Wednesday, October 1, 2008

Hope your broker's plan B isn't to jump out the window

There are 2 reasons for this blog.

1. To test the ability to post a blog by e-mail from my BlackBerry.

2. To address how this 'financial crisis' is effecting me.

If you are reading this blog, then, the ability to post via e-mail worked.

So how is this financial crisis effecting me?

Well to understand how this crisis effects me, one has to understand the crisis.

This crisis is because there are a ton of banks that wrote a bunch of bad loans. No one was watching who these banks were lending to, and there are a lot of loans that are now going unpaid.

So banks aren't collecting on their loans so they are no longer loaning money out, or they are looking at who wants the money a little closer and its harder to get the loans people need. So now that no one is getting loans, they are holding onto their cash. Now regular consumers aren't investing/buying consumer goods, the markets are losing value because the general public has pulled their money out of the market, you see all these sell off's and the markets crash.

This effects all of us. Do you need a credit card? Good luck trying to get one. Trying to buy a house? Good luck.

This is how I am being effected the most. After a year of saving and paying off debt, Jenn and I are finally in a position to buy a home. We had a condo picked out. We have been trying to buy it for a while. We made an offer of $131,500. A reasonable offer. The seller is breaking even and Jenn and I have an affordable house payment. Because of declining home values the appraiser couldn't make this house appraise for more than $125,000. Well that's a deal breaker for the sellers. They want their money back. They don't want to lose anymore money than they have already.

So they called and said that they would lower the purchase price to $125,000 and they will consider the other $5,000 a personal loan and we can pay that back over time.

Well here is the problem I have with that. Why would I pay $131,000 for a house that is only valued at $125,000 in today's market? I won't. So if they don't appraise this house at $131,500 I'm going to walk away from the deal. I will pack my shit and move.

This is something I would rather not do.

Now the second part of this crisis, is that banks aren't loaning money out all that much, so with my weak credit score and lack of a large down payment, getting my deal through underwriting is going to be hard enough, and with this appraisal fiasco, this is giving me more hours of lost sleep than I care to lose.

This crisis has people freaking out. The malls are empty, people aren't spending any discretionary money. So people aren't coming into my kiosk and buying phones. This is effecting my paycheck because I work on commission.

Let's hope the rebound in the market isn't just a one day buy back and we keep making progress.

The government needs to keep its bail out package and let the market fix itself. Let the banks pay for the bad loans they doled out with their own money.

Hey, at least Congress got oil prices to drop, albeit by coincidence, but hey, at least they got something done for once.

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