Avoiding the repo man

I like this prayer: “Dear Lord, some days I am greedy and some days I am stupid. Please keep me from being greedy and stupid on the same day.”

This brings my attention to Kris Frieswick’s piece about foreclosure. She says, don’t blame the institutions who have been offering to loan us enough cash to hang ourselves. Instead blame the greedy fools who take the loans.

It’s not so simple. Have you watched daytime TV lately? Did you see the “quick fix” commercials which promise to solve all your financial problems simply, confidentially and quickly?

Loans are complicated matters that intelligent people do not fully understand. When a smart, pleasant professional promises to solve your problems, it is easy to believe him/her. It is not always clear that it will end with a visit from the repo man.

Now the advice:“Your” loan officer does not work for you. He/she is being paid a commission on the loan that you buy. Just like a car salesperson, “your” loan officer could be trying to find the best loan for you, or he/she could be lining his/her own pocket. How do you know the difference? Read and understand your Good Faith Estimate. Ask your lender to show you the payments over the entire life of the loan. If you can’t handle the payments, with some cushion, don’t borrow the money!