Mortgages get tough to come by -- Good!


File this one away under stuff that sounds like bad news but is actually good news. Mortgages are really hard to get, unless you have great credit (a FICO score of over 700, and considerably higher if you want an interest-only loan) and crazy stuff like, oh, proof of income.

That's right: if you've wracked up credit card debt and missed payments, you'll be stuck renting. Here's why that's good news. First, more stringent standards lead to fewer foreclosures and fewer financial lives ruined. Second, clamping down on stupid lending practices that give money to people who can never pay it back helps keep prices down. To understand how this works, imagine heading off to an auction where you had to use real money but half the audience got to bid with Monopoly money. It isn't fair, but that's exactly what happened to responsible first-time home buyers who had saved up a down payment and wanted to buy a home the right way. They had to compete for real estate with people who were driving leased Lexus' and had no down payment cash back at closing loans that they never intended to repay.

And if the tighter lending standards mean you can't buy a home now, relax. Move into the least expensive but tolerable rental you can find, stop eating out, drive an old car, and save up a down payment while your credit score improves. Believe it or not, people used to take pride in the sacrifices they made in the pursuit of the American Dream.