Foreclosure Crisis Solution: Saving To Buy A House

1169 words - 5 pages

Before 1950, it was rare to have a mortgage. But if someone did have a mortgage at that time, it was not a thirty year mortgage like they are in present day. Never were they for the entire value of the home. (Most are now with a 0-5% down) People would buy a house for $15,000 and pay $10,000 and the remaining $5,000 would be mortgaged and paid off over a short time. The people who bought the home actually owned it instead of the bank. People used to save to buy a house, nowadays people are programmed to spend their money as fast as they get it. No average citizen has “real” money; it is all borrowed from the banks. That makes every person enslaved to the banks, therefore starting the cycle of future foreclosures.
Banks give out mortgages to people when they do not even know if they can actually afford to pay off what they are helping them buy with the money. People can not even save $3,000-$5,000 over a period of years. So how could a bank justify them paying back $75,000-$100,000+ for a house, while also taking new bills; property and school taxes as well as homeowners insurance. Not to mention the maintenance of the home. Over a period of thirty years, a homeowner will pay close to three times the amount of the houses initial value making it nearly impossible to pay such a debt off. Although this country has the largest and most technologically powerful economy in the world, we are becoming an entitlement society.
There is one possible solution to help this crisis all over America. Banks should require people to pay 20% or more down on a house before they can buy it. The prices of the houses would then fall to more affordable levels because they would not be able to find a buyer, almost forcing the seller to lower the price. Another part of the solution would be to stop building houses that people can not afford. The only reason why the houses are being built is to keep people working and construction companies in business. Also, if the banks make people put 20% down; it will make people actually save money. Make the banks look into what the person is buying and see if they will be eligible to make the payments, as well as lowering the interest rates so the consumer is not overwhelmed and can pay a reasonable balance over time.
The Federal Reserve controls the printing of currency (when asked) and the destruction of currency (when needed) of all paper money so that the value is controlled. The banks only have 3% of actual money in reserves, so they can lend someone $1,000,000 with only $30,000 in “real” money. So if someone is paying $10,000 a month on a $1,000,000 thirty year mortgage, within 3 months; the bank gets its “real” money back. The next 29 yrs and 9 months is paid back with interest to an electronic amount.
In the 1960s, credit companies became established. This then became a new era that blistered over the country putting everyone into an endless trap of debt, continuing the cycle of foreclosures and other future financial...

Find Another Essay On Foreclosure Crisis Solution: Saving to Buy a House

Solution To The Foreclosure Crisis Essay

1544 words - 6 pages The solution to the foreclosure crisis requires cooperation among the borrower, the mortgage lender, and the federal government. Current proposals by President Obama’s administration call for federal government intervention through interest rate subsidies for refinancing stressed mortgages, guarantees of mortgage-backed securities buyouts, and funding to fill gaps in reduced monthly payments as an incentive for lenders to work with borrowers in

A Solution to the Foreclosure Crisis: Stopping Urban Sprawl

1237 words - 5 pages The truth is there is no simple solution to solving the foreclosure crisis, but there is a way to alleviate the crisis by creating the right incentives. Neighborhoods should have the option of using the policy of “Community Buy-Back.” This policy is one that I thought of and it is something that I see as working very well in common practice. People know that foreclosed properties lower surrounding properties values. No community wants their

Proposed Solution to the Foreclosure Crisis

1310 words - 5 pages afforded us is a wiser use of those resources. As it was no single instance or policy that created the crisis, there will have to be a more comprehensive solution. 1. Separate the disciplines. Create a division of pre-purchase home ownership counselors and foreclosure mitigation specialists. Provide the funds needed to not only train them, but require certification and licensing. Just as realtors, builders and appraisers are required to be

Solution to the Foreclosure Crisis: Lending Laws

1606 words - 6 pages purchase a property that is either in the process of foreclosure or one that has already been foreclosed upon. They feel that is where they can find the best deal. That is all well and good. The problem is that the banks, in many instances, cannot seem to make that process run quickly and efficiently. Buyers are frustrated. The real estate market bogs down. One solution to the foreclosure crisis is to get out of it as quickly as possible. It will help

Foreclosure Crisis Solution

830 words - 3 pages Foreclosure is a very sensitive topic and one that almost everyone decides to look up to the tax payers to solve. This is not a feasible option, like tax relief or programs of payment assistance as that only adds to the economy spiraling down and not solving issues for the homeowners. When faced with a person who is going through foreclosure the main concern of the lender is getting their money back. The capital invested in the buyer to

Three Part Solution to Solving the Foreclosure Crisis

1029 words - 4 pages rates began to rise and housing prices started to drop in the United States, refinancing became more difficult. The United States needs to bounce back from this foreclosure crisis and it needs to happen quickly. There are three parts of my solution which consist of a limit on adjustable rate mortgages (ARM). Another is a law that requires banks and lenders to use a more complex background check for potential home buyers. Lastly

Solution to the Foreclosure Crisis: Return to the Ancient Practice of Bartering

1226 words - 5 pages of buyers back to healthier levels. One of the most common issues that holds back potential buyers is a financing problem. They can’t borrow enough money to buy a new house until they sell their old one. With a smaller number of buyers in the marketplace, the likelihood of this happening is lessened, and the problem continues to spiral. One solution Because the problem is so widespread and deeply set, the housing crisis needs some creative

Trade-Down Home Exchange Program: My Proposed Solution to Solving the Foreclosure Crisis

1369 words - 5 pages around is to prevent other people from getting stuck in this financial mess. A mortgage and a home purchase should be treated like a very important transaction. Real estate professionals and mortgage companies need to step back and consider what is best for the buyers. We are not doing anyone any favors by helping them buy a house they can’t afford. Qualification guidelines should be tightened to insure that the loan makes sense. Seller contributions

Research On How To Buy A House

1202 words - 5 pages Research On How PAGE \* MERGEFORMAT 2 Running head: RESEARCH ON HOW TO BUY A HOUSEResearch on How to Buy a HouseConnie Lashley, Debra Shepherd, Angie Maloch, Jennifer DavisUniversity of PhoenixResearch on How to Buy a HouseTo research how to buy a house starts with where, for example the township in which the house is located, what price range the buyer can afford and how many people will be living in the home. To begin we of Four Corners

Solutions to the Foreclosure Crisis

1004 words - 4 pages The foreclosure crisis is tearing away at this economy causing people to loose their house and be in national debt for long amounts of their life times. More people are filing bankrupt because they can’t afford to pay the adjustable interest rates that they set when signing loans for their houses. Now the economy is at a vast down turn, slowly turning up to becoming better internally, but still people are homeless due to their homes being

Solutions to the Foreclosure Crisis

1111 words - 4 pages Clearly we have a mortgage and financial crisis in the country that we need to work together to resolve in a satisfactory manner for all parties involved. Lenders and realtors for years were pressing that the “American Dream” is owning a home in The United States of America. Those same people were also convincing people to buy a home above their financial means. Because of the financial crisis we have banks that have been taken over by the

Similar Essays

A Solution To The Foreclosure Crisis

1035 words - 4 pages The foreclosure crisis has reached new heights since the all-time high deficit in the economy. U.S. foreclosure rates went up more than 81% and 861,664 families lost their homes to foreclosure in 2008 (Les Christie). Also, 54 households received a foreclosure notice last year (Les Christie). So what is the solution? Bold action is needed to address this serious issue. I suggest a “real estate pause” for a temporary amount of time

A Practical Solution To The Foreclosure Crisis

1070 words - 4 pages . Negative equity occurs when a homeowner owes more on their home than it is actually worth. This problem is commonly caused by actions mentioned in the second paragraph, and results in the highest foreclosure rates of any other given reason. In order for the foreclosure crisis to be adequately dealt with, the issue of negative equity must be at the forefront of solution discussions. Now that one has a clearer idea of the factors that contributed to

A Solution To The Foreclosure Crisis

1225 words - 5 pages I can provide a solution to the foreclosure crisis with a two part plan that will provide increased home equity and employment. The plan provides loan modification opportunities, financial rebates and new jobs in infrastructure construction and alternative energy resources. There are many flaws with the United States current plan of action and it all begins with our president’s $650,000 program. President Obama’s Mortgage Relief Program is

Solution To The Foreclosure Crisis Essay

1131 words - 5 pages making profits higher than their average profits during peace time must give that profit to the federal government to be distributed to families hit by the foreclosure crisis. A third congressional bill could be passed that taxes healthcare and pharmaceutical companies based on the median income of their customers. This would encourage these health insurance companies to get more customers who make less money so that their tax rate will be less