1. If you have a mortgage on your home you do not own your home. The bank does. Its kind of like you co-signed with the bank on the property.
2. If you miss 4 payments on a mortgage the bank has the right to kick you out of your home. They really do not want to, but you gave them no choice. This really sucks if you had owned the home for a number of years and have built up some equity. You don’t keep the equity unless you can sell it before the foreclosure proceedings start.
3. It is said that owning a home is the “American Dream” but its really a pain in the butt. If anything is broken or needs maintanance its coming out of your pocket. With all of this upkeep the home really owns you.
4. If you ever have default on anything like a car loan or credit card and it goes into collections the courts will slap a lien on your home. This means that if you refinance your home or sell it these liens must be paid whether you want to pay them or not. No mortgage company can do a new loan on a property unless they are paid.
5. The city or state government can just take your house out from underneath you if they plan on putting up a new highway or something else. Sure you will get offered some money but they are telling you that you really don’t own the property, they do.
6. With inflation being at the fore front of every financial happening who would want to pay down their mortgage to at least get rid of the loan. People need that extra money for gas, college educations, weddings, etc.
7. Americans love debt and we are taught to keep spending instead of saving and paying things off.
8. Many senior citizens still have a mortgage on the same home that they have lived in for 30 or more years. The reason is because they are on a fixed income and needed to take money out.
9. There is always going to be a new addition needed for a house or even worse the need to get a bigger house increasing the debt you need to pay back. Why can’t you just stay where you are at and find a way to live simpler?
10. Even if you are one of the few people that do not have a mortgage don’t even think about not paying your taxes. Missing property tax payments will put your house first in line to be auctioned off through a Sheriff Auction. Worse than that you will probably see your house on one of those late night infomercials talking about buying tax lien properties for $685 when the value of the home is $150k.
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!
Ahem. As a corporate creditor in real life the lender DOESN’T own the “secured” property, and as long as payments are kept up the lender is actually in a fairly weak position. One of my companies went through TWO successions of management (complete with corporate name-change) but as payments were kept up there wasn’t a thing that could be done (other than selling out) and some debenture holders who sued got laughed out of court. Fortunately Fuqua Industires/Actava Group/Metromedia International called the debt for redemption and paid me off a year before failing.
Now, a lot depends on the terms of the loan. Home mortgages are structured differently than corporate debentures; payment schedules are a lot different and principal repayment (sinking funds in the old days’ term) is strictly separate from interest. (this last one took a lot of getting used to in dealing with mortgage lenders; I was not used to the idea of loans with a fixed monthly payment.)
Historical note: the home mortgage up until the 1930’s was usually what is called a “balloon” mortgage now: only limited repayment of principal during the life of a loan. A worse feature was that the lender often had the power to “call” the loan in advance: demand payment/refinancing of the loan (the opposite of the Fuqua example above where the borrower had the power to force the lender to accept repayment).
Many of these features were sharply limited by law (balloon mortgages may be illegal or sharply restricted) or custom. Further Fanny and Freddy were created to come up with a new sort of mortgage designed to be “saleable”.
I feel the Mortgage Crisis bill that is about to pass may be the Smoot-Hawley Act of 2008: what starts things to finally collapse.