Credit Careful

Since the rapid decline in the long term interest rates dropped to historic levels these past few years, I have noticed how much more people are spending on not only homes and home improvements, but also consumer goods. Yes, the lower interest rates have given borrowers more of a comfortable payment level but on the flip side, the larger unpaid balances are still there. For me that sounds a bit scary when as well we all know, there are those “bumps in the road” in our expenses, and when an unforeseen expense arrives, there are no reserves to fill in the hole. I have chirped about this in other articles where I see young entry level buyers jumping up in price ranges where those very homes would have been considered the next step up in home purchases years before. It’s not just happening in the entry level purchases either. I have followed the trend of soon to be retired people plugging themselves into 100K – 200K mortgages. I think that would be the last thing anyone who is entering their retirement years would want to do is service a 30 mortgage with a 150K beginning balance. Aren’t people supposed to start enjoying the simpler and finer things in life during their golden years? I have talked about this with one of the key people in this community who follows trends and has said, “Since we live in a society that doesn’t instill accountability for actions anymore, then we will find when people make poor decisions with their financials, they just walk away from them.” This makes sense to me whenever I see how many bank foreclosures there are in Cerro Gordo County. I think I’m going to give myself a medal for how few homes I have sold over these long and sometimes difficult years that went to foreclosure. I don’t like to see people setting themselves up for failure. I do try to counsel my buyers and encourage them to be credit careful.

Joe Chodur

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