qualified’ for.