Mortgage issues

[emilye2]

No, not mine. Heck I still haven't closed yet! But what chaps my heiney is the Federal gov't jumping to the aide of people who are too dumb to do math. All these folks that got these subprime adjustable rate mortgages. I'm sorry, but if you are too stupid to do the math before you sign the papers and figure out that in five years your payment is going to go from $400 dollars a month to $1000 a month and then stop to think if you're going to be able to afford that, then you deserve to loose your house! How hard is it to figure out worst case senario on your interest rate?! We did it before we even applied for a loan. I just don't get it.....

[The Grim Reefer]

IBTL

100% agree with you. I am a dumb@$$ please bail me out

[BigSkyBart]

I'm a smartarse, can I get bailed out too?

IBTL

[mrferrit]

i hear ya also i was young and did my research wen buying a house but i didnt expect the insurance to double all through FL and i didnt expect the taxes to be reassest and for that to double 2nd year increase of 100$ per month and 3rd year increase 100$ per month

its a pain but im coping but thats a lil diffrent than the above story

[The Grim Reefer]

Its funny but when me and the wife bought our first house we went for one that cost about 60% of what we "qualified for". In 2000 I got wiped out in a car wreck and did 5 months in the hospital. It took a few months for disability to kick in but we never came close to having to beg barrow or steal. It's amazing how well you can do when you decide to live within your means. I have no sympathy for someone who signs a contract for terms they know they cannot afford

[Fat Man]

I agree with the basic sentiment of you made the bed now sleep in it. I do have one nagging question "When these people of little financial sense end up on the street, who's going to wind up footing the bill?"

[emilye2]

yeah I know there is that. I'm sure what they are proposing saves somebody now that all these foreclosures are affecting the big picture. (the economy) This wasn't meant to be a political discussion, it's not that I mind the fed. gov't helping them, I mind ANYBODY helping them. It just seems like another example of how we enable stooooopid in this country.
TGR-that's what we're doing. We are buying a house on a 30 yr mortgage that, hopefully we'll be able to pay off in 12 years. We've already budgeted in extra money per month on top of the actual payment to help pay it down. And we're still left with extra in our budget compared to making a rent payment every month.
Friends of mine specifically bought a small house and fixed it up. Now they are retired and can afford to take trips at the drop of a hat, buy new cars, a boat, afford to put on a new roof without selling a kidney, etc. Their house is small but they own it outright and have money leftover to enjoy life. And they are what I would call middle income. It makes no sense to me to have a big house just because. I want my house to look nice of course, but it doesn't have to be marble and granite to do it.

[MarkS]

Understand that most of these mortgages were not for "big" houses. I almost fell into that sub-prime trap on a new 2 bedroom house, smaller than the one I'm renting. They were selling for almost $90,000, well above market value. Something just didn't feel right. With my credit, they should have been struggling to find ways to get me into that house. Instead they seemed to be rolling out the red carpet. I ended up backing out at the last minute (literally) and I'm glad I did.

[The Grim Reefer]

Originally posted by emilye2
TGR-that's what we're doing. We are buying a house on a 30 yr mortgage that, hopefully we'll be able to pay off in 12 years. We've already budgeted in extra money per month on top of the actual payment to help pay it down. And we're still left with extra in our budget compared to making a rent payment every month.
Friends of mine specifically bought a small house and fixed it up. Now they are retired and can afford to take trips at the drop of a hat, buy new cars, a boat, afford to put on a new roof without selling a kidney, etc. Their house is small but they own it outright and have money leftover to enjoy life. And they are what I would call middle income. It makes no sense to me to have a big house just because. I want my house to look nice of course, but it doesn't have to be marble and granite to do it.

Good move

Another neat trick is making your house payment every 2 weeks instead of once a month. Instead of paying 1000 a month you send 500 every 2 weeks which is how most people get paid anyway. you end up making 1 extra payment a year over and above any other money you put toward principle.

[ooba]

well...not everyone is smart. In point of fact, many are quite dumb. I have a father-in-law that is a computer software engineer, works on top level govt. projects, gets WELL paid. very booksmart. But a complete halfwit if it comes to common sense.

I have this same discussion about subprime with my best friend, who's of the opinion that if they're stupid, its fine to take advantage of them. My reply is that it must be ok to take advantage of retarded people too in that case. He says, no, people mentally retarded certainly can't help that. My reply, so you think these people wake up every morning and make a choice to be stupid. 'Hmm, i could think today, but man, thats just too much work. It's great to be stupid! La la la! life's easy if your skull is filled with confetti and dead bees!'
I agree, anyone who would fall for that subprime stuff is a mouthbreather. I first heard of that scheme when we bought our house a few years ago and a real estate agent mentioned it. I looked at him like he was trying to sell me snake oil and thought he should be shot for suggesting it. But i knew at the time that there would be plenty of people long on hope and short on sense that would try it. Stupid or desperate and hoping for a nice house. Actually it's just the next logical step. isnt it exactly what credit card companies do also? wait until you run your card up to the limit, then bring the interest rate from 7% to 29%? I've been lucky not to fall in that trap also, but I'm about the only one.

But the fed isnt jumping in to help the idiots...they're jumping in to help the lenders get their money. If it was just the mouthbreathers getting drilled and losing their homes, but the lenders still got their money....eh, who'd care? Most everyone agrees they deserve it for being stupid.

[crpeck]

Sorry but that strikes me as way harsh.... Have a feeling this is going to thread lock territory as it should.

But before it goes .... I just have to ask if you've ever dealt one on one with one of those "mouth breathers" who get into that trouble? Can you even imagine the desperation of losing your home when you have children to support and think how possible it might be to grasp at something, anything, to hang on if you didn't know better?

There is a difference between "stupid" and ignorant. Most of the people that get caught by those loans are just ignorant and didnt' know any better. The mailers and advertisements predatory lenders put out are unbelievably seductive and easily entrap people who aren't financially sophisticated.

Mortgage lending is full of pitfalls that the average consumer can't navigate. Rather than scorn the desperate and uneducated that don't know any better, save it for the predatory lenders that take advantage of people in their weakest moments.

You think it's just "stupid" people and mortgages? You should see how many doctors I've had as clients that signed CRAZY student loan contracts that have them paying interest on accrued interest to where they're not out of debt till middle age. Doctors are smart, right? Well some of them are "stupid" financially.

Sorry to rant here. But as a CPA and accounting instructor, I've seen some HEARTBREAKING stories and have learned to not be judgmental.

[mr9iron]

Originally posted by crpeck
Sorry but that strikes me as way harsh.... Have a feeling this is going to thread lock territory as it should.

But before it goes .... I just have to ask if you've ever dealt one on one with one of those "mouth breathers" who get into that trouble? Can you even imagine the desperation of losing your home when you have children to support and think how possible it might be to grasp at something, anything, to hang on if you didn't know better?

There is a difference between "stupid" and ignorant. Most of the people that get caught by those loans are just ignorant and didnt' know any better. The mailers and advertisements predatory lenders put out are unbelievably seductive and easily entrap people who aren't financially sophisticated.

Mortgage lending is full of pitfalls that the average consumer can't navigate. Rather than scorn the desperate and uneducated that don't know any better, save it for the predatory lenders that take advantage of people in their weakest moments.

You think it's just "stupid" people and mortgages? You should see how many doctors I've had as clients that signed CRAZY student loan contracts that have them paying interest on accrued interest to where they're not out of debt till middle age. Doctors are smart, right? Well some of them are "stupid" financially.

Sorry to rant here. But as a CPA and accounting instructor, I've seen some HEARTBREAKING stories and have learned to not be judgmental.

Great post! I'm glad I got a low fixed rate on my house though. It's a 30 year note and we hope to have it payed off in about 15 years.

[McCrary]

Man, all this talk about money really makes me realize how much its going to suck when my parents stop paying my bills.

[dwd5813]

Emily, what is the exact value of your home going to be in seven years?

[dwd5813]

okay, that's a little too short.
my point is that any piece of real estate, in any market, under any terms, is a risk. no matter how carefully you plan and how sure you think you are about being able to afford it there is always a chance of something going wrong. to call everybody who takes advantage of an adjustable rate mortgage stupid is ignorant. yes, it is wise to make every preparation you can, but unforseen changes do occur, and sometimes that adds up to disaster. as a first time homebuyer when i was 20, i took a 7/1 arm. last year my mortgage payment increased by 100%, the value of my property had tripled, and my taxes also increased by several hundred dollars a quarter. am i an idiot because that put a financial strain on me?

[crzy4reefs]

we sooo need to do ours like bi weekly or something we are paying 1698.55 each month........luckly we are a head now but only cause eric is working 80 hours aweek 7 days.............we do have the option of bi weekly or something like that i think that's what we'll do

[JokerGirl]

There's a whole neighbourhood of these houses just up the road from us that was built ohhhh in 1999 maybe. They were offering the 0% financing, so a ton of people who didn't fit into the economic status of the town moved into them. 5 years later, a good portion of the houses were foreclosed on, and even now a lot of them sit empty. That's due in part to the fact that they were built cheaply, and a large section had to be redone due to black mold problems.

The amount of people that try to live a life they can't afford is scary. Matt and I are complete rednecks and are proud to admit it

[Satori]

Originally posted by McCrary
Man, all this talk about money really makes me realize how much its going to suck when my parents stop paying my bills.

What degree are you pursuing Matt?

[crpeck]

Originally posted by McCrary
Man, all this talk about money really makes me realize how much its going to suck when my parents stop paying my bills.

I hope my college student son is so appreciative.

Are you a Wildcat? My husband and I both went to U of A and met each other in Tucson.

[The Grim Reefer]

I think the majority of these people are in this boat because of greed, not ignorance. I saw how many of these loans were marketed. "With this great rate you can buy more house" or "great rates for investors" encouraging people to buy now and just flip the house in a few years when the price has gone up 30%. You think its bad now wait till those interest only loans quicken was marketing nationally over the last couple years come due. You will still owe the same 400 grand you borrowed 5 years earlier but the house may only be valued at 350. There will be no option to continue the loan at the higher reset rate, people will have to attempt to finance the debt or just default on the loan. Would you pay 400 grand for a house thats worth 350?

There are some aspects of the bailout plan I like. Right now if a lender forgives part of the debt the debtor must claim that as income and pay taxes on it. There is a bill to change that. Things like that are OK although it could be considered using tax dollars to bail them out. People who are already in default and investors are also not included which is good.

I just don't think it is right to have the government underwrite a teaser rate for an extra 5 years. Sorry but I am in a position that we paid cash for our house. It's nothing fancy but I like not having a house payment. We made the decision so we could add to our savings and have a little fun, not cover someone's butt who made a dumb decision or got greedy.

[Ritten]

I don't buy that GR. I've known a lot of people who have made mistakes, but not out of "greed."

[MarkS]

Originally posted by The Grim Reefer
Sorry but I am in a position that we paid cash for our house. It's nothing fancy but I like not having a house payment. We made the decision so we could add to our savings and have a little fun, not cover someone's butt who made a dumb decision or got greedy.

That's great for you, but the majority of the population cannot afford to pay cash for a house. If that were not the case, then the mortgage industry would be a fraction of the size it currently is. In many parts of the country, the price for a mortgage is about the same as the rent on same size house. The problem is that the teaser rates, in many cases, mine included, were either no where on the mortgage form or written in legalese so that the borrower could not easily (or at all) understand what they were getting into. The problems that people are experiencing right now are mainly due to shady mortgage brokers that did not explain the contract to the customers. Few people ever dealt with the mortgage company directly. Once the borrower signs the mortgage contract, the broker gets paid. If the borrower defaults, they still get the money and the mortgage company is left with the bill. I have yet to read a legalese document that I could understand. I am a firm believer that legalese exists solely for the purpose of screwing those who cannot read it. There is no good, honest reason that a contract cannot be written in plain English.

[The Grim Reefer]

Think about how the loans were marketed. Yes there are a lot of people who made stupid decisions for whatever reason but if you really look at this I think in better than 90% of the cases you are going to see people trying to live beyond their means. Otherwise they wouldn't be losing their home.

[BigSkyBart]

Originally posted by MarkS
There is no good, honest reason that a contract cannot be written in plain English.

so...
didja hear the one wherein the party of the first part says to the party of the second part.....

[ooba]

sorry, i guess sarcasm doesnt transmit well.