The mortgage meltdown and opposing views
If you haven’t heard about all of the fuss within the financial sector you must have been living under a rock. The demise of financial giants like Behr Stears, Indy Mac Bank not to mention many other smaller institutions has led the
With the focus on the secondary market player Freddie Mac and Fannie Mae being bailed out by the U.S. Government to save us from financial ruin. The focus is now pointed at the mortgage brokers and new regulations along with reform measures to be put into place.
Anyone with half a brain could have seen this coming. How does a janitor or a McDonalds employee afford a 400K, 500K or even 600K+ home and think that they are only going to pay less than $1,500 to $2,000 per month for a mortgage?
Is anyone blaming the consumers for all of this mess? I mean if everyone had followed the old tried and true rules for obtaining a house this would have never happened. Who would have ever dreamed that an underwriter would approve a minimum wage earner for a ½ million dollar house?
The blame for this whole mortgage and real estate mess could be summed up in a word…greed. If it weren’t for some new fancy marketing for a single mortgage program most of this would have been avoided.
Stick with the basic rules and you wont go wrong. Only purchase what you can afford. A mortgage payment (PITI – principle, interest, taxes and insurance) should not exceed 36% – 49% of your gross adjusted income.
The target is on 36% this called the debt to income ratio. You have a top and bottom ration the top is called mortgage payment to income vs. the bottom which is the debt – income ratio.
Every loan officer, banker etc can pre-qualify you in under 30 minutes provided you supply them with the proper information and credit reporting. Bear in mind that the lower your credit scores are the less of a debt to income ration you can have.
Preparing future generations to avoid failure and acts of greed is important to their over all wealth, financial health and physical health by minimizing stress, pressure from over extension and worry.
So in closing play it smart and get the proper information before you buy a life of heart ache and misery, also if you can’t afford it in 30 years why drag the pain on for 40 or more?
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Tagged with: financial crisis • land banking • melt down • meltdown • mortgage • mortgage meltdown • real estate • Ryan Wegman
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I agree with you Ryan. I’ve noticed quite a number of people who knew they were in homes they shouldn’t have been able to buy. Many of them are now just walking away from them without a backward glance. I have trouble wanting to bail them out. The decent folks who really didn’t understand their inability to pay should not have been granted loans at all and lenders who signed them are certainly guilty. There’s lots of fault to go around and greed does seem to be a common factor.
I have pulled myself into an emotional state of meltdown. Loan Bank