Sub-Prime Credit Crunch

[Black1]

The whole "Sub-Prime" and ARM loans were, and always will be, a STUPID... STUPID deal to get into. :dontknow:

These poor bastards that took the "bait" a few months or years ago are going to be HURTING come October. ........ I can't AFFORD to buy a home, and I know it. Why would you buy a home that you can't afford in the first place? :dontknow: People took the gamble, and are getting BURNED..... I say it's their own fault.

In about 6 mos., I am going to buy ( with a 30 YR FIXED mortgage w/ 20% down)....... And, I believe, about a year after that I will sell. The Real Estate market is CYCLICAL, just like everything else. :rock:

 

[Gaboon]

The whole "Sub-Prime" and ARM loans were, and always will be, a STUPID... STUPID deal to get into. :dontknow:

These poor bastards that took the "bait" a few months or years ago are going to be HURTING come October. ........ I can't AFFORD to buy a home, and I know it. Why would you buy a home that you can't afford in the first place? :dontknow: People took the gamble, and are getting BURNED..... I say it's their own fault.

In about 6 mos., I am going to buy ( with a 30 YR FIXED mortgage w/ 20% down)....... And, I believe, about a year after that I will sell. The Real Estate market is CYCLICAL, just like everything else. :rock:

It is cyclical. I don't think we have seen the worst of it yet.

 

[mauiSRT/10]

Roy this topic is one I have discussed with some friends many times............its a royal f#ckup for sure.........I think homeless folks were getting loans it was so fubar'd!!!!! LOL

And like somebody said............ get cheapest fixed rate, pay xtra and pay it off!!! My "ghetto with a gate" home will be paid off in 7 years using that philosophy!!

patrick

 

[QClikeKW]

It was just marketed as "everyone deserves a mortgage" as a way to make short term profits for the thousands of mortgage agents and the institutions who traditionally sold off most of the paper anyway after getting their cut out of closing cost. Think some of the ones who held the notes started believing their own B.S. that the runaway increases in value would keep them covered regardless.
But much like the thousands of speculators who were making millions by financing every penny they could borrow and the R-tards that thought they could buy more house than they had income,they have run into a downturn in value and now get to watch all those profits and their companys desolve.
Have no fear though most will return with another scheme,well minus the R-tards.

 

[Prof]

I try to explain to my students with every teaching skill I have, the impact of compounding.

In savings and solid investments it is the most wonderful financial formula. There have been times in the recent past where the stock market was doubling your investments every 4 years.

When your mortgage interest is computed on the remaining principle each month the wisdom of paying additional principle every month, (every penny you can squeeze into it) has huge future value. A couple of hundred a month will save you literally tens of thousands of dollars in interest.

I always recommend that home buyers try to finance a 15 year mortgage if they can do it comfortably...then run an amortization table that shows what you can save in interest if you pay as if it was a 10 year loan...but if you get a 30 year loan, run the schedule as a 15 year loan...you will see that the difference in payments is very small, but the total interest paid will be hugely different.

Many never consider paying a home loan off early.

There is a concept that says in times of very high inflation (not now by any means) that paying only the required amount, will enable a person to pay off a loan with inflated dollars...but that is a very risky tactic, inflation is manageable with fiscal policy...

When it comes to refinancing...which many do, the goal should not be to get cash from equity, unless it is a true emergency. The goal should be to lower the interest rate, and pay off the loan earlier. When the loan officer says that you get the proceeds of the refinance (x thousand dollars) just tell them to put it towards the principle payment. If emergency cash is required, go the route of a second mortgage (very carefully) because a portion of the interest charged is tax deductible.

 

[mauiSRT/10]

I always recommend that home buyers try to finance a 15 year mortgage if they can do it comfortably...then run an amortization table that shows what you can save in interest if you pay as if it was a 10 year loan...but if you get a 30 year loan, run the schedule as a 15 year loan...you will see that the difference in payments is very small, but the total interest paid will be hugely different.
.

Very wise words Roy!!


patrick

 

[QClikeKW]

I believe reason and financial common sense are lost on the close to two generations of citizens who have grown up getting immediate gratification first, from their non-parenting parents (because both work all the time so they can buy junior and themselves more stuff)and then from the almost endless stream of credit card companies soliciting them from puberty onward with the mantra of "just buy it now, you only live once" spend $20,000 pay only $150 dollars a month etc.
It's a cultural thing........... American culture.

 

[includemeout]

Bingo , we have another winner. :nurse: :nurse: :nurse: :nurse: :nurse:

 

[Overclocker]

(because both work all the time so they can buy junior and themselves more stuff)

Or maybe so they can buy food and fuel, pay rent, pay the electric bill, buy shoes for the kids...you know...stuff for which low-income parents actually need two jobs.

While I agree that many folks don't understand the concept of delayed gratification, you're trying to assume some sort of morally superior victimhood based on a huge generalization of others' behavior.

 

[Big Perm]

I'll offer my two cent feedback around the general topic....I didn't read the article, but I'm sure it's around recent events in mortgage...

First, people need to take accountability for their own mistakes....if you are going to bogey up your income to qualify for a house you have no business in, get into a payment you can't afford, and then default, you need to look no further than the mirror....

Second, the mortgage company has a responsibility to review the loan provisions of brokers and other groups they purchase loans from....if they don't do their homework, they are going to get burned...period...

Third, if mortgage brokers are falsely reporting income or other stats to perspective buyers, put them in jail.....bubba will ream da buddy hole and they'll get what is coming to them.....

That's my two cents...from your redneck reporter, Big Perm...

 

[Prof]

Exactly! Where have you been? I thought you would be post number three...(I know you are not an early riser.)

Thanks for the input from a "professional."

Roy

 

[shade]

I think a major issue with this whole thing is 85% of the public out there has no clue how finance works.
Most dont understand that an ARM loan can reset into a much bigger rate they just see its 4% now but down the road its going to be X%. They are looking for the now justification.
I think a solution is people should be forced to learn finance. In school you arent required nor do they teach a finance class in highschool. In college who is going to take an accounting class unless your major is in accounting?
Why not force would be borrowers to take a a Saturday course when they apply for a home loan, or if they used govt backed loands like FHA, the rules should be they have to take a class.
We cant say its mortgage brokers fault no one forced their customers sign on the dotted line. If customers new how to read loan documents I think it would be a different story.

 

[Wifey]

Seems like the cycle came around again. I hope many do better this time!

definitely wouldn't hurt to teach our kids finances in school rather than what is being taught!

 

[VIPR PWR]

Seems like the cycle came around again. I hope many do better this time!

definitely wouldn't hurt to teach our kids finances in school rather than what is being taught!

Should be mandatory .. I’m always asking people if they shop around for the higher interest savings accounts and money market accounts .. they have no idea about that . Make your money work for you , so you can not have to work for your money ! Maximize every thing finacial if possible for income and retirement .

 

[VIPR PWR]

If you don’t have the cash to buy something don’t use credit , save cash and pay cash !

 

[Wifey]

Should be mandatory .. I’m always asking people if they shop around for the higher interest savings accounts and money market accounts .. they have no idea about that . Make your money work for you , so you can not have to work for your money ! Maximize every thing finacial if possible for income and retirement .

Most don't think about the future and how difficult it will be if you don't do something!

 

[Wifey]

F you don’t have the cash to buy something don’t use credit , save cash and pay cash !

Exactly! I use my rewards card to purchase all month then pay in full each month to get the 5% but I'm able to stay disciplined or that wouldn't work

 

[Wifey]

Although i did finance my last new car in late 2020 but it was zero down zero interest and I pay a lot extra each month so it is almost gone. Some say that you overpay doing that but I don't agree as long as you work the finance officer and don't let them work you

 

[Wifey]

Gotta start with what it costs the dealer and work backwards - not gonna get as good a price starting at MSRP and going the other way

 

[VIPR PWR]

Just look at credit card statements and the interest rate your paying .. freaking loan sharks .. the have jacked them up crazy high .. now if you follow investment articles and ads I see ,,, the crooks are trying to push credit cards to people that have no idea what a interest rate is .. I think my lowest credit card rate has gone to over 18% and all the rest are higher to much higher . Yet my credit score is 863 and in the top 20% .. even credit score is a scam so what h out on that !