A couple of years ago, the mortgage companies were giving out loans to anyone and everyone that wanted one, whether they really needed it or not. Who cared? Give them mortgages and jack their payments up.
Now foreclosing is on the rise, and there's no end in sight it seems. The foreclosure rate is up 71% the third quarter in 2008 than in 2007. Soon my husband and I will be a part of that. So I blame the mortgage companies for some of the financial crisis. Here's why:
Back in 2006, we were living in a perfectly fine apartment building. We still had our money struggles, but money came a lot easier and we had no trouble paying our bills. The apartment we were living in was a one bedroom, one bath apartment which was fine, but we got to thinking, "We're paying $650 for rent, and we can't even paint the walls." We thought we were starting to get a little cramped, so we got to talking and began looking at houses.
We found this really cute three-bedroom, two-bath house with a garage and right at half-an-acre of land in the country. The house was three years old and had only been on the market for a week or two with an asking price of $116,000.
We got in touch with our guy at the bank who filled out the appropriate papers, and he began to look around for people to accept us and give us a loan for the house. No one wanted to touch us because of our credit score, which I don't mind to say both of our scores are low. Finally we found a company that would take us, BUT there was a catch. We could only get accepted if our loan was 80/20.
That was the first mistake, the mortgage companies never should have given us a loan in the first place with our credit scores like that.
Our house payment for a three-bedroom, two-bath house that is less than 1400 sq.-ft was $1100 a month- $862.42 for the 80% loan, and $240 for the 20% loan. When we found out our payment was going to that high, both of us gasped and at first said no.
Our guy at the bank said, "I know it sounds high, but if you're not late on your payments and if you can wait a year, you'll be able to re-finance and get your payments a lot lower."
And that was the second mistake, lying to us and telling us we could re-finance knowing that we wouldn't have any equity in the house. We were nave and didn't know any better.
My husband and I added value to the house and, after a year, tried to re-finance but had no such luck. We tried everyone and everywhere, our bank including, and everyone said, "No. You're credit score isn't high enough, and you have no equity in the house. Try again in six months." And again, in six months we had no such luck. We have tried so many times to re-finance and have gotten shot down every time.
Then our mortgage company decides to merge with another company, and the new company jacks our mortgage up. This time we're paying $1200 a month for a house, and we're starting to struggle with our other bills. Our vehicle payments are starting to get behind because we're paying a house payment.
As a last resort I tried to get with a company that would let us defer our house payments so we could get back on track, but the company wanted me to pay $1000 to do it. Okay no- if I had $1000 to begin with, I wouldn't be in the situation I'm right now.
We decided to go back into the apartments that we originally lived in, except go into a three-bedroom, two-bath apartment. Our rent is $300 less than our old house payment. We've put the house up for sale, but with the housing market the way it is, we don't think or know that it will sale. BUT, we're a lot better off and are getting caught up on our bills.