Accidents, identity theft, loss of a job, many things can happen to a person putting them in not only in a bad situation personally but a bad financial situation. Mortgage companies are allowing families to take out mortgages that they may not be able to pay back if something were to happen in their family. There are many different options to consider, but one way to help fix this problem is raising the estimate family income for a mortgage. This would be difficult for some families that are trying to get a more expensive home but it will help them too by avoiding foreclosure. If they were to decide on a cheaper home that would mean a smaller mortgage and less they owe someone else.
You may end up saving yourself quite a bit of money in your monthly mortgage payment that will be effective immediately. Refinancing your mortgage has never been as easy as it is at this moment. In order to get the best interest rate available, make sure that you do your homework and check out the interest rates offered by several competing lenders, including those that advertise online. In some instances, online lenders can even offer lower rates than those with free standing offices as they do not have to pay an overhead for office maintenance. Be certain to check out not only interest rates but what fees you will be required to pay.
The government has to take steps in regulating these types of entities and not be looked upon as the factor of salvation in saving the banks and mortgage industry. The first suggestion to solving the problem of foreclosures would be to lower the mortgage interest to 4% across the board. This would give more people the ability to stay in their homes instead of the adjustable rate mortgage that they are now enduring which ultimately puts them into a situation where they cannot afford their monthly mortgage payments. Banks are greedy and by not giving the homeowner the above chance, they end up taking back a home under foreclosure ruling and in the end, lose out as they do not recoup the value of the home and it puts everyone in a no win situation. Based on mortgage interest rates, many first time home buyers do not realize the impact that the monthly payments will have on their net income.
If they can help out, family members will most likely not charge you hefty fees or monthly payments. As a last resort, you can also go for a bridge loan. Bridge loans are bank loans that are aimed to help you through the transition process. They are generally short-term loans with extremely high interest rates. Use this method as a last option though.
This increase in beneficiaries has initiated concerns and questions about the future of Social Security for persons still working. Recent studies have shown that in its current trend, the surplus of funds for Social Security will be depleted in the near future as the increase of payments will begin to exhaust the fund’s resources. To that end, reform of some kind is needed to help sustain this benefit for future generations to come (Social Security Administration, 2014). What is Social Security? Social Security is a federal program of benefits that include retirement income, Medicare and Medicaid, and death and survivor benefits.
If the home owners finally give up on paying the loan, the banks can take ownership on the home once the people leaves. That way the bank do not have legal ownership of the home; however, in a way they are like leasing a home out to the home owner on a home that the bank does not own. The bank will not have to put the homes as assets in their books. But keep the homes as loans that have been made out and will be soon paid off when the market gets better. Banks can see the monthly mortgage payments as payments to the loan, plus as income for renting the home out.
This would also satisfy the bank because they would be getting some money monthly instead of no payment. It would also help me to keep my credit rating status quo. I realize that the concern would be that the homeowner would not be able to pay off the note when due and it just delays the inevitable. Here I would suggest that in order to get the interest only loan the homeowner must open a savings or CD or IRA account where they can save some money for the future to put towards the house. I’m not a financial wizard, but I think that would benefit the homeowner and the bank.
Mortgage Amortization, by definition, is “referring to the process of paying off a debt over time through regular payments. A portion of each payment is for interest while the remaining amount is applied towards the principal balance”(Google). By making the repayments in either monthly payments or the sum of the total payments, people will decrease the amount that they owe, which will help people to save their money in the long run like what the author Glen Craig states “As the interest portion of your payment declines, the principal portion increases, and with it, the remaining term of the loan gets shorter,” as soon as people start paying the principal, the payment period will get shorter. A mortgage is a big debt, and it is almost as big as a person’s home. Everyone wishes to shorten the term by prepaying as much of the loan as they can and as quickly as possible.
It is clear that the foreclosure rate in the U.S. is a problem that has not been resolved with the recent Stimulus Act and other measures taken to correct the problem. The root problems of the foreclosure crisis are consumers buying a home they cannot afford, decreasing neighborhood home values, home owners who have not planned for emergencies and unexpected expenses, refinancing homes to make unwise investments or cover increasing debt, and lastly banking lending practices. Implementing solutions that support education, responsibility, long-lasting results and proper banking regulation will help to correct the foreclosure trend. Everyday consumers are purchasing homes they cannot afford. Looking to impress friends, family and co-workers and give the image of success is very popular among American culture.
A solution that benefits both the banks and the people. A solution that begins with regulating the banking industry and reevaluating mortgages. Deregulation allowed banks to fulfill many Americans’ dream of becoming a homeowner, however that same deregulation is making it necessary to unceremoniously take away that dream. Banks stopped having criteria for home mortgages. It came to the point that anyone living could get a mortgage.