On a recent conference call at work we heard a crazy statistic. -1 in 84 homes in America have received a forclosure notice.
What? Why so many?
First off, why are so many homes in foreclosure? Some homebuyers stretched themselves too thin. Others didn't understand the terms of the Mortgage they signed (you mean I'm supposed to read and understand the legal contract I enter into?). Many homeowners don't think about property tax increases, homeowners insurance rate hikes, repair and maintenance costs. The last broad category I want to include is those that were hit so hard by declining home values that they owe more than the home is worth.
While thinking of homeownership as an investment is good, it is vital that the borrower does their due diligence. My brother-in-law spoke of going through the "worst case scenario" before making their home purchase. I believe that too many people only go through the "best case scenario" and forget that life doesn't always turn out how exactly as planned.
Don't let the loan officer convince you to borrow the maximum amount you can qualify for. That is why so many people are upside down in their mortgages. Borrowing less than you could afford will allow you to still enjoy life with the extra cash flow.
My point is not to scare anyone out of buying a house. I only hope that more Americans, including myself, will truly seek to understand what costs are associated with buying a home before the purchase is made.
