Posted on Wednesday, February 01, 2012 - 09:12 am:
Did the original piece mention if they were on an ARM? I would bet for a mortgage that large on an income that small they bought into the low initial ARM thinking that they would be able to sell before the bigger payments started rolling in.
Posted on Wednesday, February 01, 2012 - 09:54 am:
Fifty G's can buy a 320,000 home if you do it correctly. Live cheaply, SAVE and INVEST 80% of that income for fifteen years and pay cash for that home.
I get sick of hearing advertisements on TV and radio about how to pump up your credit score so that you can owe the banks your future.
My note to the banks..........with a song by the Who that goes "hey you, get out of my shorts!!"
The importance of your credit score is so that they can set you up to fail while making killer commissions.....off from you.
It was especially bad in Florida fifteen - twenty years ago. I knew of three families who bought into 'baloon' loans. What a rip off. A guy making 35k buys a 150k new home for payments of $239 a month, at five years they need a cash payment of 15k(all interest) and their payments go up to $750 a month for the twenty five year balance of the loan.
Housing starts my ass. Don't trust anything that politicoe's count.
They were 'planning' on income growth, and the home value doubling so that they could refinance. None of the five years of payments went to principal. These were simple folks duped by the banks. Of the folks I knew who fell for this program, all are divorced, all ended up in 'assisted living' apartments, on welfare. They were a part of the Clinton administration's 'bubble' economics. Yeah, they were simple stupid people, but they were duped by the banks. We caught them as they hit bottom though, we paid for their lives after the banks crushed them for profit.
They thought I was foolish setting up a conventional loan on the house I bought at the time.
Posted on Wednesday, February 01, 2012 - 10:38 am:
I pretty much agree with what everyone here is saying, well, except for Froggy, and we wonder why we're in the shape we're in. My wife and I were approved for over 200K when we were looking for our first house. We knew what we made and we knew we couldn't afford that, even though the people in the "know" said we could. We ended up buying a house for $80K. One thing I haven't read yet is kids, try having one or three, they ain't cheap. We're currently looking for bigger digs, we make more than the OP's topic people and our goal is to still stay under 200K. Of course property values and cost are all relative. We just missed out on a 10 yr. old, brick ranch, four bed, three bath, two car attached, 1200 sq. ft. detached with it's own drive on two acres for $167K. I'm still a little sick.
Posted on Wednesday, February 01, 2012 - 10:45 am:
There really isn't enough info to say what's going on here. They could be a couple that have been paying toward housing for 40 year allowing them to get into a $320K house with a big down payment from selling their old house. They could be newlyweds that got a gift from parents for a down payment. They may have inherited a down payment. The question isn't the value of the house. The question is the loan amount, which we don't really know.
I don't see any predatory lending here, at least not based on known facts. They qualified for the loan. You can't tell them that they qualify, but then look at them and say we won't give you the loan because the loan officer thinks they are in over their heads.
Half your income for a house is a lot when you only make $50K no doubt. It can be pretty comfortable when you make $200K. The ratios set up by Freddie/Fannie don't account for that though. If they did, it would be considered discriminatory. Bottom line is that a borrower should be careful not to get in over their heads. If they do then it is their responsibility. It would be nice if the government set better regulations for Freddie/Fannie for loan qualification though. The current system encourages over borrowing by those who can least afford it and who are least able too manage finance. They should teach these basics in High School.
Posted on Wednesday, February 01, 2012 - 01:10 pm:
Wait! Here comes Obama to the rescue (cue the William Tell Overture). "Feb. 1 (Bloomberg) -- President Barack Obama announced a package of proposals designed to jolt the housing market, his latest effort to reignite the economy after four years of foreclosures and falling home prices.
“This housing crisis struck right at the heart of what it means to be middle class in America: our homes,” Obama said in a speech in the Washington suburb of Falls Church, Virginia. “We need to do everything in our power to repair the damage and make responsible families whole.”
The president said his plan would make it easier for homeowners to refinance their mortgages into current low interest rates, which are now below 4 percent. Borrowers, even those who owe more than their homes are worth, would be able to refinance into loans guaranteed by the Federal Housing Administration.
To pay for the program, Obama will ask Congress for a tax on financial companies with more than $50 billion in assets. Congress has refused to act on similar requests twice in the last two years.
“No more red tape, no more runaround from the banks,” Obama said. “A small fee on the largest financial institutions will make sure that it doesn't add to the deficit.”
So he thinks financial institutions need to pay for his program simply because they have too much money and now he's the champion of the middle class. What a moron!
Posted on Wednesday, February 01, 2012 - 01:19 pm:
after the way this economy is, and my entitlement standing (zero - I ain't anybody's disparate class entitlement trophy) I know the best I could hope to afford is a yurt. and even then. Freedom is just another word for nothing left to repossess.
Posted on Wednesday, February 01, 2012 - 01:43 pm:
+1 Sifo They should teach these basics in High School. - Probably sooner actually. I learned how to run a small biz P/L statements, and balance a check book in 3rd grade. I was in a charter school at the time.
Strokizator
yea I think he held up on a lot of things, including talking about this for political gain reasons.
FHA has for some time done streamline re-fi's even when the home was underwater, provided the customer was being responsible, and paying the bills.
I have known about the updated HARP program, and had the guidelines- the finalized one since beginning of Oct. It doesnt go active til beginning of next month- nothing political here folks.
The HARP - Home Affordable Refinance Program.
Has for the last 2 years allowed folks with underwater mortgages under written by Freddie & Fannie refi at current rates. at LTV's up to 125% of existing values. in practice its actually 105%, because the loan has to be held and serviced by the original lender- and few are- and then refi'ed by the original. if not its 105%.
The caveat, you have to be making those payments on time, and other payments on time. In other words, your being responsible.
The Harp 2.0 as its being referred to by some, removes the LTV limits entirely. BUT there has to be a strong benefit to these responsible folks. IE taking them out of a ARM, Shortening the remaining term, or a drastic reduction of payment. or a combination.
The theory is that by giving these responsible folks a strong benefit, and hopefully shortening the term, thus reducing exposure, it will prevent strategic defaults, and help make the industry stable. -Thats not my theory, but their logic.
The finance industry is also paying for the extended jobless benefits that was just approved. They added anywhere from .1-.7 points on the the upfront points cost to the loans of freddie and fannie, just a few weeks ago. IE lets say the loan had No points to get the rate you wanted, you are now paying .1 to.7% for exactly the same thing. So everyone now getting one of those loans is now subsidizing unemployment bennies. Nice.
Posted on Wednesday, February 01, 2012 - 07:44 pm:
What about taxes in NJ you can be paying as much as $15K in taxes a year for a $320,000 home. The lowest you would pay would be around $7K so no way could or should they have bought a $320k home thats asinine. What are they rollerblading to work and gettin gubmint cheese? I would say minimum $2400 a month then ya gotta heat it light it take care of it and a car and health and life insurance if your smart or lucky. After taxes and if you have no deductions except for the regulars that's about $39750 take home tops. That means they are taking home $3300.00 a month they should loose it all dumb bastards.
.....with a song by the Who that goes "hey you, get out of my shorts!!"