So, they sucked you in and now they will turn up the screws....Greenspan

How dare you think that you could get a piece of the American dream for a reasonable price. Homeowners, they you wrapped up in their ARMS.
This is just the first of a series of rate hikes. It's how the money changers keep you in debt for the rest of your lives while they and their families just wallow in the green.

I just hope they don't get sky-high again. At least my student loans are fixed...

In 1990 I got an ARM when mortgage rates were around 8-9%. It saved me a trainload of money over the life of the loan, because after the locked period, my rates went lower every year til I sold the house. But I realized then that the opposite was possible and I coulda been screwed.

However, anyone who got an ARM with interest rates at their lowest point in 40 years would be crazy, and had damned well better refi right now.

no one believes that could happen but if bush gets back in, oh yesss... my pretty, it very well could.

Personally, I don't see the economy being that good by then.

2001. The only gift has been mortgage interest rates and credit card interest rates which they can make up withing 6 months of increased interest rates. Food, clothing, housing expenses (furniture, energy, repairs etc.) transportation, highway tolls, gasoline...all have been up for the past four years. It was an illusion to think that everything was hunky-dory because home interst rates were low. Watch to see how fast there will be record bankruptcies and foreclosures. The economy was not improving, just the war machine and the mirage of low home interest rates. Unemployment and the costs of things that really matter to working families have been up for a long time.

...fed interest rates jumped to 1.25% (that's a 25% increase by the way) the inflation rate will now continue to rise across the board, feeding the fed's rational for increasing the fed rate again when they meet next month. So here are my predictions:

June 30 rate up .25% to 1.25% inflation rate 4.5%
July 30 rate up .25% to 1.50% inflation rate 4.7%
Aug 30 rate up .25% to 1.75% inflation rate 4.9%
Sept 30 rate up .50% to 2.25% inflation rate 5.0%
Oct 30 rate up .50% to 2.75% inflation rate 5.1%

Now if Bush gets elected the fed will do the following:

Nov 30 rate up .75% to 3.50% inflation rate 5.0%
Dec 30 rate up 1.0% to 4.50% inflation rate 5.1%
Jan 30 rate up 1.0% to 5.50% inflation rate 5.2%

Economy now begins to show signs of slowing according to the fed (real reason is the shooting war in Iraq has slowed) so they hold the line on interest hikes. If Kerry gets elected, Greenspan will really apply the breaks by increasing interest rates faster and in larger increments. So, we'll be in full monetary contraction (tight money) when Kerry is inaugurated. Kerry can then appoint a new federal reserve chairman.

If they decide you have defaulted (missed a payment or two) they will churn your loan to bank after bank at whatever interest the other banks want. Banks buy up a group of defaulted loans to collect or sell to another bank at a profit. In turn the next bank charges you for the process and whatever interest is good for them.

seriously - dont spout nonsense.

for a few months.

Then... :(

:P

Fixed rate is the ONLY way to go.

I can't imagine why anyone would have gone with an ARM with fixed rates in the 4 - 5% range!

People get variable rate mortgages because they can just barely make their payments when the mortgage is at a low rate. If the mortgage had been that 1% or so higher for a fixed rate, they wouldn't be able to make it.

Foreclosures are up 45% over last year. Look for them to start happening in DROVES with a rate hike -- especially if the economy doesn't start to pick up for reg'lar folks.

Like idiots, they refinanced with an ARM and took money out to buy goods with -- car, furniture, etc. They couldn't pay to refinance with a fixed rate, and then they compounded their error by taking some of the refi cash to buy junk with! I'm sure I'll see their names in the banruptcy filings! Idiots!

are the ones who took cash out of their homes to pay off credit card debt and then, oops, when the cards were paid off they accidentally got maxed out again. Of course those particular idiots are the ones who have carried the economy on their backs for the past couple of years so I suppose we should thank them on their way to bankruptcy court.

that's it. Cards are still clear, we're running on what we make in our paychecks and Social security and we're flat broke... but at least out of debt.

Our home sold for only $5,000 more than we paid for it.... not counting the $15,000 we put INTO it, for a net loss of $10,000. When it sold, we had *just* enough to get ourselves completely out of debt.

What was the credit card debt for? Car, fur, jewelry..

Car, as in 1988 car, bought in 1997, needed to go to work in! Fur? Veterinary costs for an aging assistance dog. Now deceased. Jewelry? well, if you count several root canals and crowns (in order not to lose the teeth entirely) as jewels, yeah, jewelry. We frittered away a lot of it on such frivolities as a new roof on the house, medical bills...

Oh, well. at least we had the credit when we needed it. And the house to sacrifice to KEEP our credit rating! Now we're on a "faith based" health plan: pray that neither of us falls ill! Adn with both of us nearing our sixties, that will be a tall order.

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that's what they can qualify for. The bank makes their lending decision based on whether the applicant can make the payment due right now, today. So they get people with low intro rates on ARMs, just like the credit card companys do with low intro rates on balance transfers. The fact that it will go up next year is your problem, not theirs. You will be getting a ten percent raise every year, after all.

In order to participate in the dream you have to sell your soul and many of the undereducated don't understand what is happening to them. Many people in the northeast lost homes during the 80's simply because they were approved for mortgages they didn't qualify for...these were mostly white, lower middle-class folks who were able to secure mortgages when blacks with better credit ratings and qualifying incomes were turned down. They dried up that market and now have turned to the working poor and minority class, baiting them into loans for which they barely qualified and will now take them to the cleaners. (I am not talking out of my ass here. My sister is a banker and dealth with those tactics during the 80's. Some of you out there know exactly what I am talking about.

Middle class couples who need both incomes to cover the payment are a big target too.

beat the rush. Feds expected to incrementally keep ticking up the interest rate, so why wait until it's up to a full point. :shrug:

in a 30 year mortgage at historic lows, so, I'm all set! Woo hoo! Bring on the higher rates!

should be happy, right?

I would assume so would their earnings...

That being said, the higher rates ARE going to hurt a lot of people. Thankfully, I knew this was coming and planned for it. I can be pleased with my foresight while at the same time feel for the people who are going to get screwed by this.

If you're not in debt and not planning to be, and have money in the bank, this is good news. The low rates have kept cash flowing into the economy, but people who rely on interest income have been suffering. I for one won't weep if the days of historic lows are over.

so having higher rates will be a good thing for me. If people don't put money in the bank then there isn't money to loan to other people, they have to offer rates as incentive so people keep money in the bank.

For just this reason. No way would I have gone for an adjustable rate.

Our interest rate was 10.25% and that was only fixed for 5 years

Glad I refinanced last year - 30 year fixed at 5.0%. The only people I know who took out ARMs recently did so, so they could buy a house they couldn't otherwise afford (a really dumb move). I heard somewhere that nearly half of all mortgages in the SF Bay area are ARMS. What is going to happen to that market when rates hit 8% or higher. Salaries aren't going up at that rate. The SF market is already over-priced, it's going to get ugly when people can't afford to keep their homes.

A close family member was our loan officer last year. She held out till the last minute to get us the lowest rate possible, then realized she waited too long. With just days away from having to close the escrow, we had no choice but to accept a 5 year balloon/ARM loan.. the first 5 years are great.. but then it changes to an ARM. Well.. thanks to Bush's economy, we're pretty screwed. We assumed we could refinance before the rates went up, but job issues got in the way.. and we can't qualify to refinance our own house now! So.. in 5 years, we'll have a nasty surprise, and have to sell the house, no doubt. Though we'll have some nice equity, the payments considering what the current interest rate might be, will probably be what we are paying now for a much lower priced house. Great. We can't refi now.. thanks to job issues this past year.

:(

Thanks for the words of encouragement. Actually, we're in a very iron-clad home value area.. We chose well.

.... and anyone living in America ought to have that figured out.

ARMs are a gamble, you might win, you might lose. I wouldn't touch one with a 10 foot pole, and in fact anyone who contracted one over the last 3 years is going to get burned.

ALWAYS go with 15 year fixed...always

... while making a couple of extra payments each year.

That's what my wife and I did. Our co-op cost us $130K, of which we mortgaged $103K. The problem is, our common charges are actually MORE than our mortgage payments, and housing is so expensive in our area (Westchester County, NY) we had no choice but to get a co-op.

In any event, we pay an additiona $130 per month on our mortgage, which works out to over 2 additional payments per year. This way, we're cutting our mortgage down to effectively a 20-year mortgage or thereabouts.

That's exactly what I'm doing...

What up bud!?

I just closed on my coop last week!!

You coming downstate again anytime soon? I'll have you and the wife over for dinner!

and, you arent stuck with the higher payments of a 15 year loan, if income should suddenly disappear.

you can still beat the interest rates by paying down, but the flexibility is worth the extra .5-.75 you're going to save.

Things always go back up - sometimes faster than you think.

America is now a nation comprised of indentured servants and nobles.

Exactly what Bu$h wants.