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Not Everyone Wants a Mortgage

There is always room for a new perspective, whether you are considering the value of home ownership, or obtaining a mortgage.

Mortgage your home purchase or not?? When working with buyers from other countries, it is important to understand their possibly unique perspective on what owning a home means to them, and how they perceive having a mortgage debt.

I was also reminded of differing perspectives on home ownerships and how it happens a week ago when working with a delegation of investors from China.

I just started working with a charming couple, one of whom is not from the US (I am not sharing what country for confidentiality purposes), and during our initial buyer counseling it became clear that her perspective on what owning a home means and how it is accomplished in her country is remarkably different than here in the consumer-oriented USA.

Furthermore, the attitude about credit and carrying debt (whether it be credit cards or other types of loans) is very different.

It just isn't something they do as a normal part of life.

For the typical American, the thought of not buying on credit, or having a mortgage, is almost unheard of (yes, I'm exaggerating a bit but consider our credit issues and how many folks have multiple credit cards). Yet for this buyer from a Pacific Rim country the thought of having a loan goes against the standard practices, indeed the values, of her country. So often we assume that unless someone has plenty of cash they will simply get mortgage. This is not always the case nor the desire.

We spent lots of time talking about mortgages, how they work, the value from an equity and tax perspective, and more. While there is plenty of cash available, to find the right home for these buyers in the Carlsbad real estate market, a mortgage (small) may also be needed, and getting beyond the psychological and emotional attitude toward having credit (ouch - a monthly debt) is a big step.

Frankly, it was a refreshing attitude, and an interesting commentary on how credit-driven (read DEPENDENT) our society is and has become.

Not everyone values homeownership in the way that we do, nor do other countries offer the tax advantages or a capitalist society that enables so many to buy on credit and to create the huge debt we have as a country.

It was an eye opener. And valuable lesson as a real estate professional.

SIDE NOTE - if buyers are cash buyers from another coutnry they may have limitations on how much they can take out of their country at a given time. This is an important issue for them to understand and plan for when buying in the US.

Since we're chatting about money, you may recall this (well, that depends on your age, of course).

Posted by Jeff Dowler ~ Carlsbad Real Estate on 07/14/2008 10:06 PM

Comments (16)

sellers, buyers, financial, mortgage

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16 Comments on Not Everyone Wants a Mortgage

There was time in America where paying off the mortgage and being Free and Clear was the main goal of most homeowners. Many have, and no one talks about those folks. They drive around in old Volvos and sent their children to private collages.

07/14/2008 10:09 PM

by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)

Jeff, I don't remember that video. I must be too old!

07/14/2008 10:13 PM

by Lorrie Semler, Addison Real Estate Specialist (Keller Williams)

Oh Jeff, you made my evening! My favorite band and my favorite song. Yes... I LOVE ABBA. I know I'm weird. Well.... Thank you for that!

As far as foreign investors go and just the outlook on debt by folks living in other countries, it sure is different. My husband and I traveled led extensively around Europe and most folks do not have mortgages. They do not use credit cards. They spend what they have cash for.

We, Americans, are known for our lacsidaisical attitutude towards money. Maybe this age of short sales and foreclosures will refocus us a little.

07/14/2008 10:16 PM

by Pasadena CA Real Estate - Irina Netchaev (Keller Williams International Realty)

Jeff, owning a home free and clear would be like going to Heaven for many over-extended families.

07/14/2008 10:20 PM

by Brian Schulman - Your Lancaster County, PA Real Estate Professional (Coldwell Banker Select Professionals)

I would love it if I could say I didn't have a mortgage

07/14/2008 10:25 PM

by Roland Woodworth "Fort Campbell Area Realtor" (Exit Realty Clarksville)

OMG...haven't seen you in forever. How is Sammy Hagar doing these days?

http://www.activerain.com/blogsview/230128/AR-Look-A-Likes

All the best,

Beth

07/14/2008 10:27 PM

by Beth Patnode, MN Home Staging Firm, Minnesota (Minnesota Home Staging Network~ MN's Top Home Staging Firm)

Jeff

Great post! I will be in Carlsbad this week we should grab a coffee.

07/14/2008 10:29 PM

by Jeff Pickering (Pickering Group)

Jeff, I have worked with people from all over the world. As a matter of fact I am in the process of closing an all cash escrow with a foreign buyer.

07/14/2008 10:57 PM

by Camarillo CA Real Estate Agent/ Mana Tulberg (Beach View Real Estate)

To think what life would be like if you owned your home free and clear and did not have a mortgage. A lot less stress for sure.

07/14/2008 11:40 PM

by Randy L. Prothero - Hawaii REALTOR® (Century 21 Liberty Homes)

I was recently working a foreign buyer and they do think very differently about the financing aspect of property. What was interesting was that they were not acquainted either with the tax withholding situation if they should sell.

07/14/2008 11:46 PM

by San Diego Real Estate Voice authored by William Johnson GRI CRS e-PRO (RE/MAX Associates)

Can't wait until I don't have a mortgage... but really all I want is an Airstream. Money, money, money... it all comes down to the number of zeros.

07/15/2008 05:16 AM

by Susie Blackmon-Maggie Valley Waynesville NC Realtor/RE Blogger/Photographer (COLDWELL BANKER Kasey & Associates)

Good point ! Cash buyers are great buyers. We just helped someone yesterday close on a condo in Philadelphia for over $300K cash. Not a foreign buyer but used some of his retirment funds to diversity and to get an investment property. Smart buyer ! His son will live at the property. I have noticed that this is becoming a good percentage of buyers, parents buying properties for their children who attend college.

07/15/2008 06:55 AM

by Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate (RE/MAX Affiliates)

Very intersting working with clients from abroad -- and yes, their perspective is very different. I find that it is good to know what is required if the client is funding some of the investment in a loan, however -- the type of visa and what is required to establish credit here in the US is an important part of the process.

07/15/2008 08:47 AM

by Joan Whitebook, ABR, e-Pro, CEBA (Buyer's Option Realty Services)

Jim - how true. The days of owning a home free and clear have certainly faded. But the attitude about credit extends far beyond.

Lorrie - ha ha. Well it really isn;t on topic other than being about money. But I thought it would spice up the post just a tad.

Irina - actually I know a number of people who claim ABBA is THEIR favorite. There must be a fan club, right. Whether the housing issues will change anything is ahrd to say. Our society is so focused on credit, if not dependent on it. Not sure anything will change much.

Brian - how true. There are some who do, but many will likely not achieve that goal at least out here.

Roland - you and me both. But so many folks see this as a normal thng and that is not the case is so many other places. just a different persepctive on money and how it is used.

Jeff

07/15/2008 08:50 AM

by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

Beth - LOL. Sammy is just fine. It is summer so decided the look had to change as I did last summer. It won't be forever, tho'.

Jeff - thanks. Looking forward to meeting after all the work we did via email and phone on that last deal.

Mana - sounds like you have had some great experience. Perhaps it's time for a post on the subject?

Randy - yes, and more money in the pocket.

William - there are certainly different issues here and some things foreign buyers need to know about as selelrs down the road.

Susie - hmm, not sure I am up to living in an Airstream.

Christopher and Stephanie - I think that is a trend that is occurring more frequently all over. I saw quite a bit of it when I lived in Boston several years ago with all the Harvard and MIT students

Good points, Joan. Having a US bank account seems to be pretty important as well.

Jeff

07/15/2008 11:23 AM

by Jeff Dowler ~ Carlsbad Real Estate (RE/MAX Associates)

Thats so true. My famiy came from Europe.....and my folks have never believed in debt. They didn't buy their first house until they had ALL Cash! That happened to be a year after I moved away from home! 18 years!

07/15/2008 01:06 PM

by Liz Moras - Chilliwack (Vancouver, B.C.) Realtor (Real Estate Associate Broker for ReMax Nyda Realty)