Terry Mitchell

Help! We Can No Longer Afford the Good Life



Posted: Tuesday, October 18, 2011

by Terry Mitchell
http://commenterry.blogs.com

One of the major TV networks ran a story the other night about a family that was about to be forced out of their home, due to the fact that the wife lost her job and they could no longer afford the $2200 a month mortgage payment. They were hoping to have the bank permanently cut their interest rate to 2%, which would have resulted in their mortgage payment being slashed in half to about $1100. The story described how much trouble the family was having in trying convince the bank to do this, rather than foreclosing on them. After this story was reported and several third parties subsequently got involved, the bank finally acquiesced.

However, I see this as just another case of someone biting off more than they could chew and then wanting someone else to bail them out of their predicament. Why would someone of average means go out and buy a house that came with a $2200 mortgage payment? With a payment like that, the value of the mortgage must have been at least $300,000. According to the story, they purchased the home ten years ago when the average cost of a new home was around $215,000. Assuming they put 10% down, they paid about $333,000 for their home, or 54% more than the average price of a new home at that time. And, by the way, they didn’t live in an extremely high-cost area.

So, that means one of two things: They were either of better-than-average means or they overbought. Either way, I doubt that they could elicit much sympathy from average homeowners, many of whom are doing all they can to keep up mortgage payments that are barely more than a third of what that family was paying.
Terry Mitchell is a software engineer, freelance writer, amateur political analyst, and blogger from Virginia, USA. He posts a least one article a day to his blog - http://commenterry.blogs.com - on subjects such as current events, politics, technology, society and culture, religion, health and well-being, self improvement, personal finance, trivia, and sports. He is also the owner of a new privacy-enhanced search engine - http://www.SearchMost.com.

This Article has been viewed 141 times. (Not updated in real-time.)
Top-level comments on this article: (1 total)
» left by Christofer French
 208 days 10 hours ago.
74 fans.
Good math. Makes sense, and the sympathy issue is for sure. There are so many people who just got caught up, and are now stuck.
» left by Terry Mitchell 207 days 3 hours ago.
93 fans.
Christofer, I'd glad you agree with my math.
We want your comments! If you can read this, you don't have javascript enabled, so you can't use this comment system. Please enable javascript.