Drop in Home Prices Forecast....
- Thread starter Pandora
- Start date
We bought our house in February and our lender basically told us that X was the amount we could afford. We ended up getting a VERY good deal on a home for much less then the lender said we could afford.
nomoney
....
When we purchased our home 7 years ago (being the first home we ever bought) we got an ARM. For us, this has worked out great. But I think it all depends on the circumstances and if even with the arm someone is stretching themselves too thin.
We were approved for a 200k mortgage back in the day. We knew this was too much and opted for our then 119k home. We got the arm at the introductory rate of 4.5%. It is now at 6%. It can go up a max of 1% or down a max 1% each year. 3% is the lowest it's been and 6% is the highest it's been and it is still well below our means. We have decided that when it get's to 8% if we're still in this home we'll refinance. But as of right now...why? It's still lower then most standard rates. And in the last 7 years I've paid off tons more equity in the home then we would have been able to with starting out with the standard interest rate which I believe was 7.5% at the time. Now with the housing boom it is VERY VERY tempting to trade up with our almost 200k in equity...but we haven't totally outgrown our little house yet and why break ourselves when we've gotten terribly comfortable with our under 1k a month house payment.
Like I said I can definantly see where getting an ARM for some people who are getting it simply to be able to get into their high end homes without thinking about the near future is a bad idea...but if you're smart and not greedy about it....it may work out okay.
We were approved for a 200k mortgage back in the day. We knew this was too much and opted for our then 119k home. We got the arm at the introductory rate of 4.5%. It is now at 6%. It can go up a max of 1% or down a max 1% each year. 3% is the lowest it's been and 6% is the highest it's been and it is still well below our means. We have decided that when it get's to 8% if we're still in this home we'll refinance. But as of right now...why? It's still lower then most standard rates. And in the last 7 years I've paid off tons more equity in the home then we would have been able to with starting out with the standard interest rate which I believe was 7.5% at the time. Now with the housing boom it is VERY VERY tempting to trade up with our almost 200k in equity...but we haven't totally outgrown our little house yet and why break ourselves when we've gotten terribly comfortable with our under 1k a month house payment.
Like I said I can definantly see where getting an ARM for some people who are getting it simply to be able to get into their high end homes without thinking about the near future is a bad idea...but if you're smart and not greedy about it....it may work out okay.
ylexot
Super Genius
Ummm, if your ARM gets to 8%, it will be because the mortgage rates have gone up. So, you'll end up refinancing to an even higher rate. The trick with ARMs is to get them when the rates are high because the rates are typically lower and then the rate will automatically get lower if rates come down. Then you refinance to fixed when you think rates hit the bottom.nomoney said:
truby20
Fighting like a girl
Actually for a 30-year fixed it is 6.67%...Pandora said:
Freddie Mac's website has a weekly report of current interest rates...good stuff!
Pete
Repete
This is a chronic problem with the lending industry. They allow people to clearly get in over their heads. When I bought my house I made a spreadsheet and calculated everything down to the penny. The mortgage I could comfortably afford was $189,000. I ended up having to go $199,000 but I had to cut back on savings. The bank came back with an approval of $260,000. No frickin way I could pay that mortgage and eat. Luckily the interest rate dropped half point and it ended up costing me less.kom526 said:
This problem with lending culminated with bankruptcy reform act last year. Lending and credit institutions lobbied hard and got it passed. Now I am a firm proponent of personal responsibility but it was
The lending industry bombards people everyday with bazillions of credit offers willy nilly. They have access to all your data, they know that you have a mortgage, $1400, car payment $500, credit card $100, consumer loan $140, insurance, utilities, ect. all on a monthly income of $40K? And they think you are a worthy risk? They get people in trouble peddling credit like crack. Now people have to be responsible and they are free to jam themselves up if they want to but the lending industry has to have some ethics as well. So what did they do, they got BRA passed so now people who are stupid enough to find themselves crushed under a mountain of debt can't even go bankrupt and start over, hopefully wiser. Now they have to sit through 7 or more years of structured payment plans and emerge no better off than they were before they went into it.
C
czygvtwkr
Guest
Damn where do you work and are they hiring?Pete said:
somdrenter
Sorry, I'm not Patch...
Local blogger mentioned in Business week
http://www.businessweek.com/magazine/content/07_04/b4018055.htm?chan=search
http://www.businessweek.com/magazine/content/07_04/b4018055.htm?chan=search
Hawkeyewife
New Member
Thanks! Very interesting. We moved here a few months ago and decided not to buy due to market conditions. Our friends that bought in the last couple of months swear that we have made a huge financial mistake. Time will only tell who will be laughing all the way to the bank, I am betting we'll be the winners though.
Chasey_Lane
Salt Life
A homeowner has the advantage and always will. Well, at least that's my opinion. They have a tax shelter, whereas, renters just fork out money each month - money they will never get back. So much for winning, huh?Hawkeyewife said:
kwillia
n/a
But by that token, homeowners are also the ones responsible for roof replacements, septic fixes, furnance expenses, and the other things that can/will happen over a number of years. Renters get to go to their landlords when something goes wrong. I don't know that the interest write-off is enough to "bank" to counteract the actual expenses of being a homeowner...:shrug:Chasey_Lane said:A homeowner has the advantage and always will. Well, at least that's my opinion. They have a tax shelter, whereas, renters just fork out money each month - money they will never get back. So much for winning, huh?
FromTexas
This Space for Rent
It almost never falls should be the primary statement there. Also, as long as you aren't a douche who got an interest only or 1 year variable loan you can only pay interest on after the first year, then you get equity with every payment. The renters will act happy right now, but they were also the ones biatching and moaning when everyone else was making 5-20% on their home each year. If I get only 2-3% on my home in growth each year, that is still $7k-$11k more than a renter got that year. :shrug:ylexot said: