[Lokibob]

“Kristi and her husband can no longer afford to live in their home, because their adjustable-rate mortgage payments grew from $2,400 to $6,000 per month.”

I have no concept of how big a house (or how much you can borrow) for $2400 a month. Anybody??

....Bob

[Hi Heels]

California? We’re talking a medium size home in Marina Del Rey with three bedrooms and a toilet.....

[farlander]

Sheesh in midwest that’s about 4000 sq feet. Depends where. And if it was interest only, probably bigger.

[goodwithagun]

$2400/month= $28,800/year= 864,000/30 years= one really big house or one overpriced house in an overpriced city. They were trying to keep up with the Joneses and now have mortgaged themselves into debt. I don’t feel sorry for them!

[LetsRok]

$2400/month gets you about a $400K mortgage.

[LetsRok]

$2400/month gets you about a $400K mortgage.

[Attention Surplus Disorder]

There's not enough info in the article to figure out exactly what went haywire with this particular situation nor to answer your specific questions. But preliminarily, you can google "mortgage calculator" and make some assumptions. Bankrate.com has a simple one. It can be deduced by the payment increase from $2400 > $6K (2.5 times = unbelievable) that this borrower must have gotten the lowest teaser rate on a neg am option ARM, paid only the minimum pmt, hit the neg am limit typically 115% of the original amount, then lost her/their ability to pay only the neg am minimum payment. Then, when the loan reset to current rates (which are also somewhat abusive on easy teasers, the SHTF big time.

One useful number for quick mort calcs is the "cost per thousand per month" and if you borrow $100K for 30 years at 6%, the monthly payment is $599.55, call it $600. So the cost per thousand per month at 6% is $6. That's a good number to keep in mind. Obviously, that's a fixed loan.

Anyway, assuming she has the worst loan possible, she's probably paying maybe 8.5% on her new balance, which is likely 115% of her original loan. A $6K 8.5% pmt pays for a $780K loan. (= Trial & error at the calculator) $780K is 115% of about $678K. (And of course, nobody can know from the brief blurb whether texes and insurance are part of her payment, but I'll assume they are not) So these folks bot a $670-675K house for nothing or near-nothing down and are of course hosed.

Square footage? Bah! Those are details for the faint of heart. Who cares? RE always (and only) goes up!

[libstripper]

That's a big loan. If you take the $2,400/month and multiply it by 12, the result is annual payments, assumed to be mostly interest, of $28,800. If you assume the interest rate is about 6% and divide .06 into $28,800, you get an estimated principal of about $480,000. Of course, since 6% is a good guess for a fixed rate mortgage, the $28,800 was probably to support a significantly larger principal. Any way you cut it, the lady and her husband were living in pretty expensive digs on an ARM that they should have been smart enough not to take out in the first place. They're poster children for what happens to fools who deliberately overextend themselves, not for people ho legitimately need taxpayer bailouts.