Tuesday, February 17, 2009
I have been thinking about the mortgage 'crisis' long and hard. I have listened to those blowhards in congress and the senate bloviate on and on about predatory lenders, confusing and complicated mortgages, the buyers didn't understand what they were signing, etc.
I am NOT buying it.
Permit me to explain. When I bought my own home a little over two years ago, I knew exactly what I was getting with an ARM (Adjustable Rate Mortgage) because I didn't have enough money for a down payment, and my credit rating was good, but not great. I had been living in the house as a renter for about three years, so when the owner decided to sell, she asked me if I wanted to buy it. I thought long and hard about it, and jumped on the deal because I had been living here already and it was a good deal.
During each step of the loan process, I questioned my lender about this point or that point when they would call me requesting documents, etc. I wanted to be informed all during the process, so I asked questions, as any perspective buyer making a large purchase would do. I mean, you don't walk on a car lot and tell the salesman that I want Car A or Car B without asking questions. If you do, you either have way to much money to blow, you are an idiot, or both.
But I digress...
So when signing the mortgage papers (a grueling process as any homeowner knows), I read through all the documents, much to the annoyance of the mortgage folks in the room, but I had told them since I am making the largest purchase in my lifetime, I wanted to be sure of what I was signing, especially when it came to the document showing what my payments would be when the ARM readjusted. After studying that document, and seeing that even if the ARM adjusted up to the maximum, I would still be able to afford my mortgage, I signed it, and became a proud member of the American Dream. I have never been late on a payment, and because of that, I have been able to get a 30 year fixed rate at a substantially lower interest rate.
I guess what I am trying to say is that common sense does come into play, as does instinct. If you are making only 30K a year, that tells you right off the bat that you cannot afford a 300K house, no matter what bank, agent, or lending institution tells you. If a bank, agent, or lending institution tells you they do not need verification of your income or other financial information in order to buy a house, then you deserve the financial situation you are in.