Every day, the media talks about the problems in the hosuing market.  Most of the talk centers around  the loss of homes due to "exotic mortgages", dishonest lenders, among others.  People who are marginal borrowers, those we call the subprime market, are often the subjects of the stories.  They will also likely be the ones most affected by the changes that have already occurred as well as those in the pipeline.  As is typical, the changes implemented most affect the ones who can least afford it.

From the point of view of one who recommends using their home to build wealth, I would like to shed some light on the subject.  Despite what regulatory agencies do to try and solve the problems, there will always be abuse.  The real problem is that most of us are unwilling to accept responsibility for our actions.  If mortgage professionals were more responsible, they would do a better job screening their applicants and structuring a mortgage plan that is right for them, or even be willing to turn them down.  Borrowers could take on the responsibility of asking the right questions, demanding a clear explanation of how these loan products work and what they can expect to happen.  They would even settle on purchasing a little less house so they don't overstretch themselves.

The Pay Option ARM is the product that tends to draw the most attention in the media as it has been abused by all sides of the transaction.  Do not misunderstand me, these are great products for some borrowers.  Unfortunately, they have been used to get people into homes they clearly could not afford using a standard fixed rate loan.  Many mortgage professionals "sold" the product simply because they could make large sums of money in Yield Spread Premium (or the like) without having a an immediate impact on the homeowner (ie it did not change the minimum monthly payment, just the fully indexed rate).

Like any other fiancial instrument, a mortgage must be properly managed if it is to be used successfully.  Yes, a mortgage is a financial tool, not just another debt.  This means that you need to forge a relationship with your mortgage planner that is deeper than just the "he got me my mortgage".  You will likely want to run your mortgage plan by your financial advisor and tax advisor as well.  If you don't have these already, you should get one.  I have several advisors I work with and trust as I need to ensure my cleitns are well serviced and that my clients goals are reached.

Rememebr that you are the only one responsible to create discipline and take control of your financial future.  It is critical that you do your homeowrk up front and ask the hard questions of those who are advising you.  If you have good advisors, get educated, and manage your home's equity intelligently, you will reach your goals with greater speed, comfort and safety.