Interest Only and Credit Card Debt
Well, here is an instance of the system that isn’t functioning as intended: a mortgage loan that encourages paying off one debt, in order to overspend ourselves with an additional debt. The interest only mortgage and the credit card debt. As a borrowing country, I believe we’ve reached new levels.
It would appear that in this century we’ve managed to take every form of credit possible, extend it to the limit, and then look at them as if to say, “You mean you can’t pay?” What do these loan and credit companies think they’re going to be facing, when the total of credit and mortgage they’re willing to extend, reaches past the acceptable debt to income ratio? Why do they think these limits were established in the first place?
More clients than ever before owe massive credit card debt. It’s the way to go, many college campus’ are overrun with representatives from the major credit card companies, willing to extend credit to the young hands of the college student. Are they as ready to work with them when they can’t pay? No. What about the rest of the crazed, spending people? How do they handle their credit cards? Well, thanks to the interest only mortgage, we can currently pay off credit card debt we can’t afford, with a mortgage we can’t afford. Now, that’s progressive thinking.
The interest only mortgage is now an instrument for replacing non-deductible over extended debt, with tax deductible over extended debt, and consumers still to be the ones to pay. This is not a wise option, if you’re already spending more than your budget will allow, how about cutting back? Did that ever occur to the mortgage company? No, because they don’t make any profit if you learn to spend less.
As a fellow consumer, each of us should take the time to question our spending behaviors. Is it sensible or necessary? If the answer to either question is no, then don’t spend. You don’t want to have to make the choice between over the limit spending, and a nice, warm bed, do you?
Okay, now here’s an appealing spin on an already risky product, let’s give the bad credit crowd an opportunity to make an even worse decision, and finance a home they can’t really afford and clearly will have trouble making on time or dependable payments so they can payoff credit card debt, only to charge it up once more!
From time to time, the products and situations that you see in the everyday world of researching these loans, is truly astonishing and this is one of those situations. There are actually mortgage companies that promote these interest only mortgage options for the consumer with the bad credit record to pay off any outstanding credit card debt!
Now, what I’d like to understand is why the mortgage company, in all good faith, would want to take a risk such as this. It’s risky financing for consumers with bad credit, when you’re financing with good rock-solid collateral, well within their means to pay. You take the consumer and the mortgage loan outside those realms of operation, and you’re just merely asking for a problem.
Maybe we should have an organization that’s known as the “mortgage police” and when there’s a clear and evident infringement of just good sound common sense, a whistle blows, the computer locks up, and in walks the mortgage police. I truly believe the buyer, if not the mortgage company would be a lot better off; especially when the consumer has time to really absorb the basic facts about interest only mortgage, and the mess they can make of their finances;
With all the government control that controls the mortgage loan industry, and all the statistics that are published about the consumer with a bad credit rating, who do you suppose thought it would be a good idea to give them an interest only mortgage, that they more than likely will have additional trouble paying? You wonder if Alan Greenspan is aware of this situation, and if he takes it into consideration when raising the prime interest rate? Do you assume there’s a number factor for the “really going to default on these loans” segment of his equation that determines our prime lending rate?
Let’s hope Alan uses more foresight and plain good business sense than our mortgage loan brokers, particularly the ones that came up with this genius idea!
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Disclaimer:
The general information provided by http://MortgagePalace.blogspot.com is intended as an educational purpose only, and should not be interpreted as legal advice. The law varies drastically by location and legal specialty, and http://MortgagePalace.blogspot.com makes no promises about the accuracy or completeness of the information provided. You should not rely on our information when making legal decisions. We recommend that you consult with a lawyer to get professional legal advice on how best to deal with your situation.
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
** Attn Ezine editors / Site owners **
Feel free to reprint this article in its entirety in your ezine, blog, autoresponder, or on your site so long as you put a link back to this original post, leave all links in place, and do not modify the content in anyway.
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
It would appear that in this century we’ve managed to take every form of credit possible, extend it to the limit, and then look at them as if to say, “You mean you can’t pay?” What do these loan and credit companies think they’re going to be facing, when the total of credit and mortgage they’re willing to extend, reaches past the acceptable debt to income ratio? Why do they think these limits were established in the first place?
More clients than ever before owe massive credit card debt. It’s the way to go, many college campus’ are overrun with representatives from the major credit card companies, willing to extend credit to the young hands of the college student. Are they as ready to work with them when they can’t pay? No. What about the rest of the crazed, spending people? How do they handle their credit cards? Well, thanks to the interest only mortgage, we can currently pay off credit card debt we can’t afford, with a mortgage we can’t afford. Now, that’s progressive thinking.
The interest only mortgage is now an instrument for replacing non-deductible over extended debt, with tax deductible over extended debt, and consumers still to be the ones to pay. This is not a wise option, if you’re already spending more than your budget will allow, how about cutting back? Did that ever occur to the mortgage company? No, because they don’t make any profit if you learn to spend less.
As a fellow consumer, each of us should take the time to question our spending behaviors. Is it sensible or necessary? If the answer to either question is no, then don’t spend. You don’t want to have to make the choice between over the limit spending, and a nice, warm bed, do you?
Okay, now here’s an appealing spin on an already risky product, let’s give the bad credit crowd an opportunity to make an even worse decision, and finance a home they can’t really afford and clearly will have trouble making on time or dependable payments so they can payoff credit card debt, only to charge it up once more!
From time to time, the products and situations that you see in the everyday world of researching these loans, is truly astonishing and this is one of those situations. There are actually mortgage companies that promote these interest only mortgage options for the consumer with the bad credit record to pay off any outstanding credit card debt!
Now, what I’d like to understand is why the mortgage company, in all good faith, would want to take a risk such as this. It’s risky financing for consumers with bad credit, when you’re financing with good rock-solid collateral, well within their means to pay. You take the consumer and the mortgage loan outside those realms of operation, and you’re just merely asking for a problem.
Maybe we should have an organization that’s known as the “mortgage police” and when there’s a clear and evident infringement of just good sound common sense, a whistle blows, the computer locks up, and in walks the mortgage police. I truly believe the buyer, if not the mortgage company would be a lot better off; especially when the consumer has time to really absorb the basic facts about interest only mortgage, and the mess they can make of their finances;
With all the government control that controls the mortgage loan industry, and all the statistics that are published about the consumer with a bad credit rating, who do you suppose thought it would be a good idea to give them an interest only mortgage, that they more than likely will have additional trouble paying? You wonder if Alan Greenspan is aware of this situation, and if he takes it into consideration when raising the prime interest rate? Do you assume there’s a number factor for the “really going to default on these loans” segment of his equation that determines our prime lending rate?
Let’s hope Alan uses more foresight and plain good business sense than our mortgage loan brokers, particularly the ones that came up with this genius idea!
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
Disclaimer:
The general information provided by http://MortgagePalace.blogspot.com is intended as an educational purpose only, and should not be interpreted as legal advice. The law varies drastically by location and legal specialty, and http://MortgagePalace.blogspot.com makes no promises about the accuracy or completeness of the information provided. You should not rely on our information when making legal decisions. We recommend that you consult with a lawyer to get professional legal advice on how best to deal with your situation.
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
** Attn Ezine editors / Site owners **
Feel free to reprint this article in its entirety in your ezine, blog, autoresponder, or on your site so long as you put a link back to this original post, leave all links in place, and do not modify the content in anyway.
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
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