Wow, just the kind of people who are so well hated around here. How does the Post find them?
That was a long article that could have been shortened to one sentence: “We are greedy and bad with money.” Surely the blame lies elsewhere though. /s
My wife and I were faced with a similar situation a couple years ago. We walked. It took little thought and no effort.
Geez! How does this guy think he’s getting anywhere by having an interest only loan?
And who pays for someone to walk their dog? Why have a dog if you can’t even take it for a walk?
Katie Couric is on the national news?
Yes. The mortgage was a mistake. So too were the flat-panel television, the nice vacation, dog, daily dog-walker, and the pregnancy. A fool and his money...
An interesting point here. Many people may just walk away from their homes and figure it was just paying rent. The problem with this is the IRS will send you a tax bill. The bank will send you a 1099 and a copy goes to the IRS. If the value of the house is $400,000, you get a tax bill on that amount. Be careful if you decide to walk away from your home.
Apparently this guys job is to screw up his life then write about it in a national newspaper. No wonder he is so clueless about his money.
Why do people continually believe that they “need” very nice things that they cannot afford?
The definition of “need” sure has changed in the last 30 years. I’m convinced that if real incomes of every American suddenly quadrupled in a year with 0% inflation, there would be even more people getting divorced over money problems and going bankrupt than there are now. People would just “need” to spend 4 times more than they are now.
Was it the dog or the dog-walker that got michael and his wife pregnant? It must be a comfort to his wife that he will really share the labor pains. What a putz.
“Interest rates started to creep up...”
It wasn’t the interest only loan, it was the adjustable mortgage rate that is killing them.
If they got a fixed interest only loan they’d be sitting pretty.
Of course they should save and prepare. The main reason IMHO to do an interest-only loan is to invest the difference and build wealth - that should go without saying in this case.
They have three years. A problem could occur, but this sounds more like media hype than anything - it will be 2010 before they even have to start worrying. I’m not sure what their income is, but they have a lot of time to save up a nice chunk of money by then.
What surprises me about this couple....they seem to imply that the mortgage broker and real estate agent were no better than con-artists.
Hey bucko...if we knew when the market was going to go south, etc., I would be a multi-millionaire.
Those same loan programs that he felt he was 'tricked' into accepting worked flawlessly for the buyers that purchased with the same intent as his (selling or re-financing within a few years)...and pocketing a ton of equity as lines-of-credit or cash-out.
He just happened to be the unlucky one to purchase before the market exhaled.
A physician and a Wapo staff writer. Yes, they should have a nice combined salary.
they’re in for more of a rude awakening when hillary gets elected and they take a pay cut (income tax increase) because this couple is considered rich. and we all know how this fool reporter for the compost is voting.
What does one say about the (let's say) "friends and relatives" who (let's say) "made him feel obligated" to sign it?
Is there enough blame to go around there, too?
No sympathy. No bailout.
His wife is a physician — how frightening is that?
“It may sound crass, but we deserved a nice home. We did what we had to do to get one.”
Yep, you sure did!
P.T. Barnum was right...
In 2004, I got an interest only loan locked at 4.25% for 5 years. There are 20 months remaining on the loan, and it can go up 2 points each year until it’s at prime plus 1/4.
But I knew what I was getting into. My business loan is paid off in 17 months (3 months before my mortgage adjusts), freeing up $6000/mo (pre-tax), so I knew that I’d have extra money to pay for any increase in my mortgage.
Because I knew that my disposable income would increase dramatically when my business loan expired, the interest-only loan allowed me to purchase more house than I could have afforded with a conventional 30-year fixed.
Essentially, when I refinance to a 30-year fixed mortgage (or an ARM if rates are too high 20 months from now), I’m buying my home at 2004 prices...which is still cheaper than today’s value...even with the correction.
Not everybody with these loans is belly-aching right now...nor is everybody who got one a “fool”.
Not everybody with an interest