|
  |
|
|
Mortgages Today and the Housing Meltdown
The latest downturn in the housing market has proven to be a challenge for everyone. People are losing their homes, homeowners are seeing the equity in one of their biggest assets disappear and many people in the finance and real estate industries are losing their jobs. Why? How did all this happen? Well as a mortgage professional, I can give a multitude of reasons. First we have Wall Street. After the internet boom and bust we had 9-11. The economy sank and the Feds started to lower rates. With lower rates came heavy borrowing. Folks started using home equity loans and mortgages to fund their lifestyles and the refinance boom began. Speculation in internet stocks turned to housing. Areas such as Califorina, Florida, Arizona, Maryland, Virginia and Nevada to name a few, went crazy as far as housing was concerned. Property values soared with some areas seeing 50-60% increases in home values in just one year. Wall Street bankers saw another money making opportunity and came up with mortgage options that were nothing short of insane. Loans were developed that required no proof of income. Others had minimum payment options that didn't even keep up with the interest being charged. Mortgages were being given to borrowers that were currently delinquent on their current mortgage! Why?........ GREED. Mortgage banks were making a killing packaging these loans up and selling them as a group to hedge funds. Are they the only ones to blame? Of course not. Unscrupulous mortgage brokers that had a financial interest in turning people onto these adjustable rate, negative amortization or stated income loans played a part too. Many borrowers simply didn't fully understand or were lied to by the broker originating the loan. So is it the brokers that are to blame? Of course not. If it were not for mortgage brokers many people would have a very hard time getting a loan as brokers usually have better access to different products and are responsible for nearly 70% of the mortgages taken out in this country. More than a few bad apples did exist though and have left a mark on the mortgage broker industry as a result. So if it wasn't just the bankers or the brokers, who else is responsible?? Well, unfortunately it was the borrowers themselves. Yes, it was the people who said they made a $100000 a year and really made $60000, so they could get a mortgage on that new $350000 home. Yes it was the people that bought $50000 cars with a home equity line because the interest only payments were more affordable than a 5 year car payment. I saw it first hand and I could go on and on but the point I'm making here is that it was everyones fault. Unfortunately, everyone has to eventually pay the piper. That time is now. Houses just couldn't continue to appreciate at such ridiculous levels. If they did continue at the pace they were, the average house in the U.S.would be over a million dollars in less than a decade. Simply unsustainable. So now what?? What do you do if you need a mortgage now? Well you have a few choices and they are getting more and more limited by the day. As of this writing, the most popular mortgage we are seeing is FHA. FHA was conceived in the 1930's and was intended to assist with the housing crisis we had then, much like today. Unless you have a considerable amount of money down or equity, a purchase or refinance is best done through an FHA loan. FHA is not a lender but an insurer of mortgages. If you don't have the best of credit, little money down or little equity in your home, this may be your only option right now. In many cases even if you have equity or money down, but a lower credit score, FHA may be your best option. FHA will, in all likelihood, be the "bailout" program everyone is looking for. Congress has been debating for the past few weeks and will soon have a housing bill of some sort with FHA as its centerpiece. Is this a bad thing? In my opinion no, as its the only real option left to help those that need it. If your looking to refinance or purchase a new home, be sure to check into an FHA loan, especially if you have limited funds to put down or limited equity. If you are in one of the high risk mortgages I mentioned earlier, get out of it as soon as you can! They are a ticking time bomb waiting to explode. |
|
 |
|
No reactions yet.
Please login or sign up to rate this intel.
Please login or sign up to add a comment.
The copyright for this content entitled "Mortgages Today and the Housing Meltdown" has been specified by the contributor as:
All Rights Reserved
This content may not be copied, distributed or adapted by anyone under any circumstances.
|
|
|
This intel was contributed by Jake
|
May, 2012
2008
January, February, March, April, May, June, July, August, September, October, November, December
2009
January, February, March, April, May, June, July, August, September, October, November, December
2010
January, February, March, April, May, June, July, August, September, October, November, December
2011
January, February, March, April, May, June, July, August, September, October, November, December
2012
January, February, March, April, May
|
|
Not a member yet?
Qondio is a powerful network for making it online. If you have a website to
promote, we can help.
Sign up and get in on the action.
|
|
Welcome to Qondio! Discover the awesome power this network can deliver by going to our About page. Or you could skip straight to the Sign Up form.
|
|
