For Millennials Homeownership Should Not be the American Dream
Although homeownership is the American dream, it might not be for everyone. This mythical homeownership dream has, however, been sold to everyone — no matter their salary, background, orability to maintain their property — and this cycle must end. To put it simply, not everyone is an appropriate candidate for homeownership.
There are a variery of reasons why homeownership is not for everyone; the costs, the maintenance, and the lack of a proper mindset. Now, in case you wonder what I mean by the proper mindset, I am referring to the way people think when they begin the ownership process. Often when people talk about buying a house they speak of it in fantasy language. They use a mantra of "I deserve," and have fantasies of McMansions with marble on every surface; huge closets as big as a bedroom, or bathrooms with all the bells and whistles. Nothing less will satisfy, despite the fact that more often than not these people are living out a caviar dream on a Pabst Blue Ribbon salary.
Individuals are going to have to accept the reality that most people will never have their own home, especially if they live in major cities. Most people are unwilling to downgrade their house dreams but it’s time to reset the HGTV mindset of what a home should and can be. That said,I personally love HGTV, and consider it my dirty little secret — a la house porn — that I watch a few times a week. I become giddy over the giant kitchens with the professional grade appliances, the bathrooms with showers that look like a spa, the family cave with huge projector, and seats that cushion your rump. Who can resist the siren call of the closet bigger than a bedroom? I certainly can’t and if I were rich, I would have all that and more. I don’t blame HGTV but instead the American attitude of, "I want I want," and the unscrupulous mortgage lenders who enable unqualified people to live out their greedy dream of homes they can’t afford.
As the economy improves, and if interest rates increase, I believe that people will again buy more than their bank account can support, so I am looking towards the government to be the parent and to say, "no," to the lenders and the individuals. We need to reenact regulations to protect not just individuals and banks, but also to protect our economy from another brush with a depression.
The Obama administration has three programs that will take effect later thisyear to assist with the glut of houses that are in the foreclosure process, in serious delinquent mortgages, or that are bank owned but not currently listed for sale. The three programs are HAMP, HARP and the Pilot REO Property Sales in select areas of the continental United States. These three programs will benefit homeowners and landlords but are not geared towards individual buyers who didn’t take advantage of the easy loans from the past decade.
1) Home Affordable Modification Program (HAMP)
If you're employed, but still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP). HAMP can lower your monthly mortgage payment to 31% of your verified monthly gross (pre-tax) income, which usually provides savings of hundreds of dollars per month. Detailed information will be available for mortgage servicers in February 2012. The expanded program for homeowners is expected to be available at the earliest in June 2012.
2) FHFA Announces Pilot REO Property Sales in Hardest-Hit Areas
The Federal Housing Finance Agency (FHFA) announced the first pilot transaction under the Real Estate-Owned (REO) Initiative, targeted at the hardest-hit metropolitan areas — Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix, and parts of Florida. With this next step, prequalified investors will be able to submit applications to demonstrate their financial capacity, their experience, and their specific plans for purchasing pools of Fannie Mae foreclosed properties. The requirement is to rent the the purchased properties for a specified number of years. The forms are available on the FHFA REO Initiative page: Bidder Qualification Form PDF and Investor Pre-Qualification Process.
3) Home Affordable Refinance Program (HARP)
HARP is designed to help you get a new, more affordable, more stable mortgage. HARP refinance loans require a loan application and underwriting process, and refinance fees will apply. For a mortgage to be considered for a HARP refinance, it must be owned or guaranteed by Fannie Mae or Freddie Mac.