Posted on 03/14/2007 9:41:41 AM PDT by OnRightOnLeftCoast
"what doctor in NYC makes only 70 grand a year?"
LOL! See my post 32.
Mortgage rates are declining, and are still near historic lows, for conventional financing. Adjustable rate mortgages have risen, to the point that I wonder why anyone would shoulder the potential risk, just to save a hundred or two a month. Right now, ARM loan rates are not much lower than 30 year conventional, and are actually higher than 15 year conventional.
It originally was a 103,000 loan - she kept pulling equity out to a total of $280,000.
She inherited it.
"As rates soar, 2.2 million Americans risk losing homes this year"
Risk is required in Capitalism.
Fortunes are made and lost, and made again.
Been there, done it, and prefer it to Socialism.
I agree with you. Everything gets multiplied when you get a large house.
The price of a home is just one thing. The upkeep and maintenance is a lot more on a larger home.
Can you make the payments on a home is just one factor. Another question, can you afford to furnish a large home? What about home owner's insurance? Don't forget property taxes. Even if you do not have a mortgage on your home, there are still a lot of cost in owning a home.
I think (one of) the problem is many people buy thinking their mortgage payment is all they need to consider.
If they said she was a doctor and she wasn't...that was FRAUD on the part of the loan officer and/or Sharon Edwardsen...and possibly her employer for complying - regardless of what lending guidelines were, they broke them anyway by lying.
And I'll add...that's not Wall Street's fault, either.
This must have been a variable interest, negative amortization loan with a balloon payment at the end of a specific term, i.e., three or five years.
IOW her payments on the $103,000 loan were probably something like $400 per month, but at the end of the term, she would be required to finance a new loan or sell her house to pay off the negative amortization. Now she can't do either. Even with a negative amortization loan, I can't see it jumping from $108,000 to $285,000 in a period shorter than about 10 years. She probably borrowed against the "equity" to purchase a second mortgage to pay the first or to blow on vacations and recreational vehicles. If she had a 10 year negative amortization loan, her negative amortization would have to be nearly $1500 per month for her to suddenly owe an additional $175,000 after 10 years. This simply does not make any sense at all.
Exactly my thought too.
70 grand isn't sh*t in NYC anyway but that's an entirely different subject.
ARM's have their place - but they're not for everybody. If you can (and are willing to) afford the higher adjusted payment and are willing to take the risk, fine - but the problem occurs when the person can only barely afford the start rate - so as soon as it adjusts, they're screwed.
All true...
...but the house in the article is almost certainly NOT a large home. She owes $280,000 and in Staten Island that's a VERY small house. I don't know the actual value of it, or what equity she has, but it's doubtful it's much bigger than 1000 square feet.
In my e-mail:
"Why Refinance Now?
The window of low rates is closing, and the best opportunites will vanish soon.
» Dramatically lower your monthly payments! ...or...
» Take advantage of your home equity!
Imagine what you could do with that money...
* Pay off your bills and credit cards!
* Take that well-deserved family vacation!
* Send your children to the best schools and colleges!
* Make those home improvements you've been putting off!
* Just have fun with it... you only live once!"
See...'you only live once'....How could I go wrong....
I agree. I have no sympathy. I bot a house with the idea that if I had to get a job paying $8.00 hr., would I be able to afford the mortgage. If these people didn't think ahead like that--- too bad.
In the article, it states she was cashing-out repeatedly and using that money FOR THE MORTGAGE PAYMENTS that she already knew she couldn't afford.
A financially responsible person can use their equity in a cash-out refinance and be just fine - the problem occurs when it's repeated, or done by someone who's just going to blow it all and be in trouble again soon.
For the first time in quite a few years, I know of people in California being forced to sell their homes. They bought them with 0 down, and the prices have dropped. Now, they really can't afford them. Homes around this area start at 700-800 K. I can't even imagine buying a home with 0 down, and having an 800K mortgage.
I think people thought the housing market would always go up, and they didn't plan on having to ride out some bad times.
I grew up in Dallas, and I knew to plan on riding out bad times.
What fool would allow themselves to take a loan on 110% of the value of their home? This is one reason why we read about the foreclosures today.
How much in new taxes will dynachrome get charged to bail out idiots like this and the sub-prime lending industry?
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