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Causes and impacts of financial crisis 2008
Mortgage foreclosure crisis of 2008
Importance of a house
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Recommended: Causes and impacts of financial crisis 2008
Posing the problem of solving the foreclosure crisis first begs the question – “is there really a foreclosure crisis?”
The country is certainly in crisis, but the crisis is not being caused by mortgage foreclosure. Foreclosure is simply a mechanism for people to deal with a debt they can no longer afford. Rather than being a crisis, the potential onslaught of home foreclosures (which has been slowed somewhat by the Obama administration’s “Making Home Affordable” program) is actually market forces hard at work cleaning out the mess in the real estate market caused by too much cheap money loaned to people who were not sound credit risks to buy homes they could not afford. When home prices are completely out of line with wages and people who would normally have a hard time getting a friend to loan them $20 are able to take out interest-only loans to buy over-priced housing, something is very, very wrong. While it may be painful for many people, the real estate market collapsing, including thousands of inevitable foreclosures, is not a crisis, but rather a result of the real crisis – unserviceable debt.
Years of cheap credit, combined with government incentives to get people to purchase homes, debt securitization that hid the risk of low quality loans, and Government Sponsored Entities (GSEs) that lowered standards for purchasing mortgages created a situation that compelled lenders to make riskier and riskier loans. Individuals who had formerly not been able to purchase homes had access to credit like never before. With more and more people buying houses, prices soared and real estate looked like a sure-fire way to make money. Adjustable rate loans or loans with a huge balloon payments were not seen as potentially unaff...
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...s more opportunity to live within their means, possibly even saving for a twenty percent down payment and buying a home they can actually afford.
While no one likes the idea of turning people out of their homes, when you buy something you can’t afford, you have to return it. When you make a bad business decision, you have to take the consequences. Capitalism doesn’t work when there is no downside to risk – that downside is there to make sure that the system works properly. The most sensible, soundest and, ultimately, kindest solution to the debt crisis caused by the real estate bubble is foreclosure – expedient, easy, simple foreclosure. This is the best way for the housing market to grow again, which in the end will give people the opportunity to enjoy the piece of mind that comes from knowing they own a home they can afford and can really call their own.
Keli Goff declares in her article, The American Dream is Dead and Good Riddance, that the original American Dream is no longer on the minds of most Americans. She insists that most Americans no longer pursue the ideology of a nice house, educated children, and decent car that once fueled the ambitions of generations that have come and gone. A large number of people live alone in the U.S today with no children. With that being said, it’s statistically spoken that the dream is dying even though most of those loners want to direct their dream in the direction of a partner and children. Goff proceeds to ridicule the home ownership portion of the dream by pointing to a mortgage “meltdown” that came from the pursuit of home ownership by those who
Leading up to the crisis of the housing market, borrowers got mortgages without understanding the terms. Banks were giving out loans to people the banks weren't sure could pay the money back. The closer to the crisis, the higher the frequency of illegitimate loans and mortgages. Because there were so many mortgages on houses that could not be paid back, millions of mortgages were foreclosed on, and the houses we...
...ve more money to spend on people who need it. America’s social inequality can gain from it by bringing the rich and wealthy closer to the middle class. These steps need to be taken in order for the United States to progress and return to a country of opportunity.
The last quarter twelve percent (12%) of American homes are in default of their loan, or in foreclosure. Add that to the previous four quarters and that is eight point seven (8.7) million homes in crisis. (Further on known as HIC's) The United States “Bail Out” helped major mortgage corporations, and their chief executive officers (CEO's), but not the families that are in, or were in these HIC's across America.
When Young pays the mortgage, she added the degree of ownership of real estate on every purchases she made. Furthermore, she was able to make loans for the purchase of ownership in large amount and refinance at a favorable rate. Property owners will also be eligible to take a tax deduction. Out of the corner of the financial benefits, owning a condominium will offer Young creative control towards the condominium. It offers the ability to make physical changes when she feels there is an adjustment needed. Young should compare the benefits of owning a condominium with financial risk that will be taken against the current plans for
When someone makes the decision to buy or rent a home they must consider the advantages and disadvantages of each. In buying a home the primary advantage is that you actually own it. You can do whatever you want with it. Also, you are building equity as the years go by. “People today have problems saving for their future” (CNN Money, 2014). However, when they buy a home, the money they put down for a down payment is an investment. When the person sells the home they get back the down payment and the amount the property has appreciated in value. When looking at the advantages of renting it is easy to see the disadvantages of buying for some people. Even though you don’t get the money back that you put into it, renting could be a more satisfying option for some. This is because renting allows for flexibility. The person can move wherever as soon as there lease is up. Renters may see buying as “a reduction in lifestyle, moving to a smaller place, and perhaps a less expensive neighborhood.” (CNN Money, 2014). For example someone who rents an apartment enjoys how the complex keeps up the area and all the amenities it has to offer, and it is in an upper class part of town. However, when they buy they looks all the benefits, they have to do maintenance themselves, and move to an area they don’t particularly like to fit their price range.
The entire process was draining so we backed out and decided to go along with other millennials our age and redefine the “American Dream” as no longer owning a home but renting everything and making it the reality along with the car and children. Investing time in homeownership is not something we are willing to place on our busy schedules. Aristotle said that, “Time crumbles things; everything grows old under the power of Time and is forgotten through the lapse of Time.” We have shifted our focus of one day having our own home and no longer as millennials let it brand us with the label of “status.” We have allowed having the career, car, and money make us feel important. The advantage of ownership would definitely be not throwing your money away but investing it into us but the responsibility can be a disadvantage. Living in a rental property whether it is an apartment or house takes the responsibility of care and/or maintenance away from you and places it on someone else. The disadvantage of renting is the fact that no one cares for what belongs to you more than you and rental property owners and apartment homes drag their feet to ensure that you are comfortable you have to. Rental property owner’s focus is not
In late 2005, the housing bubble burst, and housing began to decline in price. People who refinanced, particularly those who financed with variable interest rates, suddenly found their homes were valued at much less. The housing market became flooded with homes for sale, because the homeowners with variable rates and interest only loans could not continue to make their payments. Greenspan: The rise in the number of homes for sale caused further lowering of home values. Keep in mind that the main reason for the mortgage crisis is the high number of defaulted home loans, which triggered foreclosures and sell-offs.
Foreclosure in America has been a rising and prominent problem recently, and has destroyed many Americans hopes and dreams. Over 2.3 million homes were foreclosed in 2008, and an estimated four million homes will be foreclosed by the end of this year. Despite the efforts of many banks and lending companies, over half of homes will foreclose that have received their help. I believe that we have only started in the right direction in solving the foreclosure crisis. Giving money and lowering mortgage rates will help, but I believe we should find out why Americans are in this situation in the first place. We are being too stereotypical when we think the only reason someone is foreclosing is because of irresponsible payments or buying a home out of a person’s capabilities to pay for it. If we understand their situation, we will be better enabled to help and solve their crisis.
The classic american dream is comprised of a successful job, a car, a family, and a perfect house with its white picket house. A house ownership is the sign of a source of income, stability, and a future asset for generations because it could be used for collateral, as a rental property, or a home without having to pay a hefty mortgage. Housing is the key to having the necessary stability in order to give the poorest people in our community a chance to break away from their socioeconomic level. In addition to better safety net government programs, it is important to create accessible housing opportunities for those who cannot afford housing in order to relieve poverty in the United States.
Both factors are important, as they allow both freedom and independence, but also restrict/ limit it from certain standpoints. Pros of home ownership range from the allowance to modify the home artistically and architecturally, to more stable monthly and yearly costs. With fears of foreclosure from another economic crash, however, the cons are often allowed to emotionally outweigh the pros of personal home ownership. When discussing the pros of home ownership, each individual pro must be considered solely, and weighed by its importance. For someone who is considering buying a house and potentially keeping it for the rest of their life, buying a home is usually a great investment.
Buying and owning your home is part of the American dream. Although the dream itself has since changed, the home still remains the main focal point. Today owning a home doesn’t necessarily mean a house. People now buy duplexes, cooperative apartments, and condominiums. For some families it could take up to a couple of generations before it’s able to have the capabilities of buying a home. To many people it means a certain achievement that only comes after years of hard work. It is a life altering decision and one of the most important someone can make in their lifetime. The reasons behind the actual purchase could vary. Before anything is done, people must understand that it’s an extraneous process and it is a long term project.
Nothing would satisfy me like achieving the American dream of being able to say “I made it” and begin raising our family in it. If I was at a point in my life where I was stable and finish with my education I would be preparing to become a homeowner. According to the short story Defining an Ownership Society by David Boaz says that “this year an all-time 68.6 % of American households own their own home” (264). Which only means that 31.4 % of people prefer to either rent or in the near future plan to become
An option for individuals look are looking to buy property have the option to purchase a house. The advantages are: “pride in ownership, privacy, own land, tax benefits, fixed rate, security, and can renovate to their desire. The disadvantages are: less flexibility, mortgage has interest, more stress about money, requires down payments, closing costs, and moving costs, need to have a fixed income/stable income, and bank may take over house if payments are not made” (Zillow, May 12th 2012 ). Pride of ownership is advantage because it gives those individuals accomplishment feeling and shows their hard work paid off and do not have to deal with landlords anymore” (Free Advise Staff, unknown date). Privacy is another advantage because it gives the homeowners the freedom to do whatever they wish and not worrying that they will break the rules. Owning land is an advantage because “every time you pay off your mortgage individuals are gaining equity and increasing your assets” (Chapman’s lecture, unknown date). Another advantage is individuals will get a “tax benefit which will help pay off the interest of the mortgage and increases income” (Kirlew, Unknown date). Security is an advantage because in the “long run if some individuals want to have kids those individuals do not have to worry about moving each year, but instead helps their children grow up in a ...
One of the biggest factors millennials face when buying homes are finances. Most millennials struggle with student loans and do not make significant salaries. The price of buying a home and then up keeping it is just too much for most millennials to bear. If the price of homes were to decrease millennials would be more likely to go into home ownership without reservations. Secondly, many millennials desire being close to cities, places of nightlife, and their places of work. Living in apartments in the middle of cities has become a habit for millennials and homes that are far away from these places make millennials apprehensive. One factor that could change the amount of home ownership is if homes became available closer to city centers. Additionally, homes that were far from city centers, but have easy access to public transportation or highways into the city would appeal to millennials. Lastly, millennials are used to living in upscale modern apartments. Many homes today were constructed many years ago and do not hold to the modern style. Additionally, older homes have more problems like piping, paint, and old insulation that millennials would have to worry about. Millennials would be more likely to consider home ownership if the homes they were looking to buy were new construction projects. This way homes are new and modern which appeals to the taste of