Posted on 09/22/2006 8:47:25 PM PDT by churchillbuff
They can't increase forever at the rate they have in places like Cali.
Eventually, the homes price themselves out of range for people even with interest-only loans and such.
Look at any California community and you'll be shocked. Average income $40k, with an average home price of $400k. It can't go on forever. When only 2% of the entire population of a city can realistically afford a house there, something is wrong.
"Did they review the "fine print"(i.e., the terms of the agreement)of the contracts with their attorney?
Either they had attorneys representing them or they didn't. If they had attorney, it's the attorney's duty to read the terms of the agreement.
Actually I kind of sympathize with these folks to a degree, but have to ask: OK 4000.00 per month after taxes. The house payment went up by 500.00 per month to 2200.00. Now with all their "extras" they can't afford food? How did they "make it" when their housing was only 1700.00 per month? Exactly how much are these "extras"? 2300.00 per month? What kind of cars are they driving? It sounds like they were tapped out even before the interest rates went up.
Thank you for the correction!
It is. However, I do think there is some validity in the idea that places like CA that are overpriced in the first place might have some isses. We'll be fine here in flyover country.
well it's just the SSDD thing...
I'll try to find the story, it was earlier today...
geeeze, Howlin, enough howling
I truly do wish them well. I hope they make it.
One thing I always tell newbies is to make sure they actually know what they're posting about before they post.
Butt out.
Here you go...
http://www.freerepublic.com/focus/f-chat/1706345/posts
The paranoia is spectacular
I finished the rest of the article. They had the house on the market, but they were able to refinance with a fixed and kept it instead. I wonder if we'll see more of that as fixed rates keep dropping. That could take some supply off the market, and would be bad for the doomsday scenario.
If you buy a stock, even on margin and the price falls and you sell it, you lose your money immediately. If, OTOH, you don't sell your stock and ride it out, probably you only have a paper loss.
The same things is reversed, IF you can't pay your mortgage and default. You lose your home AND you lose whatever equity you have in it; however, since you don't have any equity with an all interest mortgage, you haven't lost what the value of the house used to be or has become. You didn't have any money in it.
If you own your house and don't have to move, you don't "lose" anything at all, when/if prices go down. Neither do you GAIN anything, when/if prices go up......until you sell your house.
How utterly unoriginal.
I didn't read the article, but I'm not surprised: they had to eat the prepayment penalty in a refi and now they keep their home.
Next time, they MIGHT read the disclosures.
"The reality is that the borrowers were supplied with a Note and Truth-in-Lending which outlined (a) how the rate could adjust, (b) when it would first adjust, and (c) how to calculate the adjustments."
Of course, you are correct, Petronski. But my experience with RE borrowers is that they get a bit giddy and euphoric, and have a tendency NOT to read the fine print.
If you knew how many people were buying stocks (or gold) on margin, you'd be shocked.
Be careful with those people. Good grief.
Yes, it was one year longer than the fixed period.
The interest rate is better in such scenarios, but as you see it's not always rosy to do that. Of course it depends-on an $80,000 loan with a 1% prepay penalty, that's $800-hardly enough to inhibit refinancing, but theirs was 3% on a much larger loan.
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