Isn't this what got us into trouble in the first place. This article on CNN Money gives alternatives to those who would have otherwise used a sub-prime lender. Market collapse, people losing their homes and tons of money, overextended people with bad credit scraping to make mortgage payments...ring a bell to anyone?

While the article itself does offer sound alternatives, such as FHA loans, it still seems to perpetuate the need for low-income, sketchy credit families to own a home. There is not one person./family who needs to own a home, it is a want; for financial reasons, monetary, or any other reason you can think of. I know because I am one of those who wants house even though I don't necessarily need one. There are apartments available in cities across America, just waiting to be rented.

I believe owning a home is part of the path to financial freedom and success, but if it draining every last dollar out of me, it's not really helping me is it? According to this article, there is a Mr. Brian Montgomery who testified before congress in favor of having FHA "modernized" to benefit the "troubled sub prime borrowers."

Requested changes include: Eliminating a 3 percent down requirement, which would enable more low income borrowers to qualify; increasing the maximum loan to reflect the increase in home prices brought by the housing boom; assigning rates by risk to enable borrowers with higher credit scores to receive lower interest rates.

How does this make logical sense to anyone. We want to eliminate the 3% down payment and on top of that increase the maximum loan amount to reflect the increase in home prices, all this to help those with low income who also have bad credit. I think the smarter thing to do would be to leave the 3% down payment and possibly lower the maximum loan amount to reflect the increase in foreclosures around the country. In my opinion, if you don't have even a 3% down payment and you have bad credit, renting should be your answer until you get your finances together. Let's not "modernize" the home buying process to the point where everyone is counting on the government to bail them out of their mortgage situation.

Offer some sort of savings classes to show the potential borrowers how they can save 3% of the value of the house they are looking for. If they pass the class and show that they are saving at least some money, offer them down payment assistance. Show them how much it costs annually, on average, to maintain a home (repairs, landscaping, heating/cooling, etc.), and tell them they should continue saving money for these types of expenses. Also show them how a house-payment differs from a mortgage payment. The house-payment includes property taxes and homeowners insurance, neither of which you can own a home without in the United States. Explain how an increase in property taxes will affect their payments, and how they may want to hold off on buying that new 2007 Hummer H3 until they have lived in the house for a while and see how it effects their budget.

I don't want anyone thinking I am against these type of federal programs. I think they are great for those that qualify, but I do think that we should learn our lesson from this last near-collapse of the housing market due to all of the bad loans that were underwritten. We plan on using SONYMA to help us get our first home, after much research. Let's not just give people homes because we think they need them, educate potential buyers and enlighten them to the home buying and maintaining processes. It is and should be possible to buy a home with no money down, just make sure you have the means to keep this home.

Thanks for reading

I love you Baby

6 comments:

  1. Tired of being broke said...

    Great post. Thanks for the link to SONYMA.
    Too many of us think we 'need' to buy a home, and before we know we are in over our heads.  

  2. Moneymonk said...

    A home can be either. A financial nightmare or a American Dream. Back in the 70s. These loans was unheard of but because the government was so greedy all these subprime crap started popping up.

    I say get a fixed mortgage or don't get a mortage at all.  

  3. Sistah Ant said...

    I want a home, but not so soon that I ruin my cash flow and risk my credit to get it. By the time I actually have a down payment, I should be able to afford the costs of homeownership. Especially if I buy within my means instead of borrowing every penny I'm approved for.

    I also believe my house is a want, not a need. I can and will wait (impatiently, but still I'll wait) until I'm not putting myself at risk to get it.  

  4. Rad said...

    Thanks for the comments guys.

    Fixed would be the way to go, ideally. Unless you know your selling the house before the adjustable period kicks in (and you better be sure), don't squeeze into these programs just to afford the monthly payment, you'll probably regret it in the end.

    @Tired: SONYMA is a great deal for those that qualify, your welcome girl.  

  5. quickquid said...

    Thanks for this share. I need this information and this is written in a best way on this page. Must read it.  

  6. Best Home Loan Deals said...

    This blog is really informative. The loan alternatives information given on the blog is too good and help people .  


 

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