Since When is Staying Current on Your Mortgage Not Enough?
Recently, a prominent business magazine published an article about a young woman who bought a home with an FHA loan and made the required 3.5% down payment. This article is one of the most biased and devoid of facts that I have seen in a long time. It briefly describes the process for obtaining an FHA loan and then transitions into attacking a woman using the loan, as well as her family.
The article seems content to continually make unsubstantiated claims with no regard to actual fact. By the brief mention of actual details, it appears as though this woman took out an FHA 203(k) loan. This type of loan allows for the homeowner to obtain money above and beyond the purchase price so that one can make necessary repairs/upgrades to their home. In the case of this woman, when she bought the home, it was “just a ‘box’ with no kitchen or bathroom.”
This loan has allowed her to put both a kitchen and bathroom in place and significantly increase her home’s value. The author has a problem with her saying that her home has increased by $100,000 in value by making the improvements. He calls it “mark-to-imagination valuation” and also says “she doesn’t give any indication about how she arrived at the conclusion that she has made a $100,000 gain in just a month.” Well, apparently the author did not do the research on loan program which he was so eager to criticize. When the appraisal is done for a FHA 203(k) loan, the FHA appraiser gives a value for the current value of the home (which is not the same as the purchase price) and then also a value for what the home will be once the repairs are completed. Additionally, the purchase price of this particular home, having previously been a foreclosed property, was likely less than its actual market value to begin with.
After making some brief claims about the FHA loan program, which were buried under all of the slander, the author then goes on to attack her father. The author recounts a story told by the woman that her father first bought a home and then began acquiring nicer things. The author makes it clear that he thinks the father was not paying for these items, but rather ‘using their home as an ATM.’ Making unsubstantiated claims about someone the author has actually spoken to is objectionable, but making these claims about an unknown family member of a person they interviewed is abhorrent. It is saddening that people like this have a following and are able to influence people’s opinions.
This woman’s decisions are not the business of other people until and unless she begins to affect other people’s lives. Since she has remained current on her mortgage, she is stimulating the economy, not diminishing it. Hopefully, she will continue to invest in the real estate market, stay committed to the responsibility and enjoy the privilege of home ownership.