Here is the thing – I do not own a house. I do not have a mortgage. Why? I cannot afford one here where I live. My rent is $1,949 a month, and a house equivalent in size to my apartment would be about $1 million dollars. This would mean I would have to carry a mortgage of about $5,400 a month, give or take a few bucks. Who in their right mind would give me a loan that big on our salaries?
The bank, that’s who.
However, I am not going to blame the banks for this crisis like so many people are doing. I am going to blame the people who took out the mortgages in the first place that they could not afford. That’s not fair, you say? I say it is, and here is why – every single person is responsible for their own actions. If a person decides to use drugs, it’s their fault if they get hooked. If a person decides to drag race in their car, it’s their fault if they get in an accident. If a person decides to spend themselves into credit card debt, it’s their fault. So why should this be any different? Buying a home is the single biggest purchase anyone will ever make in life, and it should not be taken lightly. Did you really think a $500,000 mortgage was a good idea on your $11 an hour job? Just because the friendly banker guy said it was does not make it so…the borrower is solely responsible for signing the paperwork and no one can make them do it. It is up to the individual to get a second opinion if they think someone is trying to pull something over on them.
Death Pledge. Did you know the the word Mortgage is actually a combination of two French words: the word Mort which means “death”, and the word Gage which means “pledge”? Me neither, till just the other day.
I know I will probably get a lot of flack for my opinion on this, but that’s how I see it. I would not buy a car without doing my homework, I would not invest in a company without doing my homework, and I surely would not buy a house without knowing what I was getting myself into. And no banker could ever convince me that I could afford a million dollar home, even if he promised to keep the payments at $1500 a month for the first 5 years of interest only payments. I know that come 5 years, I will probably not be making enough to pay the $5,400 a month for the mortgage – so I would not take the offer. Banks can be evil, I understand that…and that is why borrowers need to know what they are doing. But as evil as they are, they cannot force a mortgage on anyone.
And just to show you that I am not heartless, I feel for people who lose their homes due to unemployment for a long time (like someone I know who is out of work due to the writer’s strike here in L.A.), or someone who has some kind of medical issue that hampers their ability to pay for their house, or any of the other legitimate reasons why people get foreclosed on. But losing a house due to taking out too much of a mortgage is a different story. The American Dream has turned into just that – A Dream. People think they deserve more than they can afford, and now the government is swooping in to save them from their self-created problem. I did the responsible thing and did not buy a house – I don’t think the government is going to give me a cookie. Sure, the economy might collapse if they don’t save some of these homes, but maybe that is what we need to make people plan a little bit better the next time around. But the economic problems this country is facing is not just due to the mortgage crisis – we overspend, we misuse funds, we think we deserve whatever we want at whatever price it may come at. This goes for the government all the way down to your next door neighbor. We need some fiscal responsibility here, not more handouts. Recession here we come, and I don’t think it is necessarily a bad thing.
Here is the complete list of participants in the series “Home Finance: Mortgages and the Real Cost of Home Ownership”:
- Why Renting is Right for Us Right Now @ Mrs. Micah
- Frugal Hacks for Your Home @ Being Frugal
- Why We Have an Adjustable Rate Mortgage @ My Dollar Plan
- Debt-To-Income Ratio and Why It Matters @ Moolanomy
- Catch a Falling Knife – Buying the Housing Slump @ Millionaire Money Habits
- Can we afford the Payments @ PaidTwice
- Pay off Credits Cards with a HELOC @ Debt Free Revolution
- So You Want to Buy a Fixer Upper @ Remodeling This Life
- Frugal Hacks For Your Home @ Being Frugal
- American Subprime Crisis””Should We Care @ Plonkee Money
- Mortgage escrow accounts Explained @ Cash Money Life
- Don’t Use Your House to Pay for Your Life @ Rocket Finance
- Why the Sub-Prime Crises has not Affected Canada Yet @ Four Pillars
- That Damned Rent vs. Buy Question @ Blueprint for Financial Prosperity
- Predatory Mortgage Lending and the Subprime Market @ Chance Favors
- After Foreclosure Guide to Housing: It Ain’t Easy @ DebtKid
- How to Avoid Foreclosure – The Definitive Guide @ Credit Withdrawal