Hear about how much debt everyone in the US has all the time, curious about some of your stories!

My bad debt is 10k left on a school loan from a for profit school that is now out of business.

Only other debt is house.

So how are you all doing with debt management?

  • foggy@lemmy.world
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    1 year ago

    The extremely (almost irresponsibly) abridged version of the 2008 subprime mortgage crisis is that banks were giving out loans to people who could not afford to pay them.

    This is the comparison I’m drawing, because it’s what is happening again.

    A 200K home mortgage isnroughly 2000/mo. It’s not doable for median income, and the .median house price is like 380k right now. The math doesn’t check out.

    • Anyolduser@lemmynsfw.com
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      1 year ago

      Yes. Today you’ll hear people online talking about how mortgages are unaffordable. If they somehow decided to apply anyway the bank would reject them.

      The difference between now and the years leading up to the 2008 crash is that loan officers would have given people those mortgages despite the payments not being doable as you said.

      A lot of banks were offering variable rate mortgages that had lower interest for the first few years of the loan and advertised this lower monthly payments. This would get applicants in the door. When they asked about the later interest increases (that would bump the monthly payments higher than they’d be able to afford) they were assured that they’d be able to refinance their debt.

      This and other shady sales practices are not happening today largely because federal regulations and oversight placed after the fact.

      The TL;DR is that the math on mortgages doesn’t check out for a lot of people. In the early 2000s banks were more than happy to give you a mortgage anyway. That simply isn’t happening right now.

      • foggy@lemmy.world
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        1 year ago

        That simply isn’t happening right now

        It is, though. People are buying homes who cannot afford them all over the US right now. It’s not as though home buying has ceased with the interest rates.

        • Anyolduser@lemmynsfw.com
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          1 year ago

          Can you provide a reputable source that large numbers of people are taking mortgages they’re likely to default on?

          I have not heard any reporting saying that is happening. I do, however have a family member who works in banking and interfaces with federal regulators that enforce the laws passed to prevent future subprime mortgage crises.

          • foggy@lemmy.world
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            1 year ago

            No. My source is basic arithmetic. The math just simply doesn’t check out. Banking isn’t rocket science.

            A 200K home mortgage is roughly 2000/mo mortgage. It’s not doable for median household income if about 75k, or about $4200/month after taxes, while grocery prices inflate over 10% year in end, and the median house price is like 380k right now. The math doesn’t check out.

            At this point I’m repeating myself.