Now look at these idiots. Forclosures surging and people making late payments. I saved for my home for 17 years and then in 2003 put a huge downpayment and got a fixed rate @ 5.25 %...IT CANT MOVE from that rate. Unbelievable how many stupid people out there! Yeah, go ahead and blame the lenders but it is not their fault.
2007-03-13 07:52:16 · 21 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
to the BAD KARMA lady....I didn't just save cash, I invested my money and made much more than buying a home 20 years ago....you don't have a clue about me.
2007-03-13 08:30:29 · update #1
keep on sticking up for stupid people, people. This is why this economy is in the shape it is in. No one wants to take responsibility for their own lives.
2007-03-13 08:32:10 · update #2
I agree. Why anyone would not get a fixxed rate is beyond me. Its is not worth the gamble at all.
2007-03-13 07:55:03 · answer #1 · answered by Anonymous · 2⤊ 1⤋
It boils down to greed. People thought home values would only go up, so they were willing to pay any price to "get in on the ride". They knew they wouldn't be able to make the payments in a few years, but so what- they'd be rich! And that philosophy actually worked for several years, so they're not entirely stupid.
What's really strange is the lenders who offered 100% financing. Mortgage business is about balancing risk-reward. By offering 100% financing, the companies hand over all the reward to the customer (all the appreciation) while shouldering 100% of the risk. Just doesn't make sense. The banks are going to get burned by this more than the individual homeowners.
2007-03-13 16:25:26 · answer #2 · answered by Cardinal Rule 3 · 0⤊ 1⤋
If you had put less money down on your home and bought sooner, you'd have more equity than you could have possibly saved up in cash.
And ARMs can be appropriate for a lot of people, if taken for the right reasons. If that's the only way to qualify for the home, that's not the right reason. Knowing you'll move within 5 years, that might make more sense to take a 5-7 year fixed rate loan.
Fact is, 90% of loans are gone after 7 years. They either refinance or sell. So most people could save money by taking a shorter term ARM. Most people shouldn't probably refi as often as they have, but that is cyclical anyway.
But I'm glad you feel nice and secure with your low fixed rate, and I hope you take full advantage of that by staying in that home and in that loan for a long time. It's not the right path for everyone, but there is no one right path for everyone. Good luck.
2007-03-13 15:21:45 · answer #3 · answered by Yanswersmonitorsarenazis 5 · 3⤊ 1⤋
I don't know the answer to your question "why", but apparently some of the sub-prime lenders did. That's how they managed to sell these loans.
A better question might be to ask why these lenders did that, considering that they are losing buckets of money on every foreclosure, and that loss most certainly IS the lenders' fault.
2007-03-13 15:31:32 · answer #4 · answered by open4one 7 · 0⤊ 0⤋
You don't have to save for 17 years to get a fixed rate.
I helped some one get a nice house with a 100% loan at a fixed rate of 6.25%. His monthly payment is $1150. He ended up getting his earnest money back at closing, and a house! The best part is in 17 years, he will have a substantial amount of equity, much more than he would have had if he were just saving extra cash here and there.
ARMs, while not the best financial decisions, are not the mother of foreclosures, either. Many times it can be job loss, divorce, sudden medical bills, their company went under, etc.
It sure is refreshing to hear someone who thinks so highly of their own decisions, and loves to look down on others. It's so rare these days.
FYI you are setting yourself up for some bad karma bub
2007-03-13 15:18:41 · answer #5 · answered by ☼Pleasant☼ 5 · 2⤊ 3⤋
I know, I tried to talk a friend out of being dumb. It didn't work, now he is working three jobs, his wife has one and they are slowly circling the bowl.
His problem is he still doesn't understand that after the mortgage company takes the house that he will probably still owe money on it. Yep, he bought at the very highest point. He hadn't owned his house 30 days before he was upside down in it. Sad but true, most Americans make instant coffee in a microwave oven. We just have to have everything YESTERDAY.
2007-03-13 15:02:54 · answer #6 · answered by gimpalomg 7 · 2⤊ 1⤋
You pegged it...people can be stupid! They bite off more than they can chew, more than they need then can not afford it later. Sad, since they don't realize how easily it can be avoided...or how badly it hurts their credit.
I personally don't understand the lure of the variable rate...yeah it's good today but you don't know what it will do in 6 months or what you'll be doing in 6 months.
All i can say is take advantage of their stupidity and buy their fancy place when it's in foreclosure...you will get a good deal!!
2007-03-13 15:11:23 · answer #7 · answered by productjunkie 3 · 3⤊ 0⤋
If you have bad credit, the lender sometimes require you to get a adjustable rate mortgage. Other people are just don't understand it and see the initial lower interest rate.
2007-03-13 15:38:40 · answer #8 · answered by Anonymous · 0⤊ 0⤋
If I can buy a $300,000 house today and sell it for $400,000 next year, than I would do anything I could to get into that house. Even interest only or ARM payments at $2000 a month would be only $24,000. When I sell the house I make $76,000.
Many people have made a lot of money this way. Many people have lost a lot.
2007-03-13 15:02:15 · answer #9 · answered by joatman71 3 · 4⤊ 2⤋
I agree with you to a point. I know personally that I cannot afford a home of my own (yet). However I know that I have had NUMEROUS lenders call me and write me letters stating how they can approve me. I know that I can be approved but can I afford it with other finances I currently have? My personal answer is no but that doesn't mean I can't get approved. I think people hear similar things that I have heard that "they can get approved and own your own home" and can't resist it. One of the biggest dreams people have in the USA is of owning a home with a white picket fence...they just don't think through the consequence.
2007-03-13 14:59:37 · answer #10 · answered by ~*~*~*~*~*~*~*~ 6 · 1⤊ 1⤋
people are always trying to "keep up with the Jones" and never publically admit that they haven't been able to. So in order to keep the game going the go for ARM mortgages that lets them buy into a bigger house and a better neighborhood than their salaries and income would otherwise permit. Greedy bankers are more than happy to put you in over your head so they get the property for pennies on the dollar after you go BQ
2007-03-13 14:57:16 · answer #11 · answered by stupido#1 3 · 3⤊ 1⤋