The Mortgage

If anyone had to pay cash for a house, everyone would live at the YMCA. Except, of course, for Bill Gates because he'd get a wedgie every time he went into the locker room. Plus, he'd probably be rich enough to write a check for a small bungalow.

The rest of us, meanwhile, have to borrow money. A staggering amount of money. Houses are priced differently than anything else you will ever buy, unless you regularly purchase fleets of jumbo jets. The main difference is the number of digits, which is at least five unless you want a roof made of something other than grass. Even then, hardly anyone has a spare $99,000 in cash lying around. (If you do, by the way, I like snuggling by the fire, long walks on the beach, and anything you happen to enjoy so long as it doesn't involve me bleeding.)

So we borrow. The technical term for this is "qualifying for a mortgage," which is what the banking industry settled on after it was warned that "sign away your soul" had already been copyrighted by Satan. The yin of owning a home is that you can defile the shrubbery at will (see Part Two); the yang is that you will be on the hook to a huge multi-national corporation for 30 years.

Once upon a time--which was right before the second Reagan administration and, coincidentally, the crack epidemic--banks considered lending giant sums of money with some sobriety. When my parents bought their house in the late sixties, for instance, they could only borrow 80 percent of the purchase price. Even then, the lenders wanted to know all the details of their finances: how much they spent on car loans, their monthly utility bills, whether they planned to breed anytime soon, stuff like that.

By the time I got around to buying my first piece of real estate, the rules had loosened somewhat. Before my wife and I made an offer on a house (we've since divorced, so the snuggling thing is still open), we "prequalified" for a mortgage, which is another way of saying "we found out how far into debt we could go." In order to do this, we were required to fill out a detailed, one-page form that asked such probing questions as "Are you bankrupt?" and "Do you have a job?"

We weren't and we did. But we didn't have anywhere near 20 percent to put down, except perhaps, on a refrigerator box. The bank didn't care. Five percent was good by them (and some federal programs will let you weasel in at 3 percent). We told them how much we made--a solidly middle-class income--and faxed the form back to the main office.

Within an hour, a "loan specialist" called. "You qualify for $268,000," she told me.

"No, no," I said. "You must have the wrong file. Domaniac. D-O-M-A-N-I-A-C. That's me."

"Yes," she said, "I know. We'll lend you $268,000."

I laughed. "You're kidding me."

She was silent. "What do you mean? That's what you qualify for."

"No I don't. Who's going to pay it back?"

"You will," she said. "According to our calculations, you can comfortably afford that."

That's the rub. What's "comfortable" for a bank is a strict diet of dried pasta and tap water for you. Real estate is a can't-lose investment: If you punt on your monthly mortgage, the bank gets your house, which, considering the market the past six years, is worth more in August than the bank lent you in July. The only potential downside is you going bankrupt, in which case you'd have to give an ugly answer to half the questions the next time you prequalify.

We took the bank's offer in stride and started looking for house in earnest. Houses well under $200,000, of course; but houses.

*****

Nouveau Snobbery

...Or There's a Reason the Market is Depressed in Love Canal.

The last apartment I rented was a bi-level loft in a converted chocolate factory directly across the harbor from downtown Boston. Wonderful place. Thirty-foot ceilings, skylights, a catwalk wrapping around the living room, two bedrooms, and a roof deck with a postcard view of the city. Plus, it was cheap, at least for Boston, which means I could afford it if I gave up certain luxuries such as, say, toothpaste.

On the downside, it was in the city of Chelsea, a place I knew about because I'd once written a story about how goofily corrupt city government was. Fascinating place, Chelsea. The police department's vice squad wouldn't work nights or weekends -- but, believe me you, hookers and craps dealers couldn't get away with anything before sundown -- and the park department crews were allowed to clock out if the thermometer tweaked 90 degrees. True story: the city let nearly $1 million in unpaid parking fines molder in an office for years because it would cost too much to mail out the overdue notices.

Eventually -- which, coincidentally, happened to be shortly after three former mayors were indicted on corruption charges -- the state installed a receiver, which is a bureaucratic term for "benevolent despot." For those five years, it was a fine place to be a tenant. For any year after that, when the locals got to play City Hall again, it would have been a risky place to invest actual real estate dollars. Even the local bookies wouldn't take that action.

It didn't matter that we could have gotten a lovely brownstone for an astonishingly cheap price. It would still be in a city with a sorry record of municipal stability. There was a better-than-average chance that a $100,000 house in 1995 would be worth, by 2000, $75,000. Which brings us back to the realtor's creed: location matters. Move the Taj Mahal to Love Canal, and it's just another cramped shack no one wants to buy. (The Taj, by the way, is only photographed through wide-angle lenses so it will look bigger than it really is. It's a contractual thing the Indian government insisted upon.)

Having already eliminated the entire city of Boston from our list of affordable homesteads, and having eliminated Chelsea as a viable nesting ground, my wife and I searched farther north, town by town. Revere was next, which many people believe was named for mythic patriot Paul Revere. In fact, it was founded by Revere's second cousin, a half-wit cooper named Carl. Still, it has many delightful qualities, including America's First Public Beach, a long stretch of white sand that also boasts America's First Huge and Grotesque Condominium Complexes and America's Largest Gathering of Pontiacs with Loud Exhaust Systems. It also has Bell Circle, a traffic rotary (another New England curiosity) honored by the Commonwealth of Massachusetts as the most accident-prone loop of pavement in the state. On the plus side, almost all of the low-level Mafia associates have since been displaced.

Next is Lynn, which has it's own poem. Lynn, Lynn, the City of Sin/You never go out/the way you came in. Oceanfront property in Lynn could be purchased in the early nineties for less than $200,000. My friend Greg considered buying the place on the water he'd rented for years. A real estate agent laughed at him.

From Lynn, there are two directions one can travel. East, across a causeway prone to washing out twice a year, to Nahant, which is gorgeous, cramped, and expensive. Greg went there. He's rich. Or north, to the unfortunately named town of Swampscott, where the coastline is rimmed with million-plus estates.

We settled in to do some homework. Being reporters, we approached the task with pit-bull tenacity. We haunted town hall, we pestered clerks and building inspectors and public works people. We knocked on doors. Within a week, we knew more about the town of Swampscott than the librarian. We missed only one crucial detail, the one I'm still paying for.

*****


Fore more on buying your home, selling your home and finding your home's value on line, visit www.domania.com.

Location, Location, Location

The easiest thing about buying a house is deciding to do it. One day, which happened to be the same day I wrote another check for an extortionate amount of money to my croup-ridden landlord, I realized that the federal government wouldn't make me pay taxes on the even more extortionate interest that banks charge for mortgages. In practice, that would reduce my annual federal tax debt to approximately 17 cents. (Fair warning to the rabble: stop carping about welfare reform. The mortgage interest write-off is the food stamps of the middle class, except it doesn't involve nearly as much macaroni and cheese.)

The hardest part about buying a house, on the other hand, is everything else. The real estate industry, which is part of the military-industrial complex we've all heard so much about, has tried to make the process easier by publishing 1,427 books, pamphlets, and Web sites that all promise to "educate consumers." None of them actually do that, because if anyone understood the basic premise behind a mortgage -- namely, that a $100,000 house financed over 30 years will actually cost roughly $300,000, of which 66 percent goes directly to a man named Vinny -- no one would ever buy a house. Plus, all the books use ambiguous terms, such as "points" and "amortization" and "Queen Anne Victorian."

I know this because I have read all of the books, give or take 1,422. From that rigorous scholarship, as well as a conversation I had with my friend, real-estate professional Alice Miller, and my own humbling experiences, I've distilled the search for a house into realistic, comprehensible steps.

The first one, which is the most important, is deciding where to live. Realtors like to say that the three most important things to consider when buying property are "location, location, location." They say this because every time they stick a for sale sign in someone's lawn, they stir up enormous amounts of grubicides that, once inhaled, addle the parts of their brain that control speech and short-term memory. The clear-headed among them, like Alice, get their brothers to stick signs in lawns and thus say "location" only once.

On the other hand, the most important thing I had to consider was what I could afford. Actually, this was a wonderful introduction to the home-buying process, because I immediately learned to scale back my expectations. For instance, like everyone else, I wanted a house with a view of the water. Even in Massachusetts, a state bordered by an ocean, my budget dictated that I would have to settle for something with a driveway prone to puddling.

So my wife and I began our house hunt by eliminating every place we could not possibly afford to buy. The entire city of Boston was quickly stricken from the list. Like most of urban America, Liberty's chosen home offers a few great neighborhoods at ridiculous prices, marginal neighborhoods at inflated prices, and lousy neighborhoods at plain old expensive prices. So my wife and I began moving out in concentric circles.

Actually, we moved in only one direction, which is a quirk peculiar to Boston. People here are neatly divided into categories: North Shore people, who prefer rocky coastlines and charming fishing harbors; South Shore people, who enjoy strip malls; and Western Suburbs people, who have more money than the shore people, unless they're forced to move really far west.

We went north. Slowly. There were too many towns to eliminate for too many reasons.

*****


Fore more on buying your home, selling your home and finding your home's value on line, visit www.domania.com.

Home Ownership as Evolutionary Inevitability

In the eighties, trend-predictor Faith Popcorn, who despite her name is actually fairly astute, announced that Americans would spend more of their time cocooning, which is a precious way of saying, "staying at home." There were several reasons for this, one being that no one could afford to go out because they'd spent all their money on cocaine in 1982, and another one being that there was almost no chance of bumping into Bret Easton Ellis in your own living room.

Beneath that particular trend, however, was a more primal urge: the instinct to claim one's own domestic space. The Cave Bear people lived as a clan because they only had one cave. Eventually, though, people wanted their own caves, so they wandered off to find someplace else to live, like Germany. After a while, we figured out how to build dwellings out of sticks and animal skins, and then mud and, once the two-by-four was invented, wood. And everybody wanted their own home, too, so that every man could have one small space in which to be a petty tyrant and not share the remote.

The problem with that particular instinct, though, is that men can't indulge it on their own, unlike other instincts such as burping or golf. We have to involve our partner, which, in my case, was my wife. While we're on the subject, it should be noted that buying a house before you're married, or seriously coupled, can be an emotionally risky venture. On some level, it's a creepy reminder that you are alone, despite being stable enough to buy a house. Plus, "I have an enormous long-term debt" has fallen out of favor as viable icebreaker at parties and bars.

The sorority-girl real estate agent had stirred my instinct to own. I pondered it for a few days before broaching the idea with my wife, who, like me, was essentially content renting an apartment. But I'd done some research, examining the pros and cons of buying property, making a passable effort of studious analysis. My wife, on the other hand, was fixated on one detail.

"We don't have any money," she told me.

"You know why?" I countered. "Because we've pissed it all away on rent." Which was true. In 10 years, we'd written roughly $96,000 worth of checks to various landlords.

"It doesn't matter why. We still don't have any money."

"Yeah, but we'd get a huge tax break if we were paying a mortgage," I told her. "And we'd be building equity." I showed her the numbers: after deducting interest, insurance, and taxes, one year of $1,300 monthly payments would pile up almost $17 of equity. Seventeen dollars we wouldn't otherwise have.

"We don't have any money," she said.

"And then there's pride of ownership."

"We're broke."

I conceded defeat. But the instinct was still smoldering. A few days later, it roared back to a flame.

I was at Kevin's house, which he and his wife had bought a little more than a year earlier, sitting out in the yard drinking beer and bemoaning my anemic checkbook. Kevin listened sympathetically. Then he stared at me for a few moments with bemused and mildly drunken eyes.

"You know what the best thing about owning a house is?" he asked me.

"No. What?"

He stood up with a deliberate effort, shuffled over to a hydrangea shrub, unzipped his fly, and peed.

"You can do this," he said. "You can come home and think, this is my house. I own this." His voice torqued up a notch. "I can do whatever I want. I can repaint at will. I can knock down walls. And if I want to, I can take a leak in my yard. My yard."

Then he zipped up and turned around. His voice was back to its normal deadpan. "Of course, I've never actually done that before. But the point is, I can."

He sat back down. "You should buy a house," he said.

He was right. I wanted my own house. With my own hydrangea.

*****


Fore more on buying your home, selling your home and finding your home's value on line, visit www.domania.com.

I Never Wanted to Buy a House…

I never wanted to buy a house, which is another way of saying I'd never given the idea any thought.

Five years ago, the only thing I knew about real estate was that I couldn't afford any. So I was content being a tenant, writing a check for eight hundred bucks every month for a fifth-floor walk-up with a view of a weathered shipyard and a giant pile of rock salt. My wheezing neighbor always told me the salt gave him emphysema or at least raised his blood pressure. I didn't care. My blood had always been on the thin side anyway.

But then some guy in a cowboy hat bought me a beer. And some tequila. He wasn't a real cowboy; he was just pretending to be one in a bar on Hot Country Night. Most of the people there that night were doing something called line dancing, which is like the Hokey Pokey only it's done in a straight line and requires less rhythm. I was not among those people. Instead, I sat at the bar with a friend who had brought me there and who had only moments earlier discovered that I don't like country music or rednecks, let alone fake ones.

He knew the guy in the hat. Because I am sociable by nature, and because the man in the hat was buying, I said hello. I didn't have to say anything after that, not as long as I kept drinking. So I listened as the cowboy told us about a house that was for sale in a town north of Boston. It was mansion, really, with nine bedrooms and six fireplaces, right on the ocean, and really, really cheap.

"It's not gonna last long, not in the market," he said. "Nope. Gonna go quick."

I nodded. He bought shots of tequila and more beer. "You gotta go look at this place," he said. "You wanna see it? I know the agent."

I drank my tequila. He bought another round.

"Really," he said, "you should check it out."

I drank more tequila.

This continued for some time. Listen to short sales pitch. Drink alcohol. Listen. Drink.

After the third shot, the cowboy started to slur his words.

His eyes were moist. "It's my wife," he said. "The agent. She's my wife."

I nodded sympathetically. I realized that we were not talking about a house. Every man understands that any barroom conversation that involves moist eyes and the words "my wife" is actually a highly evolved code for "My life is a living hell and since I've paid for the alcohol you are required to do everything in your power to help me, especially now that you are too drunk to realize the barroom code of men is really, really stupid."

The cowboy's wife was new to real estate. In three months, she had sold exactly zero properties. She was desperate. The cowboy was more desperate. He bought one last round.

"Will you at least look at it? Please?"

I told him I would.

*****


For more on buying your home, selling your home and finding your home's value on line, visit www.domania.com.