Mortgage loans are a type of secured loan which uses a person’s home as collateral. Considering that the price of a moderate house can be about $350,000 it’s very unlikely that a family will purchase their home in one full payment. For most people this would mean saving money for years and years and paying rent while they finally have enough to make the purchase. How old would they be by that time? Over 50 for the average American.Clearly this is not an option people will choose, thus the mortgage loans came to existence.

What’s good about mortgage loans? They let you buy a home when you can’t afford it and also save you the money you would pay for rent if renting.

What’s bad about mortgages? Not everyone should get a mortgage loan. Imagine you just started your career and are considered a very expendable asset. Do you have the security to say you will be able to pay the high cost of mortgage for 20-40 years to come? No… And this is the problem. People don’t think about it, lenders don’t care about it. And that is how the foreclosure crisis began. Too many people were allowed to get loans which they cannot pay off and these homes were soon property of the banks which can’t sell them fast enough.

Light in the end of the tunnel? New regulations are on the way, many of them already being active. Hopefully with Obama’s new regulations in place, the mortgage loans will again become a solution to a problem rather than a problem people are barely handling.