Mortgages
It looks like the real estate financing market may be in rather large trouble.
A lot of disturbing statistics have emerged in the last few weeks that indicate trouble on the horizon.
This can all be attributed to a few things:
1. A complete lack of MEANINGFUL government regulation. There is a lot of government regulation that concerns real estate loans; however, it is ineffective.
2. Credit has become far too easy to obtain. Americans are in debt up to their ears. The next time our economy enters a general recession the foreclosure rates are going to increase significantly.
3. The mindset of the average American has changed. We seem to live for today. People seem to want to purchase everything NOW. Fewer and fewer people actually save for anything.
I remember back to when my wife and I got married. We got married a couple of months after I was discharged from the navy in 1995. I was 28 and Karena was 26. We decide to save money for five years and then have kids. Our goal was to pay off all of our debt except one car that we would finance at 2% interest or less, save enough money to put 20% down on our dream house, and save enough money so that we could BOTH be unemployed for 6 months.
We did that. We met all of those goals before we had kids...
4. The mindset of our politicians has changed. Our politicians used to encourage people to save their money. Now they constantly encourage us to spend our money to keep the economy growing.
5. The mindset of the lending industry has changed RADICALLY. At one time you had to put 20% down to purchase a house. That has not been true for a long time. You can now get a house with nothing down, in fact, you can often get a mortgage for more then the house is worth.
A lot of people have purchased "interest only" loans. These loans actually mean that you will NEVER own the house you are buying if you continue to only pay interest. To me this is not a loan, it is renting...
I hope that this post causes everyone reading it to think a little. I am NOT a rich person. My wife and I have never made a lot of money. My wife and I have been careful how we have spent our money... We do not pay a lot of money in interest on loans and we NEVER pay late fees or finance charges...
Mike Sylvester
A lot of disturbing statistics have emerged in the last few weeks that indicate trouble on the horizon.
This can all be attributed to a few things:
1. A complete lack of MEANINGFUL government regulation. There is a lot of government regulation that concerns real estate loans; however, it is ineffective.
2. Credit has become far too easy to obtain. Americans are in debt up to their ears. The next time our economy enters a general recession the foreclosure rates are going to increase significantly.
3. The mindset of the average American has changed. We seem to live for today. People seem to want to purchase everything NOW. Fewer and fewer people actually save for anything.
I remember back to when my wife and I got married. We got married a couple of months after I was discharged from the navy in 1995. I was 28 and Karena was 26. We decide to save money for five years and then have kids. Our goal was to pay off all of our debt except one car that we would finance at 2% interest or less, save enough money to put 20% down on our dream house, and save enough money so that we could BOTH be unemployed for 6 months.
We did that. We met all of those goals before we had kids...
4. The mindset of our politicians has changed. Our politicians used to encourage people to save their money. Now they constantly encourage us to spend our money to keep the economy growing.
5. The mindset of the lending industry has changed RADICALLY. At one time you had to put 20% down to purchase a house. That has not been true for a long time. You can now get a house with nothing down, in fact, you can often get a mortgage for more then the house is worth.
A lot of people have purchased "interest only" loans. These loans actually mean that you will NEVER own the house you are buying if you continue to only pay interest. To me this is not a loan, it is renting...
I hope that this post causes everyone reading it to think a little. I am NOT a rich person. My wife and I have never made a lot of money. My wife and I have been careful how we have spent our money... We do not pay a lot of money in interest on loans and we NEVER pay late fees or finance charges...
Mike Sylvester
posted by LP Mike Sylvester at 12:17 AM
<< Home