Day 49
Mortgage burning ceremony was practiced by the citizens
of the American society when they had completed making the last payment of
their mortgage. The ceremonial included a big party, celebration and the
families burned a copy of their mortgage. In the early 80’s an average 30 year
mortgage interest rate ranged from 10 percent to 16 percent. The home mortgage
was an extremely big part of the salary at 16 percent interest rate. But as
years progressed, the interest rates declined to as low as 4 percent and the
whole ritual of mortgage burning celebration is hardly practiced. But recently
we have seen many changes in the US economy like the credit crunch, the crash
of the housing market, unemployment, increasing foreclosures, bankruptcies, etc.
So here is my question: Do you think we will return to
the ritual of mortgage burning ceremony?
According to the Bureau of Labor Statistics Data, the
unemployment rate in August 2012 was 8.1 percent which mean approximately 12.5 million
people are unemployed. In addition of citizens filing for personal bankruptcy we
have states and cities filing for bankruptcy protection. According to the
survey performed by Realty Trac on August 2012 the national foreclosure data
indicates 1 in every 681 homes is filing for foreclosure.
After the crash of the housing market and adjusting
adjustable mortgage rate (ARM) programs, the home owners found themselves stuck
in a pickle. The rate we adjusting and they could not refinance their homes
because the value of the homes had dropped drastically. In the increments of
the mortgage rate had increase their mortgage payments and unemployment rate
was an additional bruise to the existing injury. People started filing for
bankruptcies and foreclosure because financially paying a mortgage of 300,000
dollars for 200,000 home did not make any sense.
Today like the 80’s the cry of being debt free can be
heard in US homes. The value of being debt free has increased tremendously
because the homeowners have started feeling the pinch of their existing
mortgage. With the growing bankruptcies and foreclosures what is the value of
credit? Will there be new rules of borrowing because over percent of Americans
will have foreclosed or had bankruptcies?
“Financial
freedom is solving the labyrinth to become debt free”
~Lenji Jacob
Reference
Bureau of Labor Statistics Data (2012) Labor Force Statistics from the Current
Population Survey Retrieved September 18, 2012, from http://data.bls.gov/timeseries/LNS14000000
Realty Trac (2012) Foreclosure
Real Estate Listings Retrieved September 18, 2012, from http://www.realtytrac.com
1 comment:
I would love it if more people followed in the desire to be debt free. But I hear too many people wanted to do HELOC's for more money, or for debt consolidation. Once debt is consolidated that accrue more debt causing the never ending cycle.
WAKE UP PEOPLE! Listen. Live within your means. Enough said.
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