10% on a 30 yr mortgage is un-fucking-reasonable. Not if ... when you get screwed by the money man.

What part of 10% on a mortgage, a jump from the "reasonable" (at least affordable) 8.45%, isn't just fucking greed.

mortgage interest rates hit 16%.

And I was working for an S&L for a very measly salary, with no hope of affording a home in the near future.

Things were out of control.

Of course they knew interest was going to go this high. That's why they created the mortgage investment vehicles.

Where in the northeast? I lived in NJ and worked in NYC, they were a lot higher than that.

It needed work but there was beginning to be a ton of foreclosures because of the high interest rates.

Certain areas of Bergen are very pricey. My brother in law lives in Upper Saddle River.

I was living in central NJ at the time and a 3br ranch in ok conditon was going for 125k. We couldn't afford that so we bought half a duplex for 75k. Ahh, the good old days ;)

of the world.

The going rate on 30-year fixed is around 6.25% at the moment.

See http://www.mortgage101.com/Rates/Index.asp?p=mtg101

Pay attention. This was the mortgage investment vehicle these banks created. That's where the profit was supposed to come from, the massive increase in interest when these mortgages reset. They didn't plan on people walking away from their homes. The only people getting good interest rates are people with impeccable credit.

That's where the profit was supposed to come from, the massive increase in interest when these mortgages reset.

All anyone working in loan originations cared about was making as many loans as possible, then handing them off like hot potatoes to the secondary market where they were packaged and sold in the form of securities, some simple and some so complex nobody could possibly comprehend them, to people who weren't paying attention to what they were buying. The line given to borrowers was basically "Enjoy this low introductory rate, then refinance to a fixed rate when you can qualify." But rates went up, values (and consequently loan-to-value ratios) did not continue to rise wildly, and as a result not everyone was able to qualify to refinance to a more reasonable, predictable arrangement.

They didn't plan on people walking away from their homes.

You're absolutely right on that point. People who bought into the scam ARMs either bought the sales spiel planned to refinance when they could, or weren't paying attention to what they were signing. People who bought into securities backed by those loans were also taken in by the illusion that home values would continue to rise.

The only people getting good interest rates are people with impeccable credit.

Yes, we are seeing a return to sanity. Many of the people who got sucked up into the generational ARM scam would have been better off in the long run if they had continued to rent their homes. The way it worked out, they're winding up back in their rentals after getting fleeced of a bunch of hard-earned money, or forced into bankruptcy.

It's a shitty deal all around, except for people who bought when homes were affordable and got fixed-rate loans that they could afford to pay.

The financiers on Wall Street did. Wake the fuck up. They're the ones who have been flying high on these security investments, not some local schmuck who sold some loans.

Further, almost NOBODY is better off renting. People would have been better off with a regulated banking system that offered fair loans with reasonable interest rates, which was the intent of low income mortgages to begin with.

When people start using their heads instead of listening to the "experts", then we'll see some change in this country.

I believe I made it clear that the securities we are discussing are products of the secondary market. I have over 20 years' experience in various aspects of the industry. I know the difference between loan originators and investors. Maybe you aren't familiar with the lingo, so I will cut you some slack. Today.

Further, almost NOBODY is better off renting.

Wrong. Anyone who can't afford to make house payments is better off renting.

And when I sold it the people who bought it wanted to assume my mortgage and they did.


Don

So I remember what it was like before Reagan fucked everything up too.

So home ownership was, as usual, chronically out of reach for a lot of people.

If it's not one thing it's another.

We are prime borrowers, perfect credit and bought much less home than we could afford. Put 30% down, all of which we saved ourselves. We had 10.5% on that first loan and everyone was shocked we managed one that low. I refinanced twice to get it down to 4.8% and paid the thing off last year.

I had a freind who was a mortgage guy tell me not too long ago that he had financed a condo in 1986 at some astronomical rate of interest. Last year he financed the same condo at around 5 something percent, but the mortgage payment was almost exactly equivalent to the 1986 financing. The selling price changed, the rate of interest changed, yet 2 different owners were paying almost exactly the same payment 22 years apart!

Note: when rates go up, prices drop. When rates go down, prices go up. Thus it has always been.

2 bankruptcies, garnishments, horrible credit rating. But the 2 yrs before they applied for the loan they were perfect. Not a single late pay on anything and managed to save $7000 in 2 years. They worked their asses off and the broker found them a loan. They have to keep it 2 years and then can apply to refinance with only a $200 fee to the same lender they have now. The fee only gets paid if the loan is renegotiated. 2 years after that they can do the same thing etc etc until they get down to "market rate". Their mortgage insurance is with the State of Ohio because it was a redevelopment loan.

That's an outrageous rate.

in what world can renting be cheaper than buying, it doesn't make sense, landlords don't rent out houses to lose money (although the ones i know who are small landlords usually do, because even with rents higher than house notes, the case in the new orleans area, they don't seem to allow enough for property tax AND maintenance so they either lose money or don't do maintenance and piss off tenants)

... landlords don't rent out houses to lose money...

They often want to just cover expenses on an asset that appreciates over the long haul, so they don't have to dick around with paying business taxes.

Lots of people did make down payments. They stand to lose everything if they just walk away now. This is what these fuckers on Wall Street have done to working people, and we're blaming the people instead of the financiers.

his family has a MUCH better place to live at about the same monthly payment they had before. His family gets the tax incentives. He bought a foreclosure at about 30% under actual fair market value. Best of all it's the incentive for him and his wife to get their hoohah together.

I hope they are able to refinance at a more affordable rate soon!

My first hime came with an assumable VA loan at 9.5% and I was very happy.

It was a tiny run-down home and it only cost 26K.

ours was i think 9.5% so real close to your 10% -- since it was a modest home, then they have to shoot for a certain monthly payment, with a high interest rate, it meant our principal (the price of the house) had to be priced VERY LOW

just make sure there is no pre payment penalty (and there probably isn't)

because the actual PRICE OF THE HOUSE had to be so much lower to accomodate the high interest rate, we had an unusually low principal and we were able to make extra payments and ended up paying off the house in less than a decade on the 30 yr mortgage

look at it this way, you are approved and can afford to pay a certain monthly note, if your interest rate is higher, than houses in your area are going to have to be priced correspondingly lower or people who buy modest/starter homes won't buy at all -- notice we are indeed now seeing that the price of homes is falling w. the end of cheap credit

MUCH better to have high interest rate/low PRINCIPAL because if you get a raise, or get a gift of money, or sell some old stuff on ebay, or have any source of extra money, you can pay down that principal faster and get away from the note

but if you have high PRINCIPAL/low interest rate, you have more to pay off before you're free of the note

not sure if i explained this correctly in words but think about it...or maybe someone else will explain it to you more clearly

a low interest rate does NOT help you because it merely allows the seller to greatly inflate the cost of the house to what they think you can pay

the seller and real estate agent knows how much money people have, that's why they pre qualify you before they show you any houses

High real estate value means the homeowner makes the money.

way to miss the point, ya think?

there is no question that giving an inflated profit to the previous home owner and/or the real estate agent is not of benefit to the buyer

with a small principal, even at a higher interest rate, you have more power to reduce or eliminate the debt long before the 30 years are finished

with a huge outrageously even upside-down principal, even with a smaller interest rate, you end up paying over the entire thirty years because no honest person can pay such sums (hundreds of thousands of dollars) quickly

Interest only, low introductory rates, etc. This market was completely concocted by wall street investors so you can't use it to make an argument about anything.

As someone who bought in the 70s, but couldn't in the 80s, I know that you do not want high interest on homes. It isn't even worth arguing. Most people can't get the loans. Home values deteriorate. People don't have money to put into a new home if they have to move. They have no money to retire. It's horrible from anybody's point of view. It's just crazy.

we bought another home 6 years ago with a locked-in 30 year mortgage of 6.5%. I highly doubt we will ever pay off this loan, we would be in our 70's before it's ever paid in full.

should have been enough to make a humongous down payment on your current home, leaving you with either a short term mortgage or very low mortgage payments. Unless you have a medical emergency or something. Just curious why that didn't happen.

we had only lived in the home 3 years, we moved and lived in an apartment for years, the proceeds that were left over after the 80's loan was paid off (and there was not much, the home sold for just a little over what we paid) went as a down payment on a more expensive but smaller home (different part of the country, the home prices are higher). That home underwent a huge, huge remodel, and was re-financed for 30 years at a lower interest rate.

Who has that kind of money if you're an average American worker?

This housing market has a lot more to fall. In order for any normalcy to return, these prices have to come back inline to what people earn. Period.

We settled for putting 10% down, to get the payment where we want. But we could have put down as low as 3%, got a great rate, it's a fixed rate 30 year loan, with nothing weird.

it's not really a good thing for people to be repeating this meme that there are no mortgages out there, or that you have to have 20% down now. You don't. Now, if you're self employed, it's almost impossible to find a mortgage if you cannot somehow document your earnings. And.. if your scores are in the mid 600s, you're going to have a harder time, but the mortgages are still out there. When you pay less than 20% down you'll pay PMI, and that does drive up the monthly payment, and many mortgages now require insurance and taxes to be part of your monthly payment.

It was up to 14 or 16 back in the 1980s.

We got out of our ARM this year, and got a 30 year at 6.34%, just before it dove down to 5.8 for a while. Now it's back up again. I'd heeded the warning that once the election draws near, the rates will start climbing. Many believe they could be 8% by the end of the year. I PITY those people I saw saying on various boards that they refused to buy a home yet, because they thought the prices would drop a bit more by the end of the year.. I tried to warn them that a jump in mortgage rates would cancel out any savings they got, and that a rise in the rates was inevitable. Hope they didn't wait too long.

Hey, YOU can lose money on inflation. Not banks though.

and 18% inflation. Most of us at the time blamed him for the "economic malaise". We are heading in that direction again, and Obama better have the solutions or he will suffer the same fate. one and done.



http://www.time.com/time/magazine/article/0,9171,921854,00.html