We owe more than our house will sell for.

Our market here in North Central Massachusetts is a bust for many families.   This doesn't mean these families did anything wrong.  In the words of  Dave Ramsey of Financial Peace University, "...those...with property in foreclosure, are not evil people.  They are not scammers or schemers who got caught and are going to jail as soon as they lose their homes.  These people in trouble are in your family.  They work with you, they live on your street, and sometimes they are you.   I have seldom met anyone who set out with a plan to defraud creditors or steal money by borrowing and not paying it back.  Then, if not because of their lack of morals, what gets people in trouble?" 

So what does happen that gets us in trouble with money, debt and real estate?  I'll tell you what happens, we cheapen ourselves by becoming slaves to the lenders and creditors and merchants pleading for our business.  But it's a tricky scenario.  See if this sounds familiar:  You're walking along in life and you choose to buy a house.  You find the house of your dreams and you HAVE TO HAVE IT.  It will make life better.  Once your in the house angel harps will sound each and time you open the front door to welcome you.  Your spouse will appear slimmer and more radiant than ever and your children will never misbehave again.  With a kick in your step and the harps strumming  in your ear, you skip on down to the local mortgage lenders office and spill all your personal finances.

The sharp, clean cut professional says with a trumpet anthem joining your harps, "Your Approved."  Then he/she adds, "what I have to offer is this loan package...all you have to do is sign here and we will charge you an adjustable ARM at 7.75%, for 30 years with a pre-payment penalty equal to half the principal balance if you should decide to refinance or sell.  But don't worry, with the market I'm sure the rate will steady out below 5% in no time."  And you wonder when this helpful arm will show up and explain all the terms the lender just spewed.

You may think I have exaggerated with this story, however, I suspect I'm not so far off, Remember I once was a first time home buyer.  My harp cords loudly snapped when we realized homeownership comes with repairs, sacrifice and for some of our friends marriage counseling. 

The trickiness is: we do need the lenders to buy the house.  We need to meet the deadlines the Realtors and Attorneys have suggested for financing and closing.  We NEED to secure our housing plan, so we sign.  Looking back we made the right choice.  The price was, after all, approved by an appraiser. Right?   Maybe but in my opinion placing your finances in an appraisers hands you have not met or will ever meet you are playing with fire. 

Ask yourselves this when buying Anything "Do I NEED this or WANT this."  And be seriously honest with yourself.  To buy the McMansion first instead of a sweet country ranch and working your way up to the 5000sq' Estate is much safer in any market.  So do you WANT to owe this money each month to this lender.  Do you WANT  to commit to this location?  Does this choice bring you closer to your housing goals?  This applies to credit cards, regular shopping, vehicles and any other commodity that asks for Your Money in return. 

So, I have touched on several thoughts.  If you have found yourself in a tricky scenario with your real estate, feel free to contact me anytime at the Templeton Office at 978 / 410-5248 for a list of resources.

If you have a question, comment or story you would like to share with Karissa Moore, a Licensed Salesperson & Realtor of Hogan Real Estate, Inc. You can email her at www.KarissaMooreRealtor@comcast.net or call her office anytime at 978 / 410-5248.