April 14, 2024
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Linking Northern and Central NJ, Bronx, Manhattan, Westchester and CT

The Role of Mortgages In Our Spending

I’d like to follow up on Rabbi Rothwachs and Gershon Distenfeld’s recent statements regarding (“A Viral Opportunity,” April 23, 2020) our communities propensity for spending.

While I have strong feelings regarding consumers who use credit cards and other forms of debt for discretionary expenses, all the things Gershon addressed, I would like to focus on mortgage related activities.

First, as we come out of lockdown, many people will be tempted to spend. Not only will we have the mad crush of summer weddings but we will likely have the make up spring weddings as well. After many months of hibernation, people are likely to take out the plastic and spend on vacations. Having missed Pesach programs, Sukkot programs may become popular.

Twelve years ago, as a bankruptcy attorney, before I became a residential lender, I worked with a number of people who raided their retirement plans and took out home equity lines of credit in order to pay for a wedding, only to find themselves facing foreclosure when they couldn’t make the mortgage payments. Is your home the proper vehicle to be using to finance such an extravagance or to pay for an expensive vacation? Are you using credit cards to pay for these expenses with the expectation that you will get a HELOC (home equity line of credit) to pay off the credit cards?

Perhaps you should limit your expenses to the money you have in the bank and not go into debt. Economists rely on consumers to spend, even as they ring up huge credit card and other debt, because spending is good for national growth. Perhaps this type of spending is good for the economy in general but it’s not good for you as an individual. Let somebody else feed the economic engine while you live within your means.

I would also like to address the fact that people are arguably purchasing homes beyond their income level. Perhaps people can be content with a smaller home and not have the anxiety of higher taxes, steeper maintenance expenses and exorbitant mortgage payments.

There was a lot of pain in 2008-2009. I saw families torn apart due to financial stress. Hopefully we will be done with lockdown soon and the world will come back to normal. I suggest it’s an opportunity for a reset for so many things, one of which is how we consider our relationship with our homes. Are they investments and piggy banks or are they sanctuaries where we can safely house and protect our families?

Please consider that before you take out your next mortgage.

David Siegel
Teaneck
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