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.
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.
2 comments
I worked in the mortgage business in almost every capacity. It starts with the real estate agent showing them homes at their max and beyond level. Sets them up to be disappointed in anything lesser. Young people always want homes like mom and dad. When told NO they would pitched a screaming fit. And I really mean a screaming fit and cuss me like a sailor. I’ve been called a lot of different things but the worst ever was a minister. It got so bad I hung up on him. FHA had a program with a subsidized payment. Everyone got almost the same house plan, 3brdr 2bath homes. These were for people who would never be able to own. Lots of happy people and when announced we had a line out around the block. Foreclosure on those was almost non-existent.
Interestingly, the “received wisdom” of home purchasing when I was young and looking around was “As soon as you can buy anything, buy a house you can just barely afford.” It was lunacy, of course, but a lot of people swallowed it — probably because real estate agents pushed the idea of home ownership as “an investment,” which it is not and never has been.