Posted on 12/08/2006 10:07:04 AM PST by RobRoy
Hey, all that stuff is no problem when prices are on a quick track rise. You can even make up the difference with new home equity loans against your "newfound equity".
'Course, if prices flatten or even go down...
Why is that?
Not in New York City...it's heating up again this fall.
Because ex-Texan said so.
I think it depends on the situation. It also may expose that inflation is higher than some "official" figures may suggest. That is, prices may go up faster than your wages.
It is also a more accute problem when interest rates rise and refinancing is not an option.
I have also seen people get in so deep with the initial loan that they create a problem from which they may never recover. Y'know, like the people who pay several hundred dollars (or more) a month just on credit card interest. Living like paupers on $10,000 a month just trying to pay the bill for past extravigances. I've seen it and, to a lesser degree, experienced it.
Well, one reason is that sometimes, when you are in over your head, you sell your house. My friend did that. His company was six months behind on payroll. He HAD TO sell and made out like a bandit (the market was going up!
But if enough people find themself in that position at a time when they are "backwards" on their loan (they owe more than the house is worth - for those in Rio Linda), they can't sell. They default.
A 5% drop in prices wouldn't affect someone who owes less than 90% or so of their homes current market value, yet has to sell. They'll pretty much break even after RE fees, etc. But if enough people who have 100% loans and flat or reverse ammortization loans, there will be serious impact to them. And considering the buying/refinance frenzy in the last few years, I think this may just be the elephant in the room.
I should check current RV sales and prices.
I got myself into a sizable amount of debt when I was a young adult. Fortunately, my income increased while I managed to keep my spending from continuously increasing as well.
Now my debt consists of just my mortgage, though I may borrow money when buying a new vehicle in a year or two.
Awesome! They say with age comes wisdom. I had to learn the same lesson. What killed me though was a divorce. And if you have kids, it is the gift that keeps giving - I mean taking.
I'm getting seriously tired of the lead suspect in Natalie Wood's unfortunate death trying to convince me to sell my house one piece at a time (reverse mortgage) and then trying to read the reams of fine print at the bottom of my analog screen every morning at 5:00 AM on AMC.
All lenders are predators when it comes right down to it.
My brother is a securities broker. He has no equity in his downtown condo and refinances every chance he gets - but he invests the money. All of it.
His philosophy is that if prices go up, it's good for him. If they go down and he can't make the payments, he walks away.
Which would you rather have, good credit or a couple million in the bank. Yeah, me too.
An interesting side light on the new Bankruptcy Law is that home loans are not included in Bankruptcy now. If you buy a 500,000.00 house and take out Bankruptcy, after the Bankruptcy you still owe the remainder of the 500,000.00. You cannot walk away from that home loan as people have in the past.
Yes, but you cannot go to "debtors prison". But I agree with your concern. I think the way our current predatory consumer credit system and real estate lending system are set up, coupled with our new bankruptcy laws, it looks like we are setting up generation "y", and some of "x" and the boomers to be indentured slaves.
Coming soon no doubt !
Really? What is says is "apparently". The article is 100% speculation. A better reason why they problem went bankrupt is they grew very quickly, did not know what they were doing and were hit hard by the slowdown in mortgages. The article is all smoke and mirrors, no substance.
It seems to me that the bottom line is to be smart and those who won't be can't be protected against themselves, really.
If I had 2 million in the bank and I couldn't make the payments on a condo, I'd figure I was a really poor rich man.
Excellent find. Thanks for the ping!
LOL!
>>If I had 2 million in the bank and I couldn't make the payments on a condo, I'd figure I was a really poor rich man.<<
Yeah, There were some details I intentionally left out. One would get that impression from what I wrote though.
My brother does not consider a personal residence to be an investment. Most of the people in the business that I know tend to take that tack. I actually have a friend that owns several rental properties and rents his home as well.
Toss in $80K of student loans and they could be in serious debt until the day they die.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.