First-time buyers see dreams fade: Easy mortgages, overvalued homes leading many into foreclosure

Indianapolis Star ^ | January 29, 2004 | Chris O'Malley

[sarcasm]

Rock-bottom interest rates and low-down-payment mortgages have allowed more first-time homebuyers to fulfill the American dream in recent years, but some say the dream has turned to nightmare.

A number of inexperienced buyers now face foreclosure, complaining they didn't realize the high cost of homeownership -- everything from adjustable rate mortgages to hidden taxes to construction defects.

[FreedomPoster]

It all adds up. Fast.

Roof was done to get this house ready to sell, right before I bought it. I figure I've got another 10 yers, they used a very good quality architectural shingle.

I'm about to do a window upgrade on the west-facing ones this Spring. Ought to help a lot on the summer electric bills going from single-pane to double-pane low-e, and improve comfort besides. Just replacing the lites, frames are good, and don't wan't to go through the brain damage and expense of a full rip-out-and-replace.

Plumbing and electrical I do myself. I replaced the water heater last Fall. You can really do a lot yourself, just take the time to research what you're doing, and make judicious tool purchases over time.

[VeniVidiVici]

Well, it's obvious the solution to this problem is for the mean, old mortgage companies and banks to give free homes to those who don't qualify.

[HostileTerritory]

I think standard rule of thumb is don't get into a mortgage more than twice your income.

That is an impossible rule to live up to these days, unfortunately.

[quack]

What B.S. This whole article is probably B.S.

Maybe not.A few miles from where I live a man died when his house caught fire.........because of a nail driven into the wiring.Nice waterfront home too.

[mj1234]

The lender only needs certain guidlines fullfilled-
and they are GUARANTEED payment:
1:typically home buyer needs 5%-10% down
2:The home buyer MUST have mortgage insurance!
this protects the lending institution.
The banks are not in buisness to lose money on a loan-
They are not going to send you to a nice loan officer
(from it's a Wonderful Life)- if you fail to make payments
they have another waiting.

[Blue_Ridge_Mtn_Geek]

This article is a great example of the "renter mentality". The latest Housing Policy dialog at Fannie Mae's website points out how housing stock in the "affordable" category has been systematically destroyed in recent decades by the thicket of "consumer protections" and "renters rights" legislation which has made it extremely costly to evict nonpaying or property-abusive tenants. The article puts the "tenants rights" mentality on display, and the first and third "Comment" responses point out in some detail the grotesque consequences of such tunnel vision: reduction of "affordable housing" availability.

You need to be able to read PDF files to look at these (Adobe PDF reader available via a free download if you don't already have it.)

http://www.fanniemaefoundation.org/programs/hpd/v14i4-index.shtml

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[the-ironically-named-proverbs2]

Boo hoo. How many of these people went out and maxed-out their credit cards after buying the house to buy all new furniture? I guess the next article we'll be reading is how the furniture was over-priced, and can't be sold for what they bought it for when they can't pay the credit card bills.

[excalibur1701]

I've dealt with Beazers/Crossmans/Trinity before. They keep having to change their names, because each time they build a housing edition, there is ALWAYS problems with their homes. So they change their name to make it appear they are a new company. They are sneak thiefs and will do everything possible to build cr*ppy homes, then get out of dodge and then they go destroy another community. They could care less about the neighbors who have to deal with their shotty workmanship they left behind.

[EuroFrog]

Wow, hubby and I have been in military housing for 5 years now. We are moving in 2 weeks and wont have housing as an option so we are faced with the rent/buy issue. We both really want to buy, but I just don't know that we are ready. The place we are moving to (Wichita Falls, Texas) supposedly has really really limited rental options. Apartments are out of the question. What to do? What to do?

[the invisib1e hand]

here on Long Island where house prices have skyrocketed recently

i thought house prices on Longisland have been skyrocketing since the '80s...

[palmer]

A nail through a wire can start a fire. A much simpler explanation in the case from the article is that the woman didn't clean the lint filter and the dryer caught on fire. Then the extreme leftist ACORN organization sent over an electrical inspector who found poor installation work so that woman could score a new dryer (and maybe some monetary damages) from the builder.

[arete]

This problem is not going to be limited to the low income buyer segment for long. Rising values have given buyers the false sense that the can't lose by buying "up" even if it adds a little stress to the budget. It is easy for buyers to become self-delusional about how they can cut a few corners in the family budget to keep the payments made. Reality is a different story.

Richard W.

[Mamzelle]

You can't watch a hour's worth of television without an ad for "easy money" cash-out refinancing of home loans. I wonder if anyone is going to own their own homes in a few more years.

In a country which used to have few brand-new, beautiful cars on the road, these days a modest old clunker really sticks out among the gleaming new purchases.

And I watch 12K ft mansions being built around me, just so the owners can then go into hock importing the illegal labor to maintain them.

On university campuses, desks are set up on registration day to sign up 18-yr-old kids with no income for multiple credit cards.

We're achin' for a breakin'--

[Tijeras_Slim]

The Association of Community Organizations for Reform Now, (ACORN) a national activist group that represents low- and moderate-income individuals, levels much of the blame at builders of entry-level homes.

These people are serious leftist wackjobs. A couple years ago they picketed a electronic chipmaker here in Albuquerque for not hiring enough homeless and high school dropouts.

[arete]

It's called "economic slavery".

Richard W.

[bvw]

And the Congress is once against about to consider that bastard change to the Bankruptcy Laws which holds individuals to lifetime account for bad debts but lets the directors and officers of corporations do the same thing -- borrow money they can't pay back -- with personal immunity. A rotten law full of miseries that would be.

[TheBattman]

When we bought our home, we had been advised to "pre-qualify" so that we would know what we could afford...

Well, when the mortgage we were "approved" for would have mean payments of nearly $300 more per month than we actually had at in income (after paying our existing bills), we knew what the game was.

We purchased a home that the total morgage payment actually FIT in our budget - not going past what our income was.

Unfortunately, many of the people who fall for these lenders are either under-educated, or are just plain too dumb to know the difference.

Just because you are "pre-approved" for a mortgage up to $200,000, doesn't mean you can ACTUALLY make those payments.

As far as the woman with the bad wiring in a new home that caused a fire - the builder should have been responsible. That would be a defect. So why did she have to pay the insurance deductible? This would be a LEGITIMATE case for a lawsuit - especially if the fire investigation pinpointed the builder's error.

[petercooper]

Bring on the foreclosures!

[Mamzelle]

As the banks give credit now to the obviously uncredit-worthy, conservatives should oppose any change in the bankruptcy laws.

To those that argue "personal responsibility"--it is also the personal responsibility of those issuing credit to do it the right way--to only lend money to those with a reasonable expectation of keeping up the payments.

When starting out in my own life--credit had to be earned over time and was hard to come by. Would I be in as good a shape as I am if I had been offered credit when I was so immature, had no income, had been tempted with expensive goods and promises of "easy money"...would you?

[mtbopfuyn]

Texas also has ridiculously high school taxes. Much of it has to do with location, location, location. For the previous 30 years it was equal but in less than 10 years our side of the street has tripled what the other side of the street's taxes are. Really chaps my hide.