Posted on 01/31/2015 6:50:08 AM PST by dynachrome
When they moved into the house in November 2005, Kofi was earning $82,740 as an IT consultant for a government contractor, and Comfort, then 43, was making $30,000 as an administrative assistant. But in the overheated mortgage market of the time, they said everyone told them that they could buy a $600,000 house.
They made a $60,000 down payment and all their mortgage payments for more than 2½ years — through September 2008. But the house was financed with subprime loans, which reset to higher rates after short time periods, creating what are known as “shock payments.” The Boatengs said they could not make their new higher payment, and, in the middle of the 2008 mortgage crisis, they could not refinance.
(Excerpt) Read more at washingtonpost.com ...
meanwhile we are bailing out the stupidity of homebuyers...i’ve got no issue with greedy foolish banks who made dumb decisions going south but why must we continue to pay for ignorant “homeowners” who should not have qualified for a $50000 credit card but got a $500,000 mortgage for a home??
sounds harsh but if you bought property in the late 80’s early 90’s you dealt with the same thing...bought my first co-op in 1990- three years later it was worth less than half what i paid for it...i had to suck it up and deal with it...
No, they didn’t manage their money. No, not every American owes something. No, it doesn’t happen to everybody. Those with three figure salaries have no excuse and should be smart enough not to go with those type loans. But, hey, they are smarter than I am to live rent/mortgage free for 6 years which will somehow be billed to the rest of us. Most definitely we’ll be footing their bill when they do declare bankruptcy.
“That’s called a liar’s loan.
Concealing material facts from the lender that could affect approval of a loan is a felony crime.”
Coupled with the “no credit check, no income verification” policies of the lenders.
In the early 90s, our mortgage was around 11% or so, too. On just that “victim” wife’s salary, we scrimped and saved to get a reasonably priced house paid off. Moved to another reasonably priced house with a 10% mortgage and paid it off. Of course, with property taxes constantly on the rise and libs moving in with their CA pricing, our once reasonably priced house with reasonable taxes has outpaced our piddly income.
Oh, yes. Been reading Harry Bosch for years. :)
LOL! Sorry!
“. . . gummit fingers are in this grotesquely warped pie.”
No doubt about that. The pie is polluted, but some days you just have to take a bite. Some days, you have to take a BIG bite.
Let the crumbs fall where they might, but the gummit should not be involved further.
Oldplayer
Maryland “Freak State” PING!
I love your posts. Just sayin’.
So true. I believe the moral issue is our dilemma a moral people would not have the trouble our people have.
A good friend of mine made $85,000 a year. Owned several homes, two of which he bought with his parents and were rentals. His parents passed and he inherited their share of the properties. He kept pulling money out of the equity and spending it. I tried repeatedly to give him financial advice about paying down his debts, which he ignored.
One time he refinanced to obtain money to pay off his maxed out credit cards, and he told me the loan officer offered him $80,000 cash on top of what he needed to pay off the credit cards. I asked him "You refused, right?". He said "No, I took the cash - they were giving it to me!". I told him he was a fool, he had no business taking more as it would sink him further into debt.
Things got worse, and the financial stress of the debt load contributed to the fatal heart attack that killed him a couple years ago. His debt load exceeded his worth. At the end, he was several months behind in all his mortgage payments. Waving a loan in front of some people is like offering free candy to children. Sad, but they can't resist.
Having a second mortgage was looked down upon not all that long ago, it was almost as bad as being in arrears on the first mortgage, and people knew, in small towns at least. Shame had it’s place to keep people with poor impulse control from wrecking their finances completely, just to keep a halfway respectable reputation around town.
I recall our experience back in the 1970s on buying a home. Me and my wife could barely afford the home we were buying. The real estate agent advised us how we could obtain a second mortgage in addition to the first mortgage, showing us how much the payments would be. Luckily, I was suspicious and read the fine print on the second mortgage. Initial monthly payments were low, and the remaining principal was due in full after five years.
I whipped out a calculator, figured out how much the remaining principal would be, and recalculated what we would need to be paying on monthly payments in addition to what the minimum stated payments were. My wife and I scrimped and were scrupulous about paying more monthly than what was needed to not have a balloon payment to worry about after five years. Real estate agents and banks were not offering information, we figured it out for ourselves otherwise we would have been in trouble. We've always had the silly notion of not carrying debt if we could prevent it. Now retired with no debt whatsoever.
I bought my first in late 1993, it felt like it was time and I thought interest rates would never be that low again, lol, 7.25%. “Sweat equity” down payment, $500.00 out of pocket with preferred lender which was Wachovia Bank & Trust. It was a novel program at the time that has since gotten a bad rep due to people not having enough skin in the game, too prone to walking away.
I’m in process of selling now, didn’t appreciate much in nearly 22 years, maybe $50,000 all said but it’s nearly paid off, I got smart and refi’ed down to 15 year some time ago. Somewhat disappointing on the appreciation, but given the 2008 crash it’s certainly better than being upside down and having to pay to get out from under or short sale. Better than renting too, I couldn’t have rented a decent 1,600 sq ft 3/2 ranch on over an acre for what I paid.
Any future purchases will have the profit built in, fixer upper or distressed, with a hefty down payment and no more than a 15 year note, hopefully 10. Like you, I have no desire to carry debt into retirement. Not even certain retirement as it’s been known will even be possible, but diminished income from work will be in the cards eventually. Got to plan for that.
Okay, thanks.
Okay, thanks.
You're wise, good plan. That home we bought in the 1970s, we not only paid off the balloon 2nd mortgage in five years, but because that freed up money we had been paying we were able to refinance the original 30 year primary mortgage into a 15 year mortgage. The result of halving a 30-year note down to a 15-year note is that you pay far less in interest on the principal. Like I said, good plan. That home was a fixer upper, we put a lot of our own labor into it and made it a nice home before later moving up to a better home. That's also a good way to get into a home inexpensively, doing your own fixing up. People kidded us about our first home, but we ended up owning it free and clear of debt while the ones kidding us were up to their eyeballs in debt trying to impress others with the luxury lifestyle supported by a huge debtload - not smart at all. Their lives were facades and they're struggling now in their senior years.
They have enjoyed the comfort of their $600K home while I have made choices that lower my enjoyment of my home, and now, they want me to pay for theirbad choices. I am already paying half my income to the government!
(Rhymes with) Duck them!
Pick yourself up, dut yourself off, and start again.
Now they are here and use our entire country as a toilet. They spit on our laws, customs and deeply held values. Their very existence here is an affront to all Americans.
They and all like them need to be repatriated to their defective countries, preferably via trebuchet.
That, or swimming.
I was told that banks have a lot of money on hand, and do not need to sell those houses right now. They would rather hold on to the property until prices go up again, so that they see a greater profit.
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