Thoughtless Lending
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It seems like every morning as I drive my daughter to school and listen to the news, I hear about the state and federal laws that are in the process of trying to pass involving relief for people with bad loads.
That’s right: bad loans. The lawmakers are trying to place blame on the loans. They are targeting loans that did not have fixed rates and ballooned up recently, hitting the loan holder with a very high interest rate.
Personally, I think getting a loan is way too easy and I’m not sure what someone is thinking by signing an agreement on a loan that they can barely affords even with the initial low interest rate. Do they really think that all of the sudden, after the interest rate goes up., their life is going to be so different that they’ll be able to handle the payments? Nope. They’re not thinking at all. There are just too many people who are unable to think even a year in the future. They focus on the now and allow the loan brokers to suck them into borrowing money they cannot afford to pay back.
I know the economy is flat right now. I know there is a great desire on all front to awaken the real estate market. I just don’t think giving personal loans to anyone who can sign their name is the best way to go about making the needed changes. More and more people who already have homes are borrowing against their theoretical equity, taking secured loans against their property in order to pay for other things: new cars, a child’s education, and even vacations. The people we bought our last house from owed the bank more that $100,000 over what they initially bought their house for 6 years prior, because they kept borrowing against the supposed equity to go on cruises and travel.
I’ll buy again one day, but I will first make sure my income is secure and I have enough saved to back up my situation. I think the ability to borrow money is a gift, and should be used wisely.
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