Everyone knows that when it comes to buying a house for the first time that it’s a major accomplishment for him or her, but some people in the nation do not seem to consider their salary when it comes to buying a home. Many people may say they’ve found the perfect home for them but is it really in their budget? During this recession, it’s most likely that the house is out of their price range, but they still purchase the house anyways. With the house being too expensive, the new client may struggle to pay the rent each month. They may have to cut back on some of their leisure expenses just to pay the bills.
One major issue that the foreclosure crisis faces is that many homeowners are not able to pay off the rise on the monthly payments on the mortgage that banks proclaimed in contracts. One way for the bank to not have to take back homes is to offer an expended loan with the old monthly payments before the increase. By expending loans, banks do not have to repo homes and sell it off dirt cheap. Also selling a home in a down market just drive away home buyers who cannot even take a loan out from the bank because of the empty reserves that most banks had. Banks can increase the interest rates on the homes but lower the payments so that it is more manage able for the home owners.
If they were to decide on a cheaper home that would mean a smaller mortgage and less they owe someone else. The sooner a person can get out of debt the better because you never know what is going to happen. Like I mentioned earlier, accidents and identity theft happen all the time and you never know if or when they are going to happen to you. Nothing is worse than being in debt and not having a source of income. The government has set up programs such as HUD homes for families that are less fortunate than others.
Still, now that the house has a mortgage rate that matches the value of the house the homeowner has not been able to find work. In this economic recession, more and more people are losing their jobs or getting severe pay cuts. For a ... ... middle of paper ... ...ngs along those lines. This would be similar to Franklin D. Roosevelt’s New Deal. This would increase the number of jobs for people.
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. Many times borrowers are not told of all of the other factors that enter into a mortgage payment such as insurance, taxes, etc. Taking of this into consideration would make many realize that the payments would escalate beyond their means. This would also help the borrower when setting up their monthly budget. Another suggestion would be to encourage cur... ... middle of paper ... ...wing people to live beyond their means.
Looking to impress friends, family and co-workers and give the image of success is very popular among American culture. Construction companies capitalize on home eye-candy by showing the best homes the builder has to offer with many upgrades and amenities that increase the price of the home. The philosophy of bigger is better is not always the best choice. In analyzing the HUD program which helps first time home buyers learn the best way to buy a home and to keep that home. HUD helps first time home buyers become contributors to the American economic stream.
The American dream of owning a home is beginning to elude many individuals, and it is questionable that all Americans should own a home. Many individuals no longer can afford or even want to own a home because of rising homeowner yearly taxes, and interest rates that make paying down the principal of a mortgage almost an impossibility. As a young person, I question whether it would be in my best interest to burden myself with home ownership because of the unstable economy and vanishing job market. I think that it is a good idea for most people to rent a home instead of buying a home. In the past it has been too easy for the American consumer to avoid paying their debts because the “easy out” has been to declare bankruptcy and be completely excused from their debt, and even being able to keep their home in the process.
To make a system where it is ultra-easy for anyone to buy a home brings about a situation where people may have “buyer’s remorse” when they find out there is more to owning a home than the initial purchase, but by then they are locked into the terms of the loan for many years. Creating a situation where it was easy for people to get homes they would find difficult to hold onto, was a problem the government and the financial institutions helped create. We need less help from the banks and government, not more. They need not give people what people cannot generate by their own desire, effort, work, study, and maintenance. That way, we do not end up with a lot of housing in the hands of people who are not equipped to hold onto it and maintain it.
The foreclosure crisis is not something that just happened overnight, this is an opportunity that has been in the making even before people began using banks to buy real-estate. Many homeowners bought into a house that was much more than they could afford. Many bought houses that were overpriced therefore paying too much for something that just wasn’t a good deal. Builders were building $40,000 homes and selling them for 150,000 homes were being built with poor insulation, cheap building materials. When purchasing a house to live in, they might have been led to believe that this was the deal of a lifetime.
There weren’t enough buyers to keep up with the supply, and mortgages began to go into default. Families across America were faced with the reality that they could no longer afford to keep their homes, and foreclosures began to flood the market, leading the nation into a deep recession. The government tried to help reduce the supply of homes on the market by introducing the tax incentive program for first-time home buyers. This program was successful in bringing new buyers into the market, but was not enough to diminish the over-supply of homes. My plan is a proposal to help homeowners continue to be homeowners, help banks create more mortgages that homeowners can afford, and reduce the glut of homes on the market.