Are you at that point of your life where it’s time to settle down and start acting responsible? You may feel that it’s time to buy a house, but have you even looked into the process and seen what it entails? You may have heard of people you knew were buying homes 10 years ago and it sounded like a piece of cake. Well, then it was but things have changed to a great degree since it turned out that the cake that millions or people were taking their piece from was rotten, and was without much substance.
Sometimes things are too good to be true and just because the American economy was riding at an all-time high then, and home construction was as well, shouldn’t have meant (history has proven that it didn’t actually) that there wasn’t going to be consequences for irresponsible loan practices and people making bad investments. So many people were qualified to buy homes that never should have been, then as soon as there was a slight shift in the job market and the adjustable mortgage loan rates came to fruition, then all of a sudden millions of people couldn’t afford their homes anymore. Hopefully there was a valuable lesson learned, hearing of people losing their houses and being foreclosed upon didn’t use to be a very common story, but in the last decade it’s become an American cliché.
Well, the negative connotations associated with new American clichés like the mortgage crisis and school shootings, need to be turned around and we need to open our eyes and take action in order to accomplish that 180 degree turn. I’ll have to reserve the topic of school shootings for another time, but mortgage loans are still a hot topic as we’re still pulling ourselves out of the mess that we got ourselves into, one foreclosure and short-sale at a time. An FHA residential loan is backed by the federal government and affords the average, working-class American the ability to purchase a home using a down payment for as little as 3.5%.
Traditional loans backed 100% by the mortgage lender, depending on your renter’s/mortgage/employment history, debt-to-income-ratio and other determining factors, may ask for 10-25% of the home loan as a down payment. That’s an insane amount of money in a market like Denver, CO, for example, where average home prices have risen to a quarter million dollars or more. I don’t even want to think about cities like Miami, or San Francisco. All I know is that I don’t think that I could ever make enough money to save up 25% for a home close to a million dollars or more.
For the typical working class family or an individual looking to invest in home ownership, a FHA loan is often the only plausible choice available. If you’ve been thinking about investing your money instead of throwing it away on rent every month, then a FHA loan is almost surely going to be something that you should educate yourself on, especially if you haven’t been preparing to buy a home for years by saving a decent chunk of your monthly earnings. Assuming that you have a credit score of 580 or better, then the down payment required for a home that you want to purchase is going to be at least 3.5%. If you don’t have the money personally, then perhaps you need to just buckle down and develop the discipline required to put yourself into the correct mindset for buying a home. However, the entire 3.5% can be covered with gift funds if you happen to have a parent or benefactor who wants to help you do something decent with your life by getting you into an FHA mortgage.
Whatever the case may be, buying a home is a commitment and although it’s become another American cliché that commitments don’t mean anything, and you can just bail out of any given commitment like marriage or a home loan, you should never see this decision as something like that. Commitments require integrity, responsibility and hard work in order to maintain and keep, so no matter where you’ve come from or what you’ve heard, getting ‘bailed out’ isn’t all it’s cracked up to be. It’s all of our responsibility to turn the tide of some of the alarming trends that have been developing in our country. Wouldn’t you like to be a part of the solution instead of the problem? Well, you can be by beginning to live within your means and developing some self-control in whatever lifestyle you choose to identify with, especially if you want that lifestyle to include home ownership.