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Homeownership and subprime loans

Scouring the headlines this morning, I was trying to decide what to write about. The environmental crisis in China? The debate about health care insurance for middle class children? My new apartment and neighborhood?

I decided to write about homeownership and sub-prime loans because the NY Time's featured Chicago in their story on the Drop Foreseen in Median Price of US Homes by David Leonherdt and Vikras Bajaj. Having moved into a new apartment, I can talk about why I rent but not buy homes.

Sub-prime loans

The news has been reporting on the negative economic effect of the current housing crisis as foreclosures increase across the nation. It seems that the housing boom was predicated on providing balloon mortgages to those who could not afford them or cannot afford them now.  What has been disturbing is that none of the "experts" predicted this. What is the point of being considered an expert if you cannot predict anything. There is another article about the Countrywide Financial and how they persuaded people to take loans by promising, “I want to be sure you are getting the best loan possible."  They were very successful and people bought into the American dream of homeownership, and now the dream is fading.

Homeownership

I've never bought into the American dream of homeownership. Even in kindergarten, I never wanted to play house. There are some assumptions about life-style's that are part of that dream that I do not buy into because I believe that everything you own, owns you. I think it is strange that housing prices are such that it takes a 30-year mortgage to pay off a house. That is half a lifetime to be tied to a long-term loan. Culturally, of course, US people do not stay in one place for 30 years, at least in the middle class doesn't. I really don't imagine being in one location long enough to accrue great equity in a home, which I don't need too much of. I do not have children or plan to. I contribute the maximum on my 401Ks and retirement.

I know that not everyone share these assumptions, but it seems immoral that the dream is so high that for many it's becoming a nightmare.

Comments

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I agree with you to an extent. I believe many of the things we Americans are taught to value are over the top and makes little sense. Most Americans are not really looking to buy a house when they buy. They are looking to buy a home, a piece of serenity, a piece of isolation. In many countries, a house is a house--shelter that is often shared with others who are less fortunate. As a writer, I'd like a cabin... that live in for a long time that will provide the tranquility I need to do my work. In live in San Francisco where renting may be more outrageous than homeownership.

I personally think spending $100,000 on education is a bigger crock. It's gambling.Although it's true that college graduates make more (on average) than non-college graduates--not all college graduates do, or they just make slightly more. Education is extremely important, but I think we need to find another way to fund it, so that it will continue to be worthwhile to major in the humanities and art, for instance.

Home Mortgage Loans

Some of the experts did predict this as over the last couple of years there has been a big push to end predatory lending practices. But, because the stuff didn't hit the fan yet, little meaningful was done to correc the problem before bigger problems ensued.

I agree though, that the American Dream is not something that should end in losing one's home and time in bankruptcy court.

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