by Don Kwikshot

Created on: January 11, 2009   Last Updated: January 28, 2009

Buy a Home now and Make Money

We are living through one of the greatest economic problem periods of modern times, and one, which, unfortunately has been brought about mostly by banks, financial institutions, and government policies.

The lead-up to this was the frenzy of borrowing which occurred during the mid years of this decade, where we saw house prices rising at an incredible speed in most areas and in most parts of the world. How many banks called you to advise you that you qualified for a credit card, or a gold card? How many lending institutions told you that the cheapest form of credit lay in your home-loan? As house prices rose, we were all encouraged to consolidate our debt by taking out ever-higher loans on our houses, which were increasing in value on an almost monthly basis. Thus many people re-financed their homes, some to pay off credit debt, some to make improvements to the home, some to help pay for children's education, and some simply to go on holidays that they would never have dreamed of ten years previously.

Everyone had money, but no-one stopped to think that this was no more than monopoly money; it was just a paper figure a matter of borrowing from Peter to pay Paul, and that eventually, we would have to accept the fact that the money was no more than just paper, or actually, plastic.

And then the bubble started to burst. It was not just an American phenomenon, although the USA has been hit worse than other countries. First of all, house prices stagnated, then began to drop. Secondly, in the American market, bonds which had been granted at low, or below prime interest rates, suddenly reverted to normal interest rates, leaving the borrowers unable to make the monthly repayments. This caused many people to default on their home-loans, and, in the end to lose these homes.

There has also been a strong knock-on effect: builders have gone bankrupt, banks have collapsed, hardware stores have suffered enormously, many estate agencies have closed their doors, and many proud new home-owners have found themselves out on the street.

Because of the sharp downturn in property prices throughout most of the world, but particularly in the US, many people have found themselves in a position where the amount they owe on the home vastly exceeds the actual value of the home at today's prices, so they are not only out on the street, but they also still owe a myriad of institutions enormous sums of money. Despite government intervention to halt this spiral of decline

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