The idea of home ownership is never far from my mind, especially because being a reader of finance material exposes me to all the benefits and pitfalls of having a mortgage. And of course there's all the news about the bursting of the housing bubble in the U.S. and all. We didn't have the same crisis in Canada but I hear that prices are falling and this makes me a little antsy to get out of debt and into the property market.
This feeling of antsy hit me a couple of years ago, before I rented my house. I have near-perfect credit and always pay my rent on time, which is always around $900. I was starting to fall for the idea that I could roll that kind of money into a mortgage payment. I actually became obsessed with the idea of owning my own home (which helps me dramatically now, because I never let a payment slip on my debts) and I would drive around different neighbourhoods every weekend picking out houses I thought I could afford.
One weekend I found a house in my neighbourhood that was for sale, and absolutely adorable. I took a chance and called the agent listed on the sign. He referred me to a colleague in the mortgage business, who was a manager at TD-Canada Trust (this financial institution keeps showing up in my life, and I don't even have an account there anymore). The mortgage broker, whom I'll call Lisa, graciously met with me at her office and looked over all the bits of paper I brought with me, which showed that yes, I do have only a single, small income (between $20 to 25 000), and a huge amount of debt (close to what it is now).
She did the necessary credit check which proved that I have excellent credit and make all my payments on time. I tried to convince her why I would be a good risk for mortgage approval. She was polite and not too condescending when she explained why, from her perspective, I was actually a bad risk. This was the first time I had heard the term "debt-to-credit ratio."
I was angry and embarrassed when I left her office but after a while, and after renting a whole house, I realized she was right. Lisa did me a favour. If she had approved me a mortgage I would be stuck with it now, and I would be losing my mind trying to keep up with the payments. Not to mention the utilities and maintenance costs, insurance and property taxes. And the decreasing value of my property.
About a year after my appointment with Lisa it became apparent that there was this mortgage problem in the US. So many people just like me didn't have a Lisa to stop them from making a huge mistake.