Buying a House in America: When Lenders Compete, Home Buyers Win?

The bumper statement above is the conventional wisdom that all new home buyers ought to pay attention to in fulfilling their dreams to become a home owner anywhere in God’s own country, but more so in the Big Apple. One of the greatest breakthroughs you can ever make as a New Yorker is owning your own house. But it is a milestone mired in so much risk and frustration, and it is a decision that could kill you, if you don’t get it right or if you fall into the hands of desperate but licensed Real Estate salesman or broker who can sell you a dead cockroach, and would still make you believe you have hit a jackpot. The starting point is to shop around and to pray about it, if you truly believe as I do that there is really nothing God cannot do. “Oghene sel we mu”. The Urhobos of Nigeria probably got it exactly right, when they coined this statement in their powerful language which I am so much in love with, and very often quotes in few of my writings. True. There is nothing God cannot do. But when it comes to buying a house in this country, I think God needs a lot of your personal input as the buyer. You can make the decision easy for God, by doing your own homework very thoroughly. You just cannot take anything for granted or believe everything you hear from salesmen who are bent on getting their own slice of the pie, after they make you sign on, to your death warrant at the Closing which is the very last phase of the buying process in this country.

It does not matter how educated you are. You could have all the Ph.Ds in this world and still fall a victim. Like everything in America, nothing comes easy, and everything has a process in a country where the rule of Law is everything. If you want to know why it is often said that the Law is an ass, you just come to America, and you will see why, like I did. It is an experience I wish to share with every prospective homebuyer, and most especially, the first time home buyers in America. You could be a long time home owner in Africa, like I was, with a few houses to my name in Nigeria, you are a JJC when you are in America, and all of the experience you may have acquired amounts to nothing, I can tell you.

There are a lot of issues I could raise in this article, but I am going to focus on what I call ‘applied knowledge’ based on my first purchase of a house in New York. My experience is particularly instructive, as I twice successively did a Real Estate training, and got licensed, as a Real Estate Salesman, but I never, for one day, used the Licenses to practice. The theory is something and the practice is another. You would have thought that my certification in Real Estate would have bailed me out when it was time for me to buy. It did not, and the fallout from that experience is what I am about to share with you in this article.

If you are planning to buy a house in America, there is a right and a wrong age to embark on such a project. The younger you are the better. If you are planning to buy at close to 50 or beyond, you have got to be very careful. Usually most lenders will want to offer you, a 30year mortgage, especially if you are an average earner. The thirty-year mortgage may sound very appealing for a start, because it will mean a reduced monthly repayment. But when you compound the interest you will have to pay at the end of a thirty-year mortgage, plus the principal, you will have cause to think twice before going there. First of all, when you add 30 years to your present age, you will be talking of turning eighty years old, by the time you finish paying the Loan. Second of all, you have to also think of your span of life, assuming that you enjoy good health by the special grace of God. You could even die before the end of your mortgage repayment, in which case, the house and all the lien or encumbrances or accumulated equity on it would pass on to your dependants, which is fine. You should also remember there are a lot of imponderables that go along with buying a house in America. The house is not yours until it is fully paid for. Even when it is fully paid for, if for any reason you don’t pay the due taxes on it, if and when due, or if you fail to insure it at all times, you could still lose it.

If you are buying a two or three family house, don’t be consoled by what you are told by the salesman or your broker that getting rents at the rates indicated to you at the point of purchase, would hold true or serve as a cushion to your monthly mortgage on the house. Those salesmen with sugar-coated tongues are only out to make you buy, so they can take their own slice of the pie. You will be lucky, if you hire an attorney that can actually protect you against individuals wishing to take undue advantage of you. Some of the attorneys you hire are sometimes as ignorant as yourself, as they have no time reading some of the fine prints of the so many documents, you will be required to sign at your Closing. They too are also gold diggers. They are also there to take their own slice of the pie at your own expense.

I never felt more miserable like I felt on the day I had my first Closing in New York. I felt like a lamb led to the slaughter who could not do a thing to save his neck from the knife. You have to dissociate yourself from being treated like the proverbial lamb, because the Closing offers you the very last chance to opt out of the deal, and get out before you let them tie your hands. But most homebuyers, either because they are under pressure to quit where they are currently living, or are so desperate to find a new resident, more often than not, find themselves totally beholden to the wolves at the Closing ritual. Everybody present at your Closing are there to shave your head, one way or the other. The seller is entitled to his or her own piece of the pie, which is fine. But all the others at the Closing, as deserving as their role in the scheme may be, are more of vultures wanting to feed fat on you as the new owner. You have got to be fully aware of these imperatives and be emotionally ready for them for your own good.

You have got to beware of salesmen who recommend private lenders or funders to you instead of encouraging you to really shop a

round or to consult with your own personal Bankers, where you could get a much better deal, by way of competitive interest rates and points. Right now in America, you can still get the lowest interest rate possible, if you shop around enough. When Banks compete for your loan, that is the time you win. If you let the salesman mislead you, you lose and lose big. Feel free to dismiss your current salesmen, and shop around for a more rational salesman or broker. They are two for a penny, if you look around. You can always find one that is more amenable to your needs and priorities.

Beware of salesmen and brokers that will encourage you to buy a property that is clearly beyond your means or earning bracket. Most commercial Bank lenders will often consider that factor before approving your Loan, and determining your interest rate. But the private lending Companies your salesman may be shooting for, are those who will make the purchase possible at all cost, thus compromising your right and prerogative to argue with them, if you think their plans or proposals don’t add up. They are the type of lenders who will deceive you into accepting an interest rate percentage that will give you sleepless nights after the deal is sealed. Don’t go for it, because you will regret it. Such lenders will often sell your Loan to other Lenders as often as they see fit as they seek to double their gain. When the letters start coming from such lenders reminding you of your obligations to pay, you will begin to appreciate your mistake. Right now, you may not have had cause to notice any mail men coming to deliver letters to your mailbox. When lenders or funders, as they are often called, bombard you with letters several weeks before their due dates, you will begin to notice postal men coming to deliver your letters, and you will hate their sight in your premises because you would realize, like I found out, that they are carriers of bad news, as they fill your mail boxes with reminders to pay money, they know you don’t have. Sooner or later the frustration will get to you, as your blood pressure begins to rise, and clinical depression sets in to complete the bargain, and to finally take its toll on your health. Some salesmen are no good, but few are very reliable and God-fearing, and will not pull a fast one on you, by telling you the mortgage will be so much without telling you the other contingencies you have to be aware of. If your monthly mortgage comes out at 2000.00 per month, the unanticipated contingencies will escalate your monthly payments to 3000.00 plus when you factor in the monthly cost of Heat/Gas. Electricity bills, Insurance Bills, Water Bills, minor repairs and damages you have to pay people to do, if you cannot do it by yourself. To be a happy camper of a homeowner, you need to be able to handle those minor repairs like painting and carpentry jobs rather than relying on people to be paid. You will discover that people will rip you off taking money from you and not showing up for the job.

If you have tenants, don’t rely on whatever rents they are going to pay you as your only source of paying your mortgage because you will be disappointed. Eight out of ten tenants will add more to your problems, rather than minimize them. Don’t count on them for anything. If you are renting the Basement to them, you are taking a risk, because it is illegal to rent your basement to a rent-paying person. If you run into any problems with them, and you take them to Court, you will lose and lose big. If you rent your premises to a single mothers with little children, forget it, she is always going to be your boss. If you take her to Court, for dereliction on rent payments, you will lose, and that will be a signal to her not to pay you any more rents for as long as it takes for her to find another place. That could run to a year or two. In the meantime you may have to lose your house and ruin your credit rating for life, when your home is foreclosed for good. You will be surprised that your salesman will be one of the buyers bidding to repurchase, after your home is repossessed. Dogs eat dogs in this society. It is all about money, and the rest is History.

Owning a home is about one of the best investments, you can ever make in this country, but it is so fraught with dangers that if you don’t know how to play the game, you lose big time. Better for you to purchase a one Family House and you know from the get go, you don’t have to expect any rent from anybody to pay your mortgage. Better that you join hands with your wife to buy the property so both of you can chip in when the going is tough, because two heads are better than one. Don’t ever buy on the presumption that your child or children can join you in paying the mortgage and owning the house together and sharing the burden and the asset. Things hardly work out the way you envisage.

Be aware of the constraints of the shifting weather in this country and the financial burden and responsibilities it imposes on any landlord or landlady in this country. You have to be willing to shovel the snow on your front pavement and backyard in the Winter time, soon after a Winter storm. You have got to be ready for a roof that may leak or collapse from the weight of the snow pile-up. You have got to be prepared to replace a frozen pipe or a sewage that may back up, and may need to be cleared with immediate effect. If that is your situation, your best bet may be a Co-op or a Condo with no strings attached. All of these observations cost money. How about the cost of Heat to keep you warm in the Winter and occasional argument or fight with an irresponsible tenant who is not paying rent when due, but who wants to place the Heat Thermostat at 80 degrees in the Winter, while deliberately cracking his or her windows to let in more cold hair because he knows you are paying the bill? What of the tenant who wants to install additional units of Air conditioners at Summer time to increase the cost of electricity which he knows you are paying? It is a terrible situation that can make a mockery of your intentions as a gentleman, and turn you into a brute, ruthless and wicked landlord. If you don’t ever want to become any of that, you have got to be careful. Not everything that glitters is gold in the Home-Buying business in America. That is the simple truth.

Above is just a tip of the iceberg. Many more homeowners in this Land will have many more stories to tell, I will imagine. But before I draw the curtain, how about exploring the possibility of losing your marriage and peace of mind, if you are unlucky to be married to a Shylock, who may be gun

ning to lure you into a fight, call the Police on you, and walk you out of a house bought with your sweat and blood without lifting a finger. It is a common experience in this land of opportunity where a woman is often the boss, if the truth must be told. These are some of the bits and pieces you will need to pay attention to, as you take one of the biggest decisions, you will ever make in your life in this country. Need I say more?