Home Mortgage … Asset or Liability
Copyright © 2025 Prof. Dr. Dr. Dr. Tom Grooms
*Investor *Family Business Owner *Author
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Home Mortgage
Life begins for most after marriage and a 30-year mortgage, both till death do you part. It is a naive thirty-year death trap, the mortgage, not necessarily the marriage though 50% of marriages end in a destructive divorce.
You may be one of the 75% or 100.6 million American households who can’t afford to purchase a medium-priced home at $459,826 based on a fixed 30-year mortgage rate of 6.5%. You may be one of many who are also upside down in the investment of their home. (Source: NAHB National Association of Home Builders)
At an average 30-year fixed 7.0% mortgage interest rate, 70% of Americans between the ages of 23-40 who want to buy a home say they can’t afford one. It would take a household income of $147,433 to buy a medium-priced home at $459,826. (NAHB)
The value of a 30-year mortgage is directly tied to the 10-year treasury note controlled by the Federal Reserve committee which sets mortgage rates. For every quarter-percent rise in the 30-year fixed mortgage rate, over one million households are priced out of the market. (NAHB)
The biggest problem with mortgages is debt. This 30-year mortgage lifetime-sentence of financial stress means directly working for the federal government, banks, and financial institutions.
Prior to 2008, the average age of a first-time home buyer was 38 years of age. In 2024, the median age of home buyers was 49 years of age. In 2025, the median age of all home buyers has risen to 56 years of age.
The benchmark to note is home buying is presently being done by those with higher incomes. The ability to purchase or mortgage at higher prices is greater than first-time or younger home-buyers.
The biggest difference for this fact is younger working adults and couples together under 40-years of age don’t make enough money to save. This is because of the inflation created by the Federal Reserve.
Mortgages have put 60% of American family homeowners in default, underwater on home values, and unable to sell their home for what is owed. In this instance, mortgages are a liability.
The other 40% of homes have no mortgage. The discrepancy is most of the cash no-mortgage homes are bought by investors for rental income or to make a quick flip for a fast profit. However, many of them are now facing default due to no tenants and poor business decisions.
Mortgages are designed for first-time home buyers. After that, only people who can’t afford to pay cash for a home use a mortgage.
For young adults and families, a no down-payment mortgage should be their first step to home-ownership. The mortgage should have no closing costs and be a short-term note for 5-years at no interest.
For college graduates, a no down-payment mortgage should be their reward in acquiring their first home-ownership. The mortgage should have no closing costs and be a short-term note for 5-years at no interest.
The reason why this is a good deal for America and every American, it gives young people a vested interest in the American way of life and being positive contributors to society. It’s the same vested interest in the country each person has after service in the military.
It’s better to have Americans in a starter-home than living on the streets or struggling years to raise a minimum downpayment which is almost impossible under the current condition. The banks, mortgage companies, and financial institutions take no risk and shouldn’t care since the government picks up any loss and they lose nothing anyway.
You shouldn’t need a mortgage after selling a home by rolling your equity into your next home. This keeps the homeowner out of trouble from default.
Sure, you can lose your job, have a medical catastrophe, or bad luck and forfeit your home. The whole point is to be given a fair-chance to succeed in life at the start while your younger which doesn’t exist at present.
Another sound approach to home ownership is to pay cash as you go by first purchasing a lot to build your own home on and pay it off. Next, buy the materials as you can afford while working to build your dream home with your own two hands and own it gradually title free-and-clear from the start.
You can always buy a pre-existing home in bad condition in a great neighborhood and renovate it yourself over time while living in the construction. Afterall, you always need a place to sleep at night.
You don’t always need a contractor to do the work for you. You only hire a subcontractor when it comes to doing something you need help with or can’t figure out how to do it yourself.
This approach allows savings of thousands of dollars in interim construction loans and mortgage interest. Another benefit may be to bypass many government licenses and taxes since you are doing it yourself.
Being in a hurry about anything in life is usually costly. You can’t buy time, but you can put a lot of extra money in your pocket.
It may take you longer, but well worth it. You should always build a home your own way, at your own pace, to your own liking, and own it debt-free.
By all estimates, when you take a $350,000 house and add-on $600,000+ in mortgage-interest payments over a 30-year period, doing it yourself looks pretty good and financially smart. Having no mortgage or paying off your mortgage as soon as possible is your number one best lifetime savings while paying in the least amount of income taxes.
You cannot overpay for a home with cash. You can overpay for interest and debt landing in default. The Grooms Rule of 5.
Source: Grooms, My Little Business, 2023.
In 2024, 66.6 million households or 49% out of a total of 134.9 million households are unable to afford a $250,000 home. The data is based on conventional underwriting standards that assume the cost of a mortgage, property taxes and property insurance should not exceed 28% of household income. (NAHB)
In 2025, there are 134.3 million existing households seeking to reach fulfillment of owning a home and reaching the American Dream. More than half of American households can’t afford a home. (NAHB).
At present, 76.4 million households or 56% out of the total 134.3 million households in America are unable to afford a $300,000 home. Only 6.83 million households in America are able to qualify for a $300,000 to $250,000 home. Even worse, 52.87 million households in the U.S. are estimated to have incomes sufficient to meet the threshold affordability to buy homes priced up to $200,000. (NAHB).
My work argues a conservative estimate of households spend 60%+ of disposable income for their mortgage payment. This is due primarily to shrinking incomes as a percent of inflation, fraudulent rising property taxes causing extreme financial hardship, doubling or significantly increasing homeowners’ insurance premium cost, and unreasonable HOA fee assessment if one is liable having no option.
Most people assume the value of your home comes from the property Appraisal … it doesn’t. There exists no federal, state, county, or city law that requires an Appraisal … in the law of contracts the price of a home is openly between the buyer and seller in their agreement.
Fannie Mae and Freddie Mac don’t require you to get an Appraisal on a home. The Appraisal can be waived depending on the amount of money the buyer puts down on the home.
The mortgage and financing underwriting systems take many factors into consideration when evaluating any loan or mortgage. Always ask your mortgage broker or lender if the system used requires an Appraisal. Some lenders get waivers but don’t use them which is misleading to the home buyer.
Commercial banks and hedge-funds are under threat from commercial property. When landlords default, properties are dumped on the market, and housing prices collapse.
The one-third of households under a severe cost-burden by mortgages will send credit and liquidity shocks like the ceasing of loans. Another 62% of households are stuck with no buyers and no home equity for a short-term loan.
If mortgage rates were to drop to 5%-6%, homes would come under affordable restoration again in 2-3-years. At the other end of the spectrum, 10.8 million households are extremely low-income families with no adequate small square feet home market which is especially pronounced in entry single family homes defined as under 1400 square feet.
Whether the housing market is gradually collapsing or fundamentally restructuring, the ones who understand the dynamics of the transitioning market will be the ones to profit while others panic.
The current economic condition realizes 47% of commercial markets are under threat of mortgage collapse and foreclosure. The occurrence of a crash of this magnitude is capable of sending ripple effects through the entire housing market and even abroad causing global disturbances.
Mortgages are an invitation into the danger zone.
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