If some or even a few of these apply to you, the opinion of this Court is you should stay out of the home ownership water and thus avoid being bitten by the squaliformes
- Your income averages less than $35,000 per year and varies significantly for whatever reason. Mortgage servicing squaliformes are notorious for not giving a damn about why your income changes. They want the payment every month but are more than happy to make profits from the late payment fees and interest. They will pile fees on top of fees on top of interest on top of anything they can to take money from you. If your income varies a lot, either wait until your career stabilizes or you have a way to keep six months worth of house payments stashed away that you can draw on (and then refill) during the gaps.
- You have little or no medical insurance coverage. One of the most common threads of mortgage foreclosure and bankruptcy stories involves people with serious unexpected medical bills.
- The home is situated within a "Homeowner's Association" that can impose dues, conditions and restrictions that could result in a lien against your property and even foreclosure. The only way to stamp out these menaces is to kill them off economically by never buying a property in one.
- You don't have a few thousand dollars readily available to cover having an attorney on your side, the moving expenses as well as the unexpected stuff, i.e., uninsured or deductible damages, utility deposits, miscellaneous household repairs, yard tools, etc.
- You're planning to get married and will be counting on having two incomes to survive. Given the percentage of marriage failures (which are exacerbated by financial problems) one of the last things you want to have to deal with is how to split up the ownership of a house and the responsibility for the mortgage payments. Make sure the relationship has some proof of survivability before you expose yourself to the risks. Walking away from a lease is a lot cleaner than dealing with real property ownership.
- You're having relationship problems with your spouse. Buying a home and having the financial burdens that will come along will only add to your problems.
- The IRS says you owe them money. They will find you and will attach a lien to the property which you will find nearly impossible to clear up even if you dispute the amount.
- You have more than $5,000 in credit card debt and it isn't declining. You're in over your head already and just don't realize it. The expenses you haven't counted on in buying and setting up a home are going to ramp that to over $10,000 in less than a year.
- You're leasing a car. You're either trapped into another lease at the end or paying twice what it's worth to buy it out, or you're going to have to go into debt to buy a car when the lease runs out. And you may have to pay for mileage overages and various cosmetic condition problems. If you're a homeowner, chances are you won't be able to save enough to make a substantial down-payment and you'll end up with a high-interest rate loan over too long a period of time.
- You're renting-to-own your major appliances and furnishings. If you're trapped into one of these schemes, you not only risk having them taken back when you have to choose between the house payment and food and that big-screen TV, but you're not contributing anything to your credit rating. And the fact that you're dealing with these squaliformes indicates you have not learned how important it is to save money in advance of buying even modestly expensive items.
- You aren't capable of doing basic maintenance and home repair tasks, either because you physically can't or you simply don't know which end of a wrench does what. You could end up buried in expenses for having people do routine things, and many of them will show up on your credit card(s).
- You or your spouse are thinking about going back to school or making a career change. Better to wait until you get through the change and restabilize the income before picking up the burden of a home.
- You own a vehicle but it is more than five years old. One of these days something major is going to die on the car and you'll be hard-pressed to decide whether you make the mortgage payment or fix the car.
- You've borrowed money (especially the down-payment) from a friend or relative or you need a cosigner for the mortgage. Quick way to ruin a relationship and if you've falsified anything on the loan application and it's a federally insured loan, you're going to face possible criminal charges if they find out.
- You think you're going to change jobs. There can be lags in income. Companies make mistakes in setting up payrolls and there are misunderstandings about things like when commissions are paid. Your new employer's payroll check might come from out of state and your bank will hold the funds longer than you expected. Depending on the job, you may find you need to update your wardrobe or buy some tools. Sometimes when cutbacks come about the most recently hired are the first to go. There can also be unexpected expenses if your medical insurance coverage doesn't start and you get sick or injured. Best to wait a few months to see how things are going to work out.
- Your employer is having a hard time making a profit. Companies have little or no loyalty to employees. If your company is in trouble, you could find yourself out of a job and unable to make the house payment.
- You're going to have your first child in the next year or so. Consider what will happen to the mother's income for some weeks or months. Better to wait until you have a handle on what it takes to raise a child before you commit to a house payment.
- You think now's the time because of seemingly low interest rates. Yes changes in interest can make a significant difference in what you pay, but don't rush into something just because the broker is leaning on you to get the deal done. Interest rates are driven by things far beyond your control and are not easy to predict.
- You think you're going to save a ton of money on income taxes. Not necessarily. It depends on your deductions. If you do look at itemizing, you may even find you don't have enough to exceed the "standard deduction," so not everyone is automatically going to see a dollar-for-dollar income tax savings.
- You're planning to move within a couple of years. You have to take into consideration what it will cost to not only sell a home but what you'll spend moving. Balance all of those costs against what you think are the advantages. Don't forget to look at what the real value of the property might turn out to be. Don't assume prices will go up and don't forget to take into consideration the stress you'll be under every time you go through the buy/sell/move process.
- You don't have at least 20% down. The squaliformes will tell you they have programs for you but there's a reason they do that: They make a ton of money off of you for the supposed privilege.
It is the judgment of this court that the great American dream of homeownership is highly over-rated for a lot of people. It is the squaliformes dream of American indebtedness that goes unnoticed.
The Honorable Judge Roy Bean.