Home loans low, downsizing options are slim.

We have been watching the stock market plummet, the banks fail and reduce and eliminate credit lines, home prices drop with no buyers and no loans. Our credit scores were affected by the changes in reduction of credit card and bank lines putting us over the 50% threshold that kept our scores lower. Now, we have more and more unemployed and those with jobs are facing salary reductions. How does one downsize to stay within their means? It is nearly if not impossible. The future we and our neighbors face under the current climate is grim.

In the last 5 years if you qualified for a home loan you could afford you probably used a 401K or savings as liquidable assets to requalify for a new loan even if you could sell your current property (at a loss) your investment portfolio is probably substantially lower, your income may be lower, you have less capital from a fire sale to reinvest in a new home. This option of selling your current home and downsizing to a less expensive one is also nearly impossible.

The options to recover and be responsible and live within your means just got a whole lot more difficult. So how much should we celebrate the bank deal the treasury just made? I don’t think we should pop open the champaign just yet.