Friday, March 28, 2008
NO Forclosure Bail Out
I do not think the government should consider a massive bail out for homeowners that purchased homes that they could not afford, and are now in jeopardy of forclosure. As a homeowner that has purchased three homes, I can positively say that there are lenders who try and confuse you with the contracts, but that is no excuse. Purchasing a home is the biggest investment you will ever make, and it is your responsibility to read the contract entirely. It is your signature on the loan agreement, and by signing that document, you are approving of the terms listed in the contract. Most of the buyers that are in trouble are the ones who have ARMS (Adjustable Rate Mortgages). Now I don’t know about you, but if the word adjustable is in the title of the loan your about to sign on then shouldn’t that tip you off that at some point it might just do that…. ADJUST. Most individuals that purchased a home using an ARM loan, intended to sell before the ARM expired hoping the home value would go up tremendously, which in turn would make them a significiant amount of money. That was a high risk investment that went bad. Now I’m not saying the banks are free of any wrongdoing, and I do believe the government should step in to review mortage loan procedures, but an individual must be held accountable for their own decisions. If the government bails these people out who is going to pay for it? The taxpayers who didn’t sign on to an ARM loan with a Balloon payment. I purchased my first home when I was 24 and was offered 2 choices. I could buy a more expensive house with and adjustable rate or a house I could afford with a 30 year fixed rate. I chose to buy within my price range. If I could figure it out at 24 then I have very little sympathy for those in trouble now. The reality of the situation is that a lot of Americans play a dangerous game of keeping up with the Jones’, and with the help of credit and ARM loans it is possible to have that facade. The government should not use taxpayers money to bail out people who don't have the common sense to not live beyond their means.
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2 comments:
I have to agree with you Jason about the fact that the government should not bail people out completely. I am hoping to soon be a home owner myself, and have heard tons of horror stories with loans. I usually do financial research before doing any kind of investment. A lot of people do not know where to get started. I do believe the government should offer free debt relief classes and work with the people to get on a plan to pay their debt and keep their houses. I know a few people that have gone to debt relief classes and were very pleased by them. Education and making someone apply it themselves create a self efficient person. If you completely bail someone out, they have learned nothing. They will still not know how to keep from falling in the same situation again. I think they should start teaching high school students how to stay out of debt. Investing, saving, and smart financing so that they will stay on a good path and not overextend their finances. They do teach this at high schools, but it is not mandatory and very limited. In the article “An ‘F’ for economics curriculum,” Ruth Mantell states that only 17 states require students take an economics class to graduate high school. Only seven states require a person-finance course to graduate.
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