MaggieMae
Reality bits
- Apr 3, 2009
- 24,043
- 1,635
- 48
I'm sorry, but whatever happened to the days when folks saved up down payments of 10%-20% or even more for a house and waited until they knew they would likely be in a place for at least 5-10 years and didn't use their equity as a piggy bank and planned to actually own the house outright at some point?
Now people buy homes with as little down payment as possible with no real commitment to living in the house for any length of time and they cash out their equity every chance they get. The same attitudes that helped bring down the housing market still persist.
A home isn't an "investment" in the way the real estate agents want you to think of it as - if its your HOME its value to OTHERS should be irrelevant, only its value to YOU should matter. If you bought a house 2 years ago with the credit hoping it would be worth more now so you could either sell it for a profit or cash out on some equity - then guess what? YOU ARE A MARKET LOSER, DEAL WITH IT. If you bought a home to live in 2 years ago and you're stilling living there and not expecting to need to move any time soon and not expecting to use it as a piggy bank - then you shouldn't be worried about the price decline.
Whatever happened to the formula banks used to use of a mortgage payment being no higher than a third of your monthly income? I remember the first house we wanted to buy, filled out the application and related paperwork for lender approval, and it got bounced for that reason. So we went shopping for a lower-priced home and found one. That's the problem with the whole mess. BANKS (deposit banks) began competing with store-front mortgage lenders who changed all the rules in order to scam people and pocket obscene profits.
Same thing with credit card companies that offered a card to people with bad credit, but were able to rake in enormous profits off the high interest alone. They could write off the principal as a bad debt.
Credit was so easy to obtain that low-income, middle-income, and high-end, middle-income people went on a spending spree of buy now, pay later, and wound up in debt up to their eyeballs. Everyone wanted a piece of the action. And the ones who made out like bandits were...the bandits selling the easy credit.