It is clear that the foreclosure rate in the U.S. is a problem that has not been resolved with the recent Stimulus Act and other measures taken to correct the problem. The root problems of the foreclosure crisis are consumers buying a home they cannot afford, decreasing neighborhood home values, home owners who have not planned for emergencies and unexpected expenses, refinancing homes to make unwise investments or cover increasing debt, and lastly banking lending practices. Implementing solutions that support education, responsibility, long-lasting results and proper banking regulation will help to correct the foreclosure trend.
Everyday consumers are purchasing homes they cannot afford. Looking to impress friends, family and
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Quite often most home buyers save just the amount of money needed for their down payment and closing costs. However, when they move into their new home, the unexpected happens. These unexpected events could include, appliances that need to be replaced or repaired, emergencies not covered by the home’s warranty, plumbing problems and many other issues. When these emergencies occur, the home owner has not available income or funds to put towards the cost to repair them. Some home owners choose to spend the needed money to make the repairs but then cannot afford to pay the then due mortgage payment. This puts the home owner in a never-ending cycle of chasing their monthly mortgage payment – most often falling behind. Having a requirement that there must be a minimum amount remaining in the home owner’s savings account that can cover these emergencies would be a solution to this problem. This is not an easy solution and would be unpopular with some home buyers; however, there are no shortcut to buying a home and staying financially stable.
Declining property and home values is also a problem with the foreclosure crisis. Home buyers who buy homes at low rates may buy the largest home in a neighborhood without taking note of the average size and price for a home in that neighborhood. Building companies profit by selling larger homes with eye-candy and of course will not tell the uneducated