This installment is actually about dumb things poeple SAY.
I was taking my daughter to basketball practice and we were listening to the radio. One of those advertisements were on that was read by the DJ, with their own little comments and observations inserted.
This advertisement was for some company that was going to get you out of your underwater home. “So you owe more on your house than it is worth? Then call Blah and Blah and they will fix your problem!”. It was the same type of commercial you hear everyday, no big deal.
Then the DJ starts talking…
He and his cohort are chatting about how one of them owes more on their house that is 10 miles away from the water than you can actually buy a house for on the water now. The DJ then advises that they should call Blah and Blah to get them out of their underwater mortgage and they should go buy a house on the water. He then advised to his cohort that he will end up paying on the underwater mortgage for 30 or 40 years and STILL not have it paid off because of what they owe compared to the true value of the house, so they should get out of it now.
I started screaming ‘What are you talking about???”. With a mortgage, you owe a certain amount of money over a certain amount of time, and what your house is worth does not matter at all to the original agreement. Why would you have to pay for 40 years and still owe money on your house?? I was so angry because people listening may actually be nodding their heads and agreeing with this fool, and then they will call Blah and Blah and look for debt forgiveness based on incorrect information.
The only good thing about this little bit of misinformation is it was a good teaching lesson for my daughter, as I explained in depth why the DJ was totally wrong and explained how mortgages worked. After we talked about it, she said “Then why did the DJ tell everyone that they would still have to keep paying?” I then said that he didn’t know what he was talking about and should not be saying such things on a public forum like the radio. I bet that DJ thought he sounded really smart too, sadly enough.
I do think that a big part of the reason why our nation is in the economic crisis it is in is because because act on false, or zero information. If people were better educated in Personal Finance, then I am sure we would all be much better off…