Buying a Home the Old-Fashioned Way
From Homescape
written by Dean Golemis on Tuesday, March 25, 5:08PM
There’s been no shortage of finger-pointing among politicians and policymakers, mortgage lenders and bankers, as to who caused the current foreclosure mess, which is helping suck the blood out of our nation’s economy. Sure, there’s enough blame to go around for how subprime lending failed starry-eyed consumers. But keep in mind that many folks who grabbed at these exotic loans — only to see their American Dream quickly crumble — also failed themselves. They either lacked financial foresight or didn’t do the necessary homework that could have protected them from faulty investment vehicles and crooked financiers. Many just didn’t have the means to buy property in the first place, but they did anyway.
That’s not to say that buyers who snapped at the subprime mortgage bait weren’t duped by sneaky lenders out to make a greedy buck — there was plenty of that going on. However, what’s happening in today’s housing market stems from a more fundamental problem permeating American society. Life here has become less about fiscal responsibility and more about effortless entitlement, instant gratification and zero-money down. People always talk about the things they want, but few consider the sacrifices they have to make to get them.
Conventional wisdom still holds true that if you want to buy a home, you should stash away your hard-earned cash or make a smaller investment before taking the plunge with a solid down payment and fixed mortgage. Not to say that people don’t do that anymore, of course, but seeing the surge of foreclosures, it’s easy to conclude that the financial integrity required in home buying has been trivialized by our urge to get what we want — right away.
Once upon a time, our leaders admonished us to save rather than spend. President Dwight Eisenhower comes to mind. Ike believed that unbalanced budgets and deficit spending were a bane to the country. He called on government to practice fiscal responsibility and urged all Americans to save money and buy bonds. Today, however, our president exhorts us to run out and squander our upcoming rebate checks to keep a low-octane economy from sputtering. (And just in time for the summer driving season: Each rebate amounts to a few subsidized fill-ups at the pump for those who adore their full-size SUVs and drive them everywhere. With gas prices climbing, it’s another windfall for Big Oil!) An AC Nielsen survey found that Americans are among the most cash-strapped folks in the world, belying our long-held reputation as the planet’s richest nation.
Keep in mind that the economics of sound home buying begin right at home with the buyer. When considering a purchase (or other major investment), it’s important to plan ahead, educate yourself in personal finance, save money, improve your credit score if it’s subpar, and keep abreast of local market conditions. It’s also about asking the right questions, often some simple ones — of yourself (“Can I afford this home in the long term?”) and of the people you hire (“What does the fine print of this mortgage mean?”). Always get a variety of expert opinions before taking the first step. And patience: If you don’t have the money to buy, hold tight until you do.
The foreclosure mess is just another symptom of our country’s larger credit ills, be it excessive personal debt or record trade deficits. As Ike once said, “Savings, and the incentive to save, built this country.” The opposite is now crippling it.
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