I few days ago I ran across one of the many stories related to home buyers crushed by the weight of their mortgage loans:
After discussing their financials with a mortgage broker, the family was presented with a deal and payments they could afford (italics mine). The interest-only, adjustable rate loan sounded good at the time. And since they were not first-time homebuyers, they thought they knew what they were getting into. [They] figured they could always refinance before the interest rates were adjusted.
Soon, the family settled in their seven-bedroom, five-bathroom plantation-style home with a pool (bold mine).
They were also paying mortgages on vacant rental properties when they couldn’t find tenants because of the housing crisis.
The story did not provide details on dates but vaguely implied the purchase took place perhaps four years ago or so. The story did say that this is a family of four (two adults and two kids). I suppose the story was intended to draw some form of empathy, but I had to stop and wonder: four people in a seven-bedroom house, with five bathrooms? Four, seven, five? Seriously? Vacant rental properties? Interest-only payments? Empathy?
We didn’t expect it to implode was the thinking. But, realistically speaking, this situation is what is generally referred to as living well beyond your means. Whether shady characters in financial institutions were crafting even shadier products to pile up so-called toxic assets and pass them along while making a bundle is not the point. The point is, simply, seven bedrooms when they can’t realistically be afforded and were probably not necessary to begin with, pushing the limits of financial reality and sanity over the edge. Any disturbance in the force (and they sadly experienced a few, including, unfortunately, health issues) is very likely to blow the scheme to smithereens. The story has a happy ending or sorts: the rescue plan, after some maneuvering, seems to have helped this family’s situation, which is good (there is little point in having people end up roofless), yet there is a sense of responsibility that seems to have been lost to boundless meness and unrealistic entitlement, which handily obliterates any sense of empathy whatsoever when there are so many other families that lived closer to their means and still got caught in the storm or others that chose to (or were forced to) pass on owning because they made the sensible decision that they could not afford a place.