Interest Only and Credit Card Debt

Well, here is an example of the system that isn't functioning as intended: a mortgage loanthat encourages paying off one debt, in order to overspend our selves with another debt. The interest only mortgage and the credit card debt. As a borrowing nation,I believe we've reached new levels.

It would seem that in this century we've managed to take every form of credit possible, extend it to the limit,and then look at them as if to say, "You mean you can't pay?" What do these loan and credit companies think they're going to be facing, when the amount of credit and mortgage they'rewilling to extend, reaches beyond the acceptable debt to income ratio? Why do they think these limits wereestablished in the first place?

Moreconsumers than ever before owe massive credit card debt. It's the way to go, many college campus' areoverrun with representatives from the major credit card companies, eager to extend credit to the young hands of the college student. Are they as ready to work with them when theycan't pay? No. What about the rest of the crazed, spending public? How do theyhandle their credit cards? Well, thanksto the interest only mortgage, we can now pay off credit card debt we can'tafford, with a mortgage we can't afford. Now, that's progressive thinking.

Theinterest only mortgage is now a tool for replacing non-deductible over extendeddebt, with tax deductible over extended debt, and consumers continue to be theones to pay. This is not a wise option,if you're already spending more than your budget will allow, how about cuttingback? Did that ever occur to themortgage company? No, because they don'tmake any money if you learn to spend less.

As a fellowconsumer, each of us should take the time to question our spending habits. Is it wise or necessary? If the answer to either question is no, thendon't spend. You don't want to have tomake the decision between over the limit spending, and a nice, warm bed, do you? Okay, now here's an interesting spinon an already risky product, let's give the bad credit crowd a chance to makean even worse decision, and finance a home they can't really afford andobviously will have trouble making on time or dependable payments so they canpayoff credit card debt, only to charge it up again!

Sometimes,the products and situations that you see in the everyday world of researchingthese loans, is truly amazing and this is one of those situations. There are actually mortgage companies thatadvertise these interest only mortgage options for the consumer with the badcredit record to pay off any outstanding credit card debt!

Now, whatI'd like to know is why the mortgage company, in all good faith, would want totake a risk such as this. It's riskyfinancing for consumers with bad credit, when you're financing with good solidcollateral, well within their means to pay. You take the consumer and the mortgage loan outside those realms ofoperation, and you're just simply asking for a problem.

Maybe weshould have an agency that's known as the "mortgage police" and when there's aclear and evident violation of just good sound common sense, a whistle blows,the computer locks up, and in walks the mortgage police. I truly believe the consumer, if not themortgage company would be a lot better off; especially when the consumer hastime to really absorb the basic facts about interest only mortgage, and themess they can make of their finances; in the case of the bad credit consumer,the further mess they can make of their finances.

With allthe government control that regulates the mortgage loan industry, and all thestatistics that are published about the consumer with a bad credit rating, whodo you suppose thought it would be a good idea to give them an interest onlymortgage, that they more than likely will have further trouble paying? You wonder if Alan Greenspan is aware of thissituation, and if he takes it into consideration when raising the primeinterest rate? Do you suppose there's anumber factor for the "really going to default on these loans" segment of hisequation that determines our prime lending rate? Let'shope Alan uses more foresight and plain good business sense than our mortgageloan brokers, especially the ones that came up with this genius idea!