The U.S. Mortgage Crisis.

 

For many of you who are wondering what happened in the United States and why such a huge financial meltdown, it was a combination of greed from the banks and insufficient research by the buyer.

Essentially banks offered teaser rates often known as introductory rates that were super low. The mortgage for a home would only cost $500.00 per month but after five years when the teaser rate expired the new rate kicked in which set off huge mortgage rates. People who were paying that super low $500.00 per month mortgage were now forced to pay $2,000 per month or have the bank foreclose on them.

What the bank didn’t count on was that everyone would be affected by these huge rates and the next thing that happens is the banks are stuck with millions of properties and no one to buy them. So people would be left homeless while the banks had useless properties for no one to buy. Now the U.S. government is forced to step in and bail everyone out because everyone got too greedy for their own good. Let’s hope another financial meltdown doesn’t happen again and banks as well as people who are looking for a home do their research the second time around.

When you go to buy a home make sure you find out how much your monthly payments will be even after there is an introductory rate as you may not be able to afford the huge mortgage bill afterwards.