The Housing And Financial Crisis

850 Words4 Pages
The housing and financial crisis from a few years back, in my opinion,can be attributed to poor decisions by both the lending community and the borrowers. I feel as though during that time common sense flew out the window. My husband and I were not hit as hard in the economic fall because we were not yet homeowners, but we could have easily been one of the many. We originally applied for a loan on just his income, which was not much at the time, and the bank came back with an offer for a loan five times what he made. If we would have not used common sense, within the first year or two we would have defaulted terribly on the loan. I don’t completely blame the lenders for the foreclosure crisis, the borrowers should have listened to a little voice in their head that said if it’s too good to be true, it probably is and it might not be a good idea. I’m not so sure most of the boomerang buyers have really learned their lesson either as a lot are still blaming the banking industry for everything. I also wonder if some banks really learned any lessons from this. For the lending institutions that were given money with the well-known government bail out, it seems like they are still just as willing to hand out money, but they may change the route that they are handing it out, i.e. through high interest rate credit cards or personal loans. If most of these buyers were to start over with a rent to own option, instead of just buying straight out, I do feel that they will have a better chance of success. The requirements for buying a home through traditional banks has become very strict, which is a good thing and a bad thing.Not only are you supposed to have near perfect credit you also have to have a very low debt to income ratio a... ... middle of paper ... ...wning another home until they are debt free and continuing that trend once they purchase. With the amount of fraud that is happening around this country it might not be a bad idea to start using cash for everything and just having one emergency credit card. In doing this you know at the start of every month what you have left over once all the bills are paid. I genuinely feel that another market crash can be avoided if people were to just use common sense in teaching the next generation about saving their money, instead of always buying the newest or hottest item, will go a long way in protecting themselves. Our society needs to be more realistic about what people can really afford and not how much they can spend on credit. So, in conclusion it is my opinion that financial institutions as well as individuals need to keep a keen eye on not over extending credit.
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