I Wish I Had a Mortgage Problem

That way I could stay in that house I didn’t buy because I knew I couldn’t afford it, thanks to Pres. Obama’s latest way to ensure his re-election.

Back when I was renting a house, my wife and I dreamed that most American of dreams: home ownership.  We never considered it an entitlement.  We knew that like all dreams, it required a certain amoung of sacrifice on our part before we could do it.

So, the first thing we did was use that dream to empower us.  We took the energy we got from the desire to own our own home and used it to encourage us to pay down our debt first.  We didn’t spend money on things that didn’t get us closer to our goal.  We didn’t eat out.  We didn’t have cable tv.  We didn’t go on vacations.  We ate generic brands.  Lest you think we suffered, remember that we had a goal.  We didn’t have to do these things necessarily, rather, we did them because we knew it would put us in a better position when it came time to buy.

This took a few years, and we spent a lot of time looking at houses for sale.  My wife became an expert “home shopper.”  She could look those books with the listings and tell by the mds how long it had been on the market.  She tracked price changes.  She could look at a listing and tell you what they were trying to hide about the home, by looking at what they were focussing on.  She knew what counties had the better deals.

When we got the debt paid off, we already knew what kind of home we wanted and roughly where it was located.  We also knew how much we could afford.  Before we went to the bank to ask for the loan.

Let me say that again: Before we went to the bank to ask for the loan.

You see, one of the things we learned about the business of real estate is that when you sit down with a seller, his agent, your agent, and the bank, EVERYONE stands to gain financially in the transaction except you.  You end up with a six figure debt spread out over 30 years or so.  Everyone else gets paid, and the more money you borrow, the more they make.  So, I didn’t ask a real estate agent how much I could afford.  Nor did I ask the bank (how about you?) or obviously the seller.

When we bought our house, we got a good deal on a home that was priced below the true market value, and we knew we could afford it.  We weren’t “investing.” A home is a crappy investment…at least it is supposed to be.  When interest rates are low, some people are financially better off renting, believe it or not.  Invenstments are supposed to make you money.  If the entire market is going up, you might gain some equity in a home while you pay down a mortgage, but it’s going to cost you more money to buy the next home anyway.  Zero sum gain.

Unless, of course, home PRICES outrun real home VALUES.  I bought my home for less then $90k.  When in less than ten years Zillow had it listed for over $200k, I just laughed and waited for the crash.  You don’t have to be an economist to see that the math doesn’t add up.  But at least I could afford my mortgage payment.

A bunch of you knuckle-heads got too wrapped up in all the shows on TLC and HGTv that showed all those regular folks “flipping” houses, and got yourself stuck with two mortgage payments last year.  Started calling yourself an “investor.”  Or, maybe you saw all of your friends cashing in the equity and moving to better neighborhoods.  Interest rates were lower than they had been in years.  The “economy was booming” or so all the talking heads told you on tv every night.  You jumped on the bandwagon and let the banker and the real estate agent tell you how much you could afford.  When you whinced a little, they told you all about how you could lower that payment for the firts five years or so by getting one of those balloon mortgages.  You would have five years or so to either get that promotion you deserved, or even better, to sell that house and pull all that equity the “booming real estate” market was going to produce.

Then, the bubble burst.  Turns out, your house is only worth what someone will pay for it.  Zillow be damned.  And if half the country is trapped in a mortgage they can’t afford, and banks don’t have any capital for you to borrow anyway, how are you going to sell it?  Sorry about that.

Not really.  I’m not sorry at all.  At least not for you.  Looks like your president is about to fix it all up for you.  He wants to use my money to buy up your bad mortgage.  He wants to re-figure your home VALUE and give you a shiny new mortgage so you won’t be upside down any more.  Congratulations.  The nanny state has come to your rescue.  Meanwhile, folks like me who did the right thing get to pay the bill.  It’s called the Mo Mod.  You’ll be hearing about it soon.  Don’t worry, you get to stay in your big house with no yard in the nice part of town after all.  All them folks you have been impressing will still be impressed.

And I’ll still be in my house.  The one I knew I could afford before I bought it.  And don’t worry about my retirement that tanked.  I should be able to pay it off before I’m forced to retire from this job, and I’ll have plenty of time to get another job so I can eat.  And pay taxes that get spent on your old crappy mortgage.  Congratulations.