There is a recent news story how a certain individual is being forced out of his house and a bunch of do-gooders are going to bat for him. Now for the rest of the story, as a certain newsman used to say.
The man in the story is retired. He used to be in a branch of the military. Retired from it. He is also good with his hands doing carpentry type work and the like. Sounds like someone who should have saved up some money along with being employable, right?
He says that he can afford to pay $800 to $900 a month for a mortgage, not the $1200 to $1500 he is either paying now or the bank is willing to re-finance to. His mortgage is in excess of $250,000. Hey, wait a moment? How does a middle aged guy end up with owing $250k on a mortgage. This can be usually one of two reasons:
a) he traded up to a house more expensive than he could really afford
or
b) he got greedy and decided to re-finance in order to have spending
money on something else.
The fact is not everyone deserves to own his own place. He (or she) cannot budget himself accordingly.
Society does not need to reward him. That is what caused the big run-up in real estate values that eventually caused the housing market to crash. We let anyone and everyone buy a house because in America it is supposed to be an entitlement, like getting a driver’s license.
Well, it shouldn’t be. I bought my first place- a townhouse- around 1984 and paid $56,000. My real estate agent talked me into getting an FHA loan. I was embarrassed. She said that I shouldn’t. Everyone did it and it allowed me to pay only 5 or 10 percent down instead of 20. I fooled her and put down 15 percent. I felt like a mogul. The other benefit, she explained, was that it meant that the Federal Government would insure the loan and back it in case I defaulted. I couldn’t argue with that logic so I did apply for the FHA loan and got it.
Feeling a little richer, I put down 20% on my current place. I’ve refinanced twice since the original mortgage was taken out and have lowered the rate and monthly amount to pay significantly. I am not a man of means but one who takes his obligations seriously. I bought within my budget. The current value of the place is appraised less than the purchase price of 14 years ago. But, that’s okay- everyone’s is. One day it will come back. And even if I never make a profit when selling it, I still am ahead of the game because I have a roof over my head. Do-gooders please stay away. Okay, I’ll call you if I need you. Hopefully not.