The American Dream

The American Dream isn’t cheap.

With Denver home prices where they are today, coming up with a 20% down payment can feel impossible. There isn’t a sock drawer big enough to hide that kind of money.

Then you add homeowners’ insurance. Property taxes. Utilities. Water bills. Maintenance.

But people still want a home.

They should.

I believe homeownership matters. I also believe people deserve honest conversations about risk.

“You Got a Cute Little Starter Home”

When my husband and I bought our first house, his boss smiled and said, “You got a cute little starter home.”

I was offended.  (even though it did turn out to be a starter home, that’s not the point)

It was my home.

I wasn’t buying it because I expected to trade up in two years. I wasn’t counting on the market doubling. I wasn’t planning to refinance into something bigger.

I planned to pay for it. Thirty years if that’s what it took.

Maybe that sounds old-fashioned. But I believed stability was worth more than a gamble. I’d rather skip dinners out than bet my family’s future on everything going perfectly.

Don’t Worry About Tomorrow

During the mortgage meltdown, people were told not to worry about the details.

Don’t worry about rising payments. Don’t worry about interest rates. Don’t worry about what happens later. Home values always go up. Your income will go up. You can refinance. Just buy now. Worry later.

Creative financing exploded. Interest-only loans. Balloon loans. Adjustable-rate loans that looked manageable on day one and didn’t on day 365.

Many people weren’t buying a house. They were buying a hope that everything would work out.

Sometimes it did. Sometimes it didn’t.

The Tortoise and the Hare

But when it came to money, I chose the tortoise.

Some of the hares didn’t just lose money. They lost stability. They lost confidence. Marriages suffered. Children’s lives were turned upside down.

A home is more than an investment. It’s where life happens.

The difference between saving $50–$100 a month on a creative loan and staying on a boring 30-year fixed didn’t seem that dramatic to me. It was one less dinner out. It was knowing I could keep the lights on if things got hard.

Mortgage Insurance Sounds Great

Then comes the next conversation.

You don’t have 20% down? No problem. Let’s add mortgage insurance.

Insurance sounds good. If I have car insurance and get into an accident, it helps protect me. So mortgage insurance should help protect me too, right?

Not exactly.

PMI on conventional loans — and Mortgage Insurance Premiums (MIP) on many FHA loans — are designed to protect the lender. Not the homeowner.

You pay for it. The bank benefits from it.

If foreclosure happens, mortgage insurance may help cover the lender’s loss. It doesn’t save your credit. It doesn’t let you keep your home.

And here’s what catches a lot of people off guard: depending on when an FHA loan was originated and how much was put down, mortgage insurance can remain for the life of the loan. Not until you reach 20% equity. The entire loan.

That can mean paying an extra $150, $200, even $250 a month for decades. And if the lender gets paid by that insurance after a foreclosure, that payment doesn’t erase what you may still owe.

Falling Behind

Life happens. People lose jobs. Families get sick. Unexpected expenses appear.

You miss a payment. Then another.

Eventually you find work again and think: I’ll catch up.

But now there are late fees. Legal costs. Accrued interest. Penalties.

Once people fall behind, catching up can become incredibly difficult. The system isn’t designed to make it easy. And while you’re trying to figure out your next step, the clock is still running.

Living in Limbo

Then comes the short sale.

The concept sounds straightforward: you ask the bank to allow the home to sell for less than what you owe.

The reality is different.

The process can take months. You may have to prove the home isn’t worth the loan balance — which often means starting on the market at the full amount owed, watching it sit, and slowly reducing the price. There’s an old truth in real estate: start too high and you end up lower than if you’d priced it right from the beginning. That’s painful in a normal sale. During a short sale, it can mean thousands more lost.

Meanwhile, you wait for a buyer. You wait for bank approval. You hope the buyer doesn’t walk away while you’re waiting. And often the foreclosure process continues in the background the entire time.

You’re living day to day without knowing what comes next.

The Surprise That Came Later

Many people believed that once the home was gone, the problem was over.

For some families, it wasn’t.

Some received IRS Form 1099-C — a form showing that the forgiven debt was considered income for that tax year. If the bank accepted $100,000 less than what was owed, that $100,000 could potentially be taxable. The short sale was done. The tax bill arrived in April.

Others discovered that even after a foreclosure — even after mortgage insurance paid the lender’s claim — the underlying debt didn’t simply disappear. The lender may have recovered part of its loss. That didn’t necessarily mean the borrower’s obligation disappeared.

Federal legislation changed over the years, and the outcome often depended on the timing of the transaction and individual circumstances.

What was consistent: many homeowners were surprised by how little they had understood when they signed the paperwork years earlier.

What I Learned

I believe in the American Dream. I believe people should own homes. I believe optimism is a good thing.

But optimism should never replace understanding.

To someone else, it was a starter home.

To me, it was the beginning of so much more.

It was pride. It was building wealth. It was making memories. It was hosting holidays and having extended family visit. It was a yard to grow vegetables. Grass to mow. Flowers to plant.

It was knowing there would always be a place that was ours.

A home should be a place of stability — not a gamble that only works if everything goes perfectly.

Because to someone else, it may be a starter home. To someone living there, it’s the beginning of so much more.

If you’re facing a difficult real estate decision, ask questions. You deserve to understand the risks before you sign the paperwork.

— Leslie Scholfield

This article is part of the Real Estate Transparency Series — an ongoing look at the structures, systems, and moments in real estate that deserve a clearer explanation. These articles reflect my observations from 16+ years in the Denver market and are not intended as legal or financial advice.   They are intended to help others know what questions to ask.