HGTV’s “My First Place”: Where are the Hazardous Content Warnings?
Lots of cable TV shows carry “adult content” warnings in the opening credits, to prepare us for violence and adult themes. I think that “hazardous content” warnings need to used on some TV shows that feature people spending their money.
Last night I was walking on the treadmill while watching one of my favorite networks, HGTV. I caught the last segments of a show called “My First Place.” This series features young couples searching for then buying their first home. I’m talking a really young couple in this episode, as in the guy looked like he should be shopping for his first razor, not his first house. The gal still had that post-honeymoon glow. So sweet.
These newlyweds were from Denver and wanted to live up in the mountains in sort of a lonely-looking community set in a wooded area. They found a house (with the help of an eager Realtor) and eventually made an offer of $225,000. The offer was accepted. (That was close to the selling price of Mr. and Mrs. ToughMoneyLove’s first house, except that you have to move the decimal point to the left one position.)
The show follows the newlyweds to the hard truth part of a home purchase: the closing. This is where I got upset. As the closing began, the show host explained the details of the mortgage loan: 100% financing, interest only, 5-year adjustable rate. I thought (actually I yelled out): You have got to be kidding! Do the show’s producers not watch the financial news on any of the other networks?
It actually got worse. While the Realtor discussed the closing documents with this poor couple in a rapid fire fashion (hey – the less understood the better for getting the deal done), sub-titles were displayed on screen. One of the sub-titles explained what an interest-only loan was. To the show’s credit, we were told that with an interest-only mortgage, the loan principal amount was not being reduced. But – not to worry – the next sub-title told us, this couple would build equity from appreciation in the value of house. That was in interesting rationalization considering that residential housing values in Denver have actually been falling for some time. Funny, I didn’t hear the Realtor mention that at the closing.
Then the show had these greenhorn home buyers explain why they chose an adjustable rate mortgage. The purpose for the ARM, they said, was to keep their payments as low as possible, then they would re-finance to a fixed rate before the interest-rate adjusted. Uh – where have we heard that before? Would that be from the thousands of homeowners who have experienced foreclosure this year because their mortgage interest rate adjusted and were told they could not re-finance because they had negative equity?
By the way, the starting interest rate on this ARM was 6.75%. What kind of teaser rate is that?
So now I am thinking that a show producer who knows something about personal finance will close this episode with a warning to all younger viewers that what this couple did was extremely risky and therefore unwise. Nope, nothing but scenes of the happy couple staring at their new home and planning where the new hot tub will go! I wonder if the newlyweds were plotting to use a HELOC to pay for the hot tub?
My last hope was that this show was a repeat and had actually been first broadcast a couple of years ago. So I went on the HGTV website and found the episode summary. Nope – the show was brand new.
HGTV lost credibility with me last night. You would think that a network that is focused on being informative and authoritative in matters of real estate would not simply ignore all of the financing mistakes these young home buyers were making. Even if the show was filmed before everything hit the fan in 2008, a little post-show warning would have been appropriate in light of everything that has transpired.
HGTV can still do something to partially compensate for its failure to present the reality of home financing in its “My First Place” series. We need a new HGTV reality series. It should be called “My First Foreclosure.”