A Philosophical Look at Mortgages

"A Mortgage Casts a Shadow on The Sunniest Field" is a quote attributed to Robert Green Ingersoll. That’s not a name that leaps out at you, but in the late 19 th century he was one of the foremost political orators of his day. Of course, he said this in a world where families typically homesteaded their land, carving farms out of the woods or prairie. The practice of buying a working farm from someone else was rare back then. Does this saying have relevance for us today?

I think that Ingersoll’s remark was prompted by the stories of people who had mortgaged their properties for one reason or another and who then lost them through foreclosure. We all can remember scenes from the silent film era when the evil banker went out to the farm in his buggy, twirled his long moustaches, and served eviction papers on the family. That’s was tragic occurrence, especially when you consider that the farm was the source of all of the family’s sustenance.

Today, foreclosure is still usually a tragedy for a family, but probably happens much less often today than it did back then. Today, mortgage foreclosure rates are in the one to two percent range, but I think that it was a lot higher back then. Because of that, perhaps, in those days having a mortgage was a social smear on your character.

So what about mortgages today? Well, I am proud of what our industry has been able to help people accomplish. When I was born, only about one family in three owned their own homes. Today, the figure is double that, and it has largely been made possible because of the availability of inexpensive mortgage financing. In much of the rest of the world, mortgage financing is simply not available as it is here, and they have considerably fewer homeowners.

I heard once that a significant number of people who die in this country have estates of less than $1,000. If you find that hard to believe, I want you to consider the number of people who live on Social Security income in a mobile home park in rural America .

In my folks’ old home town, near the end of the month you could go into the grocery store and roll a bowling ball down the aisle without fear of hitting anyone. On the 1st of the month, when the Social Security checks hit the banks, you couldn’t find a space in the parking lot. You know that some of these people were hungry the last few days of the month. You can also surmise that the overwhelming majority of these were not homeowners.

The fact is that for many American families, the ability to own their own homes is the significant factor in their wealth. That would be true even if we had not had the significant appreciation that we have experienced in recent years. If they have prudently managed their mortgages, they will own their homes free and clear by the time they retire. Even if they have few other resources, they have the ability to get a reverse mortgage, converting their equity into long term income.

Thus I view mortgages as a tool that allowed millions of people to participate in the American dream. They have to do their part, of course, because a mortgage is only a tool. I also believe that the mortgage can and should be managed. It means refinancing at times when it is appropriate to do so. It means managing so as to achieve a goal, such as owning the home free and clear at the time of retirement. That almost always means making more than the obligatory minimum payment.

It means visiting with a mortgage professional or other financial advisor from time to time to make sure that goals are realistic and that the homeowners are on a track to get to their goals. If you haven’t done so lately, you ought to make an appointment for a check-up.

I am proud of our industry, and I am proud of my accomplishments and those of other client-oriented professionals who have helped people create the largest part of their net worth. I don’t think that we’ve created shadows; we’re part of the sunshine.