One of the most disastrous recessions to hit the country happened a decade ago. It began in 2007. This is when the number of high-risk mortgages escalated uncontrollably. When the housing bubble burst it left devastating effects throughout the entire US and even the rest of the world.
And if you haven’t realized, 2017 also ends with the number seven. Some of the biggest financial crises our country and the whole world has faced happened in the years 1987, 1997 and 2007. If you do the math, a financial crisis happens every 10 years. Doesn’t that make you pucker up a little bit?
Whether it’s just plain coincidence or it truly follows a pattern, only experts can tell. But there is always a thing or two we can learn from the mistakes of the past.
Millennials who just entered the homeownership arena may have little understanding of what happened. Taking a look at what happened during the last housing crisis will help millennial home buyers plan out for homeownership, avoiding the past’s mistakes.
A Quick Recap
During the mid-2000s the nation was enjoying a housing boom.
Fueled by huge demand, speculators entered the housing market. This drove the demand even higher. This, plus the ultra-low rates during that period, made it easier for borrowers with poor credit to get financing. Lenders were still lenient when it came to mortgage qualification. With all these things combined, it was a recipe for a disaster.
The 2007 global financial crash was seen as the worst crisis following the
Great Depression in the 1930’s. The U.S. subprime market was in such a bad shape that it became a full-blown international macroeconomic banking crisis. To prevent such crisis from happening again,
Dodd-Frank regulatory reforms were drafted and enacted.
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A Good Attitude Towards Debts
Debt is debt. No matter how big or small a debt is, it has to be repaid. However, sometimes the problem isn’t just about not repaying the
borrowed money. It’s about taking the wrong program that doesn’t fit your budget and lifestyle.
Sometimes, people borrow too much and fail to see that they can’t afford to repay it. Other times they don’t realize that their debts are already accumulating but they still keep on borrowing money. Some people immediately take advantage of the “too-good-to-be-true offers” without knowing and understanding how such financing works.
Millennials must know that accountability and adequate knowledge always go hand in hand when dealing with debts. Keeping consistent, on-time and full payments is a prime ingredient, but a truly responsible borrower seeks for ways to be debt-free faster.
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Looking at the Now
No one can exactly pinpoint as to when the next crisis will happen. Hopefully, there will won’t be one anymore.
More Learned and wiser, international banks are stronger now than they were before. try may impose a great problem. Good regulations are set in place. Others seek to improve these laws without over-regulating to further safeguard the nation’s economy. Homebuyers and owners are also doing their part by being more responsible for their debts. And even when home prices are rising, more people are now living mortgage debt-free. So far, the financing balance is still in equilibrium.
Millennials do not have to go through a housing crisis to learn what they have to learn. It is better to learn about it in books or anecdotes than to experience it for themselves.
Be a responsible homebuyer, always choose the safer ground. Learn more about the present housing market,
available loan programs, the current rates and new regulations governing the mortgage industry. Talking to a lender will help you gather this important information so you can plan out a safer and a more solid homeownership goal.
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