« Wealth Building | Home | Plan Your Meals »
Mortgage Woes
By Daphne | March 13, 2008
The horses have already run out of the corral and now the Fed says mortgage lenders should have more stringent rules for mortgages.
Really? Tell us something that most people with common sense don’t already know.
When credit was more difficult to get some people had to abandon their hope of owning their own home.
“This effort is not about finding excuses or scapegoats,” said Treasury Secretary Henry M. Paulson Jr., who outlined the proposals in a speech here on Thursday morning. “But poor judgment and poor market practices led to mistakes by all participants.”
Paulson has made a valid point: “Poor judgement and poor market practices” are what got us into this mess. Lenders, realtors and buyers all had a hand in this. The lenders would ease credit restrictions and offer more money to people than they could reasonably afford. Realtors seeing that perspective buyers were interested in a property convinced the buyers into spending most of the money they were approved for. Buyers fell in love and spent as much as they were offered without thinking about some of the extras that you need when you are a homeowner.
Now people who have made the choice to walk away from a home will have to live with that action.
If you have difficulty paying your mortgage, try to work out a deal with the mortgage company where the loan holder will extend the payments by the ones you have missed. If you can’t add anything to the principal and can only afford to pay the interest on the loan, see if that is an option.
If you are saving to buy a house because there are deals to be had, make sure that you do not spend all of the money that you are approved for. If you have no other choice, try to get a fixed rate so there will be no surprises in the future. Plus, you still have to pay other expenses such as utilities and insurance that you didn’t have to pay when you were a renter. Protect yourself and do not blindly purchase a property without knowing how much you will have to spend each month.
Topics: March 2008 |