I’m reading that the government is thinking about a freeze on interest rates for those who are facing a big increase of their variable-rate mortgages. The plan is to force banking institutions into moving these people to other mortgages.
Millions of low-rate mortgages were issued and are about to kick in with the higher rates spurring fears of a drove of defaults. So the Feds and bankers are looking for a program to help these people out.
How about a literacy program?
Didn’t they read their contract? They knew that their rate would go up. Or, did they think it would go down? That’s what variable-rate means.
Somehow, someone is going to pay for this bail-out. Higher taxes if the government does it. Higher bank fees, interest on other loans, or lower savings interest, if the banks pay. Either way, it comes down to you and me, all of us paying for it.
How is that fair to all those people who avoided the variable-rate mortgages and stayed with the higher cost fixed-rate plans? I am one of those. I knew I’d rather stick with what I could just afford at the time, not hoping for the best later. I’ve already paid more interest, but get nothing for it, while those who chose the teaser rates are crying for a bail-out now.
Sure, I thought about it. I would have liked to buy a nicer home maybe 10 years ago and do it with one of those low-interest mortgages that were all the rage at the time. But the experts warned us about this coming and I guess I was one of the few who listened.
We’re the exception to the rule here in WNY, where real estate values are low, but the rest of the country has grossly over-inflated property values, due in a large part to these mortgages. Instead of a low demand driving the values down to realistic prices, they pumped up the demand with the low interest rates to sustain the demand at the high real estate prices.
Now, it’s threatening to bring the banking and real estate industries down to their knees, after they have reaped the profits they engineered setting it all up. With Enron or Adelphia, you could point a finger at a few guilty parties in charge, but in this case, the whole system was in on it and guilty of their profit-taking in the face of what everyone knew was going to happen.
Amen on the “literacy program”. I worked for 8 years for one of the major credit reporting agencies, and during my last few years there, worked primarily preparing updated credit reports for mortage applications. Now everyone does something stupid with their money sometime in their life, hopefully just when they’re young. But, people, please be careful and be well informed when you make any major credit decisions. Not only houses, but autos, too. They are both becoming way overpriced these days. Home equity loans are another thing that needs to be used with caution.
I have a personal income that puts me squarely in the average middle-class bracket, but I cannot afford a mortgage in New England. I think there are a lot of people who can’t really afford a mortgage the correct way and are suckered into the promise of a home for their family by these low-rate mortgages. I can’t fault them for not wanting to raise kids in an apartment, but having the home taken away from you isn’t good either. And let’s not even factor in rising property taxes. That’s another cost on top of it all. People, the lending industry is not concerned with what is in your best interests, be it mortgage, car loan, home equity loan, or even credit card or student loan. They only want to get your business. It’s up to you to educate yourself about what is best.
Which brings me to my own little personal pet-peeve rant. You know those commercials and ads that promise you a free credit report only if you sign up for a year of service to the tune of about $70 that lets you look at your personal credit report every day of the week if you want to? First of all, your credit report only changes monthly, and only changes in entirety approximately every 3 months. You are entitled by law to receive a copy of your credit report free yearly from each of the 3 national credit reporting agencies. You are NOT entitled to free FICO scores or other credit scores, and DO have to pay for them. As a general rule, though, if you are taking care of your finances well, your score should not be a problem and I would not bother with it unless your are about to enter a major credit contract or are involved in some sort of financial problem such as bankruptcy or divorce.
The correct source for your free annual credit report is:
http://www.annualcreditreport.com
1-877-322-8228
P.O. BOX 105281
Atlanta, GA 30348-5281
Anyone nervous about doing this online can call the toll free number. They will tell you what info they need and you can send it to the POB in Atlanta, GA.
You can get your free report from each of the 3 agencies all at once, or you can do what I prefer to do and space them out over the course of a year. This way you get a yearly overview of your credit for free. The 3 agencies are Equifax, Experian, and TransUnion. Remember to alternate the reports as you will have to pay for any reports more than once a year from any given agency.
Even the free reports can be annoying. I was given a pamphlet about that back when I bought my new truck. It may have been the same URL you gave, I don’t remember.
But I tried it. I had absolutely no intention of buying any report service, I just wanted to check things over once to know where I stood.
So, I went to the web site, filled in a bunch of questions and hoped for the best. Well, all it did was refer me to each of the three credit bureaus one after the other. Even worse, while it seemed to pass on the information I had entered, they had to either ask for more or confirm what I had already entered. I might as well just have gone to each one, Equifax, Experian, and TransUnion, on my own.
But it did work and I even cleared up a couple errors before they became a problem.
But, now I get emails begging me to subscribe to their pay services. I guess free means the price you pay is becoming a marketing target.
I haven’t got on any email list from the source I gave. The other ones (such as the current commercials with “pirate boy”) belong to each of the credit reporting agencies. They will do the same thing, but since they make their $ selling credit reports, they try to sucker you into paying for the yearly plan. I get asked to join these same things through all my charge cards, too, along with all those other things they stick in with the bills. Just ignore them.
You are also entitled to a free credit report for approximately 30-60 days after any denial of credit.
Just for the record, “pirate boy” in the commercials couldn’t see his deadbeat fiancee’s report unless she got it herself and showed it to him.
Just wanted to pass on a little personal expertise in appreciation for the advice on the laptop. Thanks.