Читать книгу Home Buying Kit For Dummies - Eric Tyson - Страница 51

Ultimately, a lender doesn’t care about you, your financial situation, or your other needs as long as it has protected its financial interests. This is true whether you’re borrowing to buy a car or a home. The lender doesn’t know or care whether, for example, you’re

 Falling behind in saving for retirement

 Wanting to save money for other important financial goals, such as starting or buying your own small business

 Parenting a small army of kids (or facing steep private-schooling costs)

 Lacking proper personal insurance protection

And therein lies the problem of making your decision about how much home (or car) you can afford to buy on the basis of how much money a lender is willing to lend you. That’s what Walter and Susan did. They set out to purchase a home when Walter’s business was booming. They were making in excess of $200,000 per year.

Walter and Susan really wanted to buy the biggest and best house that they could afford. When they met with their friendly neighborhood banker, he was more than willing to show them how they could borrow $900,000 by getting an adjustable-rate mortgage. (You can read all about these mortgages in Chapter 6. We’ll simply tell you here that because some adjustable mortgages start out at an artificially low “teaser” interest rate, they enable you to qualify to borrow a good deal more than would be the case with a traditional, fixed-rate mortgage.)

Walter and Susan bought their dream home with an adjustable-rate $900,000 mortgage. Within a few years, Walter and Susan’s dream home turned into the Nightmare on Oak Street. Their mortgage became a financial noose around their necks.

When blessed with young children, Walter and Susan didn’t want to work such crazy long hours; yet they were forced to do so to meet their gargantuan mortgage payments. The initial payments on their adjustable-rate mortgage were low, but they ballooned gigantically as the loan’s interest rate increased.

The financial strain led to personal strain as Walter and Susan had frequent arguments about money and childcare. We know of others who stretched themselves the same way that Walter and Susan did. Many of them continue slaving away long hours in jobs they don’t like and making other unnecessary sacrifices, such as limiting the time they spend with family, in order to make their housing payments. Some end up divorcing, due in part to the financial strains. Others default on their loans and lose their homes and their good credit.

People at all income levels, even the affluent, can get into trouble and overextend themselves by purchasing more house than they can afford and by taking on more debt than they can comfortably handle. Just because a lender or real estate agent says you’re eligible for, or can qualify for, a certain size loan doesn’t mean that’s what you can afford given your personal financial situation. Lenders can’t tell you what you can afford — they can tell you only the maximum that they’ll lend to you.