Tuesday, October 14, 2008
Home Buying
Just a note to say that buying a house is alot of work. All the faxing and documenting. I think I really like home shopping so much better!
Thursday, October 2, 2008
Letter to WA Senator Patty Murray
I sent this letter to Patty Murray after I received her response to my previous email telling me why she supports the "bailout plan."
Ms. Murray,
Thank you for your response. I understand the challenge you face as you try to keep the economy on track, but hold people accountable for their choices. Let me share our situation to explain why I don't support the bailout.
We owned a home a few years ago. Our payment was high enough that it took two incomes to make ends meet. We have a son with special needs and it became clear to us that he (as well as our older children) needed a parent at home full time. I left my job, we sold our home and decided to rent until we could afford to pay a mortgage on one income. That was right before the housing market increased dramatically. Just a year later, my husband's income increased and we started to look at homes to purchase. Because of the housing market inflataion, created by loose lending restrictions and low interest rates, home prices were out of reach for us. We met with several lenders who offered us all of the types of mortgages included in the bailout: interest only, ARM, 50 year. We refused to purchase a home that was not affordable on a 30-year fixed rate with one income. We tightened our belt and began to save. My husband started commuting to work by bicycle and we shared one paid off car. We don't have cable television, take elaborate vacations or use credit cards unless necessary. We had two children in college at the same time and received some financial aid, although not enough because we are middle class. We took out minimal parent loans, our daughters took out loans and we cut back to make large monthly payments to the University.
After renting for five years, we have been able to save $7,000 so far toward a down payment on a home. The median home price in Pierce County where we live is around $255,000. At the rate we are going, we will not have 20% down for years to come. We had hope, however, because we knew the bubble would have to burst. Home prices are too high for the average income in our area to sustain. We made wise choices, cut back and saved anticipating that when prices dropped we would be able to buy a home with 5% down with a mortgage program we found. Did I mention we have excellent credit, because we pay all of our bills ontime and have a great debt to income ratio?
So, I hope you can understand, why we are more than a little frustrated by the bailout plan. We bought the financial advice books and followed the plans. We got out of debt, lived within our means and saved. But that isn't good enough. From our perspective, the market needs to deflate, so that prices become realistic for families like ours. Instead, buying up bad debt will serve to devalue the dollar (making our paltry savings worth even less) and keep home prices artificially high. If we, not having a background in finance and economics can understand this, what is wrong with our leadership that they can't?
Today, I called my real estate agent and said, "I'm done waiting for a responsible time to buy a home." So I guess the bailout will work. Consumers like us who were doing things "by the book" will throw in the towel and take out debt beyond what we can really afford. I guess that's the only way to buy a home and we don't need to worry. If we can't pay our bills, Uncle Sam will come to the rescue.
Sincerely,
My Toe Mama (Insert my real name here)
NOTE TO MY TOE READERS:
I doubt I will actually do anything irresponsible because I just can't. Large financial purchases make me nauseous, stupid ones make me too ill to sign papers. I am seriously looking at homes though, because I think the bailout is going to devalue the dollar, making prices soar across the board.
Ms. Murray,
Thank you for your response. I understand the challenge you face as you try to keep the economy on track, but hold people accountable for their choices. Let me share our situation to explain why I don't support the bailout.
We owned a home a few years ago. Our payment was high enough that it took two incomes to make ends meet. We have a son with special needs and it became clear to us that he (as well as our older children) needed a parent at home full time. I left my job, we sold our home and decided to rent until we could afford to pay a mortgage on one income. That was right before the housing market increased dramatically. Just a year later, my husband's income increased and we started to look at homes to purchase. Because of the housing market inflataion, created by loose lending restrictions and low interest rates, home prices were out of reach for us. We met with several lenders who offered us all of the types of mortgages included in the bailout: interest only, ARM, 50 year. We refused to purchase a home that was not affordable on a 30-year fixed rate with one income. We tightened our belt and began to save. My husband started commuting to work by bicycle and we shared one paid off car. We don't have cable television, take elaborate vacations or use credit cards unless necessary. We had two children in college at the same time and received some financial aid, although not enough because we are middle class. We took out minimal parent loans, our daughters took out loans and we cut back to make large monthly payments to the University.
After renting for five years, we have been able to save $7,000 so far toward a down payment on a home. The median home price in Pierce County where we live is around $255,000. At the rate we are going, we will not have 20% down for years to come. We had hope, however, because we knew the bubble would have to burst. Home prices are too high for the average income in our area to sustain. We made wise choices, cut back and saved anticipating that when prices dropped we would be able to buy a home with 5% down with a mortgage program we found. Did I mention we have excellent credit, because we pay all of our bills ontime and have a great debt to income ratio?
So, I hope you can understand, why we are more than a little frustrated by the bailout plan. We bought the financial advice books and followed the plans. We got out of debt, lived within our means and saved. But that isn't good enough. From our perspective, the market needs to deflate, so that prices become realistic for families like ours. Instead, buying up bad debt will serve to devalue the dollar (making our paltry savings worth even less) and keep home prices artificially high. If we, not having a background in finance and economics can understand this, what is wrong with our leadership that they can't?
Today, I called my real estate agent and said, "I'm done waiting for a responsible time to buy a home." So I guess the bailout will work. Consumers like us who were doing things "by the book" will throw in the towel and take out debt beyond what we can really afford. I guess that's the only way to buy a home and we don't need to worry. If we can't pay our bills, Uncle Sam will come to the rescue.
Sincerely,
My Toe Mama (Insert my real name here)
NOTE TO MY TOE READERS:
I doubt I will actually do anything irresponsible because I just can't. Large financial purchases make me nauseous, stupid ones make me too ill to sign papers. I am seriously looking at homes though, because I think the bailout is going to devalue the dollar, making prices soar across the board.
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