Chap 8: Mortgages

There are really only two ways to buy a house - with your money or someone else’s money. What would baby boomers of the past generations have done without the huge equity they have in their principal residence? This only came about through hard beginnings, a down payment scraped together or borrowed, and a home mortgage.

Over the next year, millions of Americans will deal with a mortgage in one way or another. Many will upgrade to a bigger home or re-finance their current mortgage loan. Others will reach their dream of becoming first-time homeowners with the help of a mortgage, which is one of the best ways for anyone to build their wealth.

If It Seems Impossible

Unfortunately, for many lower-income families, this dream can seem impossible. Through the work of many organizations and non-profit groups, there are numerous resources available to help make this a reality. It won’t be easy, but it will be possible in direct proportion to how much energy and effort you commit to making it happen. You’ll need to commit for a reason – not just a season. After that, you’d be surprised at how many groups and individuals are passionate to teach you about the tools needed to get started. The contact information for America Saves, with groups throughout the country, is in the back of the book. It is managed by the Consumer Federation of America who was also instrumental in the start of the Black America Saves programs. One call and you’ll be in touch with many others who share your dreams, goals and desire to look for ways to make home ownership a reality, one step at a time.

One powerful example of this started in early 2004 when Pittsburgh became the first city to launch a Faith Saves Initiative. This is a program designed to help motivate and educate families on the value of savings and the benefits of home ownership. Under the leadership of Building United of Southwestern Pennsylvania (BUSP), this group has already pulled together over 1,200 churches. Its executive director, Reverend Samuel Ware describes the purpose of BUSP very clearly as “a mission to help people with low to moderate incomes become home owners.” The Faith Saves Initiative also has major commitments from Fannie Mae and Countrywide Home Loans.

Where there’s a will, there is always a way. But you cannot have others fighting harder for you than you are prepared to fight for yourself. If you are someone who believes that owning your own home can’t be done, take a look around, and realize that many are well on their way.

Shopping for a Mortgage Loan

Obtaining a mortgage loan is almost a dance. Lenders want the largest return with the least risk, while the borrower wants the most generous terms at the lowest rate. This is definitely an area where shopping around for your mortgage can pay off in savings larger than negotiating the actual price of your house. One of the considerations will certainly be the deductibility of mortgage interest. But you can deduct interest on a bad mortgage in the same way you do with a good deal.

Shopping for a mortgage loan has nothing to do with convenience, and where you currently bank is irrelevant. It’s not as if you’re ever going to visit your mortgage company for coffee. Whether they are located across town or in a different State, all that matters is their rate, points and terms. The payments will be debited from your account, or mailed, no matter where you live or bank.