It first started with the subprime mess-the people who were supposed (I believe) not to have the house in the first place. You see people just see that they can just scrap together the down payment, closing costs, get the mortgage and the house is there. Well folks, the real deal start afterwards, the maintenance of the house the utilities bill, the furnishing, the different mortgages amount each year when the property taxes change. All these factors are not taken into account before buying the house. You see even if your mortgage rate is fixed at 30 years, your monthly payment amounts can change (either increase or decrease) depending on where you live based on the property taxes (it has happened to me). When we were done with the subprime mess –the people with poor credit. Now people with high credit are getting hit just because they are losing their jobs.
So the credit score can be predictor for how well you managed yourself fiscally in the past but can not be used as predictor of how well you will do in the future, since you don’t know what will happen in the future-there are so many unknown.
The way Wall Street came up with dizzying arrays of how the mortgages should be packaged is amazing and sad. LIAR loans (where you don’t have to specify your income or lie about it) NINJA (no income, no job, no asset) payment option loans, interest only loans and the like. It was like they (Wall Street and the assortments ) just wanted to put as many people in the houses as possible.Quite a few of them did made a lot of money but this party was going to coming to an end and everybody knew it, they just chose to ignore it.
Many people did get very rich but most of them ruined their credit scores in the process. I regret not getting in the game since I believe in the 30 year fixed conventional mortgage (old fashioned you can call me). I see so many heart wrenching stories regarding the foreclosures and the people who have lost their houses that it just scares the hell out of me. It also seems very mind boggling to me that most of people are now saying that they were duped by these financial people into buying what they could not afford. The excuse is that if they knew we could not afford it why did they shove it down our throats.
Well (correct me if I am wrong). If I know that I am not able to afford to buy a house why would have that kind of stress on myself and my family to buy something which I would have to give back in foreclosure of short sale or in bankruptcy later on. I don’t get it folks.
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