I just saw this over at Jen's blog, and thought I'd spread it around a bit more:
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
There is a minimal amount of time investment required to watch this short video. The one thing that this illustrates is how regular people could have innocently (that doesn't mean they are excused of ignorance) been responsible for the crisis. Basically, the financial world made loans available to people who couldn't afford them. The people who were taking the loans never seriously asked themselves if they could afford the payments. The banks, in their greed, were not going to tell them.
When we bought our first two houses, we had to have top notch credit, 5% down, another 5% for closing costs, and the total monthly payment could not exceed 35% of our gross monthly income. In these last couple of years, I don't think they were requiring those things.
I certainly understand how people would still sign on the dotted line. Home ownership is part of the American dream. I wish for others to own their own home as I have been blessed to own 3 now. I also wish for them to start out with 'starter' homes. Yeah, it will be a little cramped. There may be children sharing bedrooms, no home theater, den, mudroom, formal and informal dining areas, etc, etc, etc. BUT, that is how we need to live, one step at a time! So many who bought their first homes, were buying houses larger than the ones they grew up in! What I mean by that is, young folks were buying more home to start with than their parents had when their family was growing. Don't get me wrong, I'm not saying that each family and its successive generations should not pursue upward mobility. I'm saying we should simply pursue a sustainable rate of upward mobility.
Things that I did today
3 hours ago
4 comments:
That was an excellent video.
And I 100% agree with you about staged growth. People just need to be more freaking patient. I'm looking forward to living in our condo for the next 3-5 years, while it (hopefully) gains equity, and we continue to put more money into it. It's going to be a little more crowded than anticipated, but that doesn't mean we're going to move in to something we can't yet afford!
I'm very thankful I didn't jump into buying a home. It may have been a serious point of contention and one of MANY reasons why my marriage broke up, but I feel I had a realistic perspective on it. I know I would now be in financial ruin had I not followed wisdom God provided me.
I was pre-approved for a loan a while ago. When I saw what the monthly payments would be, I laughed. It was ridiculous that I could be approved for the amount stated. It's a joke.
On a single income of $not-so-much, I made the decision not to purchase. It was the right one. Thank God.
Maybe some day I'll be blessed with ownership... but in this crap and uncertain economy, I'd rather not have such a "blessing". I feel pretty free.
I'm not a HUGE 700 Club fan, but I think Pat Roberts is right... owning a house is not an investment, but a liability. The current state of affairs has proven this.
It used to be that people bought houses to use, to live in. Now it has become a market for investment. This was a STUPID transition. Now houses are bloated in value, and banks and firms trade them like cash. The day of them simply being a place to live is the day of the past. Though I hate the trouble the financial side brings on people and their families, some part of me would like to see the price of houses be parallel with the rest of inflation and the whole housing market not be blown out of proportion. If it's this hard for my generation to afford a house, it will be next to impossible for the next generation if greed rules the day. Only banks and successful tycoons will be able to afford houses, cuz they'll be traded like gold, stocks and bonds. No one will actually LIVE in them because that would, heaven forbid, "decrease their value".
I like how they blame it on alen greenspan
I like the simple approach of not biting off more than you chew.
Whether it is individuals, banks, the Fed, or whoever, RISK has potential consequences. When the risk does not pay off, then responsible people of character need to step up and accept the consequences.
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