Are You Financially Fit?
The first thing you need to do is perform a detailed financial analysis of how much money you have versus how much you’re going to need to buy your house. The way you do this is you draw up what professional accountants call a “Balance Sheet,” which should look like this:
Money You Have
1. Savings account: $927.62
2. Checking account: Conceivably as much as $83.15, provided that the check you wrote to Mister Muffler has not been cashed yet
3. Other assets, primarily canned goods and undeveloped photographs of the airplane wing taken during your trip to Disney World: $44.02
Money You Need To Buy A House
1. Cost to pay random lawyers for God knows what (see “The Ritual Closing Ceremony”): $6,765.90
2. Cost to have various inspectors come around and hold clipboards and shine flashlights at things but fail to notice any sign that the heating system is going to explode moments after you take possession of your new home: $1,250
3. Taxes: $3,856.90
4. Additional taxes that nobody ever mentioned to you: $4,847.89
5. Taxes that are just now being rushed into law and will apply only to your specific house purchase: $5,563.92
6. “Points,” which is technically defined as “money that for some reason you have to give the bank, even though you are the one trying to buy the goddamn house, and no matter how many times you ask, you will never be given an intelligible explanation for this”: $8,745.00
7. Other (phone deposit, cost of actual house, etc.): $126,436.06
So we can see from this financial analysis that you are definitely going to need the bank to give you a lot of money in the form of a mortgage. The bank is willing to do this because, the way mortgages are set up, no matter how many payments you make, you still owe the bank all the money you ever borrowed. Really. This explains why, in all your wide circle of friends, you don’t know a single person who ever came close to paying off a mortgage. When you have a mortgage, at the end of every year the bank sends you a statement like this:
YOUR OUTSTANDING BALANCE AS OF THE BEGINNING OF THE YEAR: $93,423.54
YOUR TOTAL PAYMENTS MADE DURING THE YEAR: $11,647.32
YOUR OUTSTANDING BALANCE AS OF THE END OF THE YEAR: $93,423.54
It may seem as though the banks are taking unfair advantage of consumers here, but they really have no choice. A few years back, they lent billions and billions of dollars to the Third World, which had promised to spend the money on factories and heavy machinery, but which in fact lost it gambling on rooster fights. And since the banks can’t very well march down to the Southern Hemisphere and repossess, for example, Brazil, you can understand why they have no choice but to get the money from average everyday unarmed consumers such as yourself.
All mortgages work basically the same way: You sign a bunch of papers, then you make large monthly payments until the Second Coming. Nevertheless, the top Consumer Money Geeks all recommend that you “shop around” for your mortgage, because there are a number of different kinds available, each with its own terms, conditions, feeding habits, and so forth. Some of the more popular ones are:
The Fixed-Rate Mortgage
The Variable-Rate Mortgage
The Mortgage Whose Rate Is Based on What Order the Teams Finish in the National League East
The Mortgage with a Real Low Rate That Is Advertised in Huge Print in the Newspaper But Nobody Ever Actually Gets It
The Balloon Mortgage
The Party Hat Mortgage
The Mortgage That Is Really the Expired Warranty for a 1966 Sears Washing Machine
The Mortgage of the Living Dead
Here’s an important piece of advice to bear in mind when you’re shopping around for your mortgage: Don’t be intimidated. Sure, the bank is a great big, rich, powerful financial institution and you are a small, worthless piece of scum. But that doesn’t mean you should walk into the bank with your hat in your hand, like some kind of beggar! Not at all! You should crawl into the bank!
Ha ha! Just kidding, of course. You have nothing to worry about. All the bank will ask you to do is supply the home phone number of everybody you have ever known, even casually, since the fourth grade. Then you’ll have an interview with a Loan Officer, who’ll ask you a few standard screening questions, such as: “To get this mortgage, are you willing to lick the gum wads off my shoe bottoms?”
Assuming that you come up with the correct answers (“yes”) to these questions, your mortgage application will be sent on to the Committee to Hold Up the Mortgage Applications for Several Months. This will give you time to practice signing checks in preparation for the Ritual Closing Ceremony.
The Ritual Closing Ceremony
This is an important and highly traditional part of the home-buying process, the last major hurdle you must clear before you become an Official Homeowner. It is comparable to the initiation ceremonies at major college fraternities, where, to prove that he is worthy of the privileges and responsibilities of membership, the pledge must perform some feat such as attending a Papal Mass wearing only a softball glove.
Essentially, what you must do, in the Ritual Closing Ceremony, is go into a small room and write large checks to total strangers. According to tradition, anybody may ask you for a check, for any amount, and you may not refuse. Once you get started handing out money, the good news will travel quickly through the real estate community via joyful shouts: “A Closing Ceremony is taking place!” Soon there will be a huge horde of people—lawyers, bankers, brokers, insurance people, termite inspectors, caterers, photographers, people you used to know in high school—crowding into the closing room and spilling out into the street. You may be forced to hurl batches of signed blank checks out the window, just to make sure that everyone is accommodated in the traditional way.
Another ritual task you must perform during the Closing Ceremony is frown with feigned comprehension at various unintelligible documents that will be placed in front of you by random individuals wearing suits:
RANDOM INDIVIDUAL: Now, as you can see, this is the Declaration of your Net Interest Accrual Payments of Debenture.
YOU (frowning): Yes.
RANDOM INDIVIDUAL: And this is the Notification of your Pro Rata Indemnities of Assumption.
YOU: Certainly.
RANDOM INDIVIDUAL: And this is the digestive system of a badger.
YOU: Of course.
Once the various officials present are satisfied that you truly wish to become a homeowner and have no checks left, they will award you a mortgage, which will spell out your new duties and obligations in standard legal terminology.
Hear ye, hear ye, everybody listen up because the MORTGAGOR, hereinafter referred to as the MORTGAGEE, has, by duly picking up this piece of paper and putting his JOHN HANCOCK thereontofore, committed himself and his family and his distant relatives and unborn children and domesticated animals body and soul to the terms and conditions of this MORTGAGE, whether these terms and conditions are actually stated right here in print on the MORTGAGE or exist only in the form of vague concepts in the minds of LAWYERS working for the BANK, to wit:
1. The money has to BE THERE on the first of the month, rain or shine.
2. If the money is not THERE, the BANK is going to get VERY ANGRY.
3. The BANK is going to want to GET EVEN.
4. The BANK is going to make SOMEBODY wish he was naked and tied down spread-eagle on an anthill with ants eating his EYEBALLS because that would be a lot more pleasant than what the BANK has in mind IF THE MONEY IS NOT THERE.