How I Lost My Home: Don't Make the Same Mistakes I Did
This is the story of how I lost my home. I thought I was living the American Dream, but thanks to a series of missteps, it turned into a nightmare. I'm sharing my story in the hope it helps someone else avoid having to go through losing their home.
The shady broker
Let's start at the beginning of my story. I had a friend. She got referred by a friend of a friend of a friend to a broker who was supposed to be able to help people who couldn't get qualified to get houses.
That should have been my number one red flag because I hadn't even tried to get qualified by normal means. I knew I didn't qualify for a mortgage because I had already worked for a financial institution and had a finance background. I did not have very much in my savings.
The plan was to live in the house for a certain amount of time, probably a year or two, and then ultimately rent the house out.
The logic behind it was solid, but I was not financially able to do that just yet. Even though I had the mindset my money wasn't there.
I was looking at houses in shady areas, and the broker got me because I knew I didn't have much money. He was selling loans for homes in areas that were trying to revitalize. When you buy the house, you are given so much money from the transaction to do repairs and updating.
I was so focused on this dream at the time that I did not heed my intuition and questioned things a little bit more. In my mind, I was going to be a homeowner and eventually a landlord. So I'm just moving down this path, getting more and more red flags.
At the time, my fiancé had gotten caught up in this because my soon-to-be brother-in-law was a contractor.
I figured I was going to get this money from this loan, I'll be able to get discounted labor through my soon-to-be brother-in-law, and my fiancé was originally from the east side of Detroit, so I thought he could help me navigate the city.
When it started to fall apart
Between those two people, I felt more confident about it. Very shortly after getting the house, my fiancé and I broke up, so there went all the guidance I thought I was going to have from my fiance at the time and the brother-in-law who was going to do all this work on the home and help me stretch the money I was supposed to get out this loan.
Nobody knows where the broker is, and I couldn't get any information from him about the $10,000 I was supposed to get out of the transaction.
About a month later, I was stressed out completely. I was not in a good mental state because my relationship had fallen apart, and I didn't know what to do about this house.
Then the broker finally gets in contact with me. He tells me he doesn't have the $10,000, but he had a couple of thousand. So now I'm desperate because I know the mortgage is due soon.
The house wasn't livable at the time because someone had broken into it, and people were breaking into houses and stealing copper, stealing toilets, stealing wood, and whatever they could get out of the house.
I couldn't live in it without this money to fix it up. I took the couple of thousand the broker gave me. I don't know why, but I decided to work with the contractors he recommended. The work was substandard.
The broker found somebody to rent the house. She did have a deposit and the first month's rent, then stopped paying. It cost me $1,500, I think total, to try to get her evicted. I was broke.
Eventually, I stopped paying the mortgage, and the home foreclosed; this was right in the thick of the subprime lending bust that sent us into a recession.
Out of that very humbling experience, I learned quite a few things. I'm going to share those with you. So the first thing is to avoid getting too attached to an outcome, person, or situation. I made a decision that wasn't in line with where I was then.
The next thing is to make sure you have plenty of cash. Not a loan, not a credit card, but cash on hand. Whatever you think the house will need repairs and what that estimated cost might look like, pretty much double it.
This next lesson is common sense. If it sounds too good to be true, it's likely too good to be true. I had all sorts of intuitive nudges and red flags. Everybody's like, this doesn't sound right. I went ahead with it anyway, and I got burned.
The other important lesson is the onus is on you. Do your research. Be responsible for the financial purchases and decisions that you make.
My last and final thing is that I did not have a worst-case scenario plan. I had all these plans for what would happen, but they were all plans created around everything happening as it should.
You should have a best-case scenario and then a worst-case scenario; if you can budget and still get by on your worst-case scenario, you're probably good. If you can't, then it might be a decision that you need to rethink or delay.
A house is a huge purchase. It's probably the largest purchase you'll ever make in your life, so take it seriously.
How I lost my home
Hopefully, you all can get plenty of lessons from my bad experience when I lost my home. You can lose your home quickly after buying it if you aren't financially prepared.
Have you had a similar experience when buying a home? Share your story in the comments.