Hey I got a brilliant business plan. Let's offer mortgages to people who can't afford them and then stretch them out as thinly as possible and make a ton of cash! Surely with interest rates going up and the housing market bubble finally popping won't effect the business in any way right??
I guess not. One of the biggest mortgage lenders has declared bankruptcy today. Interest only loans, exotic payment plans, and 40, even 50 year loans are becoming more and more common. Listen up people, I'm going to give you a basic economics class. If you can't afford something in a simple, standard 30 year fixed rate, then DON'T BUY THE HOUSE! Look for something smaller, something outside of the city, a fixer upper, or just rent an apartment. There's nothing worse then buying your dream home and then a few years later having to move out because you can't afford it and financially ruining your family.
So, who's to blame? Well certainly there's personal responsibility involved. Customers of home loans shouldn't purchase a home if they are scraping by by the skin of their teeth. But you can bet that the managers of this company are going to be losing their jobs and things will get very ugly because they lowered their standards and loaned money to people who shouldn't have gotten the amount of loan that they did or in some cases, they shouldn't have gotten the loan at all.
Buying a home is a scary thing, especially if it's your first home. Mortgage payment, taxes, maintenance and a host of other things will keep you up at night. The first 6 months to a year you think to yourself "what did I get myself into?" That's why you should never buy a home if you are in a situation where if you or your spouse were to lose his/her job you wouldn't be able to afford the house.
Travis
travis@rightwinglunatic.com
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