My Debt Blog

There is so much scare out there about the sub prime mortgage lending damaging the economy. What confuses me is why so much blame is being put on the sub prime loans when it should also be shared by the consumer who signed up for that loan. For anyone who has ever bought a house, there is so much paperwork involved and it is a process to get the financing in order. At closing it can be exciting to just get through that paperwork so you can get the house. Did you have a real estate attorney at closing explaining and showing you exactly what you were signing? I did and know exactly what I am dealing with regarding my loans.

If someone buys a house they simply cannot afford, should it become a problem for the government to bale out people using taxpayer dollars? Our government will bale out corporations due to limited liability, sends money overseas as aide for other countries, but can’t help the average Joe save their home? The government is not going to make a person more responsible by helping them save their home. Regulation isn’t going to fix the existing problems of people trying to borrow 500k and pay 1k a month. It all seems fine until the payments adjust out of control and there is no way to handle the new payment.

When I got my house a year and a half ago, my credit was good and the time seemed right because I was getting married. Instead of doing one lump loan for 30 years, I did 100% financing through 2 separate loans. My first is a 80% 7 year ARM at a much lower rate than the fixed loan, lower payment, and no PMI. The second is a 20% HELOC which made up for the difference and structured the loans so I would not have to pay closing costs. This seems stupid to me now to have done it this way when I had 10k sitting in the bank. I did end up paying off my car and going on a completely paid for honeymoon, so what’s done is done.

Think I could do the same thing today if I walked into a bank? Not even a chance. I don’t think I would want to try to buy a house right now, even though it is a buyers market because people can’t seem to get rid of their houses. It’s a year and a half later and I am 94% LTV on my house and based on recent estimates will cost me 8k just to sell it. How in the world can I buy a house with no money, can afford it just fine, but it will actually cost me money to sell it? It must be worse for people who have owned their house for many many years and try to sell it but keep lowering their price and losing the equity they have spent years to gain. For the people who are being foreclosed that can get bailed out by the government, could the same be said for the loss of value when one sells their house for less than what its worth?

I’m not very willing to move anymore because now is really not the time to be doing this. If we tried to sell the house, I would have to figure out how to come up with money just to do that. When a house inspection is done, there could be a possibility they might find something that needs to be repaired or replaced, which could cost me even more money. My wife is always looking at apartments and condos we could rent which have really nice features, but forgets that we’re currently in a house. When renting you have the ability to break a lease to move somewhere else when you would like. We would have to sell the house before even looking to renting anything. I should also mention both the mortgages are on me since I bought the house before we were married. It should be a mutual decision to sell, but I also think I should have some say in how we go about doing it.

Hopefully for now she will just focus on student teaching and be patient when it comes to selling the house. I would rather she have a job lined up somewhere else so that when we sell our house and move somewhere else, there was a clearly defined reason to do it. I’m also considering my job at the same time because I like the location I work at and if we moved where she wants, I would have to transfer to the city and become a train commuter to get to work. It’s a mess I’m not sure if I want to deal with right now just based on this idea that living so much closer to downtown Chicago would be neat.