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Warning signs of the housing bubble crash (part two) Mike Adams, the Health Ranger See article keywords and concepts

You make it easier and easier for people to get home loans. This is especially important as house prices continue to increase. Fewer and fewer working people can actually afford home loans under the old, tighter rules of home loan qualification. So, if you are in the banking industry or the lending industry, you have to loosen those requirements so that more people can qualify. As a result of this, we're seeing some really radical stuff in the home lending market.

Essentially, we're seeing home loans go out to people who should not qualify for home loans, and they're being structured in a way that almost guarantees financial disaster. A recipe for disaster: variable rate mortgages Here's how it works: You've heard of the variable rate mortgages, where you have a low interest rate today, but that rate is tied to the prime rate. If the Fed raises the interest rate, mortgage payments go up. There's really no limit to how high it can go.

If you know anything about personal finances, you know that normal home loans are structured as interest and principal. If you pay $1,000 one month on your mortgage, you might pay $900 in interest and $100 in principal. The hundred dollars goes to actually pay down what you owe on the house. The $900 goes to pay the money you borrow that month. So, you can pay on a house for 10 years and have very little equity, depending on how the loan was structured. But today, there are radical loan structures that are interest-only loans. You pay for five or 10 years, and you own nothing.

As a result, many banks are making home loans using little more than thin air as the assets backing the loans. This is how a real estate bubble happens at the same time as a stock market bubble. This is San Francisco in 1999. This is Silicon Valley in 2000. It's exactly what happened. At that time, I was warning about the looming stock market crash, and it was poorly received. A few people listened and they sold their stocks and were safe, but most people didn't. They said, "You're crazy. This thing is going up forever. We are all rich. We are all rich!" But I knew better.

I don't sell home loans, and I don't have a book on this subject. I'm just passing this along, because I don't want to see people hurt again. A lot of people will never hear this message, and a lot of people who do hear it will say, "This guy doesn't know what he's talking about. He's not a real estate investment guru. He's not a banker. He's not a financial expert. What does he know?" That's why I'm going on the record. We'll find out. We will find out what happens to housing prices in the years ahead.

Why used cars cost more to drive than new cars (and other uncommon personal finance advice) Mike Adams, the Health Ranger See article keywords and concepts

You can alter your financial future by wising up about how to deal with home mortgages, home loans, credit card debt, your personal credit rating, food purchasing and other discretionary purchases. If you're wise about it today, you can start saving money and, just as importantly, start finding ways to stop wasting your money on things like old cars.

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century James Howard Kunstler See book keywords and concepts

Before Ronald Reagan took office, S&Ls had to keep at least 80 percent of their assets in home loans, by law. A typical S&L would offer 3 percent interest on money deposited with it, and make mortgage loans to homebuyers at 6 percent. The 3 percent difference or "spread" covered the bank officers' salaries, and paid building rent and owner profits. Obviously this required a stable currency. The severe inflation and interest rate hikes of the 1970s threatened to drive the thrifts out of business.

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ABOUT THE CREATOR OF NATURALPEDIA: Mike Adams, the creator of this NaturalNews Naturalpedia, is the editor of NaturalNews.com, the internet's top natural health news site, creator of the Honest Food Guide (www.HonestFoodGuide.org), a free downloadable consumer food guide based on natural health principles, author of Grocery Warning, The 7 Laws of Nutrition, Natural Health Solutions, and many other books available at www.TruthPublishing.com, creator of the earth-friendly EcoLEDs company (www.EcoLEDs.com) that manufactures energy-efficient LED lighting products, founder of Arial Software (www.ArialSoftware.com), a permission e-mail technology company, creator of the CounterThink Cartoon series (www.NaturalNews.com/index-cartoons.html) and author of over 1,500 articles, interviews, special reports and reference guides available at www.NaturalNews.com. Adams' personal philosophy and health statistics are available at www.HealthRanger.org.