Adjustable Attitudes Instead of Adjustable Mortgages

Oh no! Someone is telling people NOT to spend huge amounts of money on their houses! Everybody run away!

The truth is that it's in a Realtor's best interests to encourage clients to stay well within their means. Successful homeowners make for better references. A Realtor known for honesty concerning a client's income and the amount of mortgage they can *really* afford is going to be in demand by people who want someone who is going to look out for their best interests. So here it is: the facts of buying a house that costs more than you can afford on a normal mortgage. In short, don't do it.

The foreclosure crisis has clued some - certainly not all - people to the fact that buying a house that you can't afford ends up badly. Somewhere between the public's rabid fascination with the rich and famous and the American Dream is the attitude that it is permissible for people to risk their credit rating, their health and their family's security in order to live in a home that is so far out of their budget that it might as well be on another planet.

What is sad is that home ownership is still a good investment - as long as it is entered in upon wisely and carefully. The power you have with your own property is considerable. You could buy a fixer-upper and, with some judicious repairs and decoration, sell it for thousands more than you invested. You could buy a property in a market that becomes hot and see your home slide up the value scale. These things are all possible for homeowners who know their limits.

Living in our society has given some people a grossly skewed notion of what needs are vs. wants. A person might think that they "need" a car, that they "need" TV, that they "need" the Internet. They don't stop to think that, barely 100 years ago, a person in their financial bracket often didn't have anything of the sort and there are millions of people on the earth who still don't.

This is not to say you should ditch your car, cable and Internet. However, you should be taking a long, hard look at your income and your spending habits before pen touches the paper of a mortgage contract. You need to be aware of how much it's smart of you to be spending on a mortgage every month. Forget what you're qualified for; figure out what you can afford along with the attendant expenses of a house: maintenance, repairs, taxes, and insurance, not to mention non-house-related debt. If you can buy cheaper without sacrificing house quality or getting into a bad location, seriously consider it.

What do people really need to survive? Food, water, shelter. Shelter includes adequate living space and appropriate clothing for the elements. You might also include heating and cooling in with this. That's it. And that's what a lot of people spend their lives struggling to attain, while we sit and whine about how hazard it is to drive a 10-year-old car.

Our perception of what we "need" in a home is warped. Many people think they "need" extra rooms for material objects that do nothing for their lives except accumulate. Others think they "need" extra rooms to entertain or house the guests who come once a year. Do they? Sure, it's nice to have extra space, but if you don't have the extra money to pay for it, you might find that the expenses far outweigh the benefits in the long run.

A little perspective can go a long way when you're considering a house purchase. You don't need a house that is outside of your budget - some simple math should clear that up. You also can't separately calculate your debts to credit card companies, student loans, etc. in terms of your income. You must know how much you spend each month and whether the mortgage you're thinking of taking on will end up benefiting you.

Another item: You are not your house. So what if your friend has a huge McMansion with its own in ground swimming pool? Can he afford it? Good for him if he can. Can you? Better check. You'll look a lot stupider going into foreclosure on a property you couldn't afford in the first place, then being the proud owner of a modest home with a reasonable mortgage.

In conclusion, adjusting your attitude towards your "must-haves" in a home will drastically change your financial picture to one that you can maintain over the years instead of bringing you to financial dire straits. Knowing what your true needs in a house are and being willing to stick to them makes you a lot more likely to be a success in the home ownership arena. Forget the Joneses. Keep up with your personal financial obligations and leave the rampant spending to the fools who will soon pay for it with their credit and their debt load.