1% interest rates

[glatt]

We were the same way when we bought our house. We bought a house we could afford on only my income, even though we were both working at the time.

When I read news stories of what some people in this area have as their mortgage payments, my jaw drops. It's like 3-4 times what I'm paying.

[classicman]

Originally Posted by Juniper

Take an ARM out on the off chance you might be earning more in 5, 10 years? Ha ha ha. Even if people do end up earning significantly more, chances are they are spending more too. Dumb.

Now, it really ticks me off to hear all the whining about "predatory lenders." Hey listen -- these were BANKS. Or mortgage brokers, who make money by selling a loan as a product. These are not noted for being nice, caring, altruistic people: Caveat Emptor.

Hey listen -- you buy a product, you make a mistake, it's YOUR fault. You should've done the research ahead of time and figured out what you were signing up for.

I could have bought a $500K house instead of my $200K house, but I thought it might have been nice to eat, too.

Very well said - I too bought my first home after working 2 & 3 jobs for years to save up for the down payment. I scrimped and saved and sacrificed. I HAD to be disciplined to achieve my goal. I was and I did. No entitlements!

The people who bought more than they could afford because they didn't do their "homework" or weren't/aren't willing to sacrifice get no sympathy from me.

If you took a risk & lost thats on you - YOU pay the piper.

[SteveDallas]

Originally Posted by Juniper

We always opted for the boring old conventional 30-year. The DH and I are not risk-takers, particularly. Take an ARM out on the off chance you might be earning more in 5, 10 years? Ha ha ha. Even if people do end up earning significantly more, chances are they are spending more too. Dumb.

Or, you'll be able to refinance at more favorable rates--maybe even another teaser ARM. The problem is, you can't do that refinancing if the value of your home has dropped to the extent that it's less than your mortgage balance. It's another example of an assumption that only worked in a world of perpetually increasing property values.

Originally Posted by Juniper

Now, it really ticks me off to hear all the whining about "predatory lenders." Hey listen -- these were BANKS. Or mortgage brokers, who make money by selling a loan as a product. These are not noted for being nice, caring, altruistic people: Caveat Emptor.

Hey listen -- you buy a product, you make a mistake, it's YOUR fault. You should've done the research ahead of time and figured out what you were signing up for.

I've always said I couldn't see any point in taking an ARM when rates are near historic lows, meaning they have nowhere to go but up. So I'm with you to a large extent. But let's not let the banks off so quickly.

What makes the bank more money? a $100,000 mortgage or a $200,000 one? Duh. And if they're going to sell the note to somebody else before the ink is dry, they don't have a massive investment in making sure I can pay off the more expensive mortgage.

Appraisers and realtors are tied into this too--your house that you bought for $150,000 two years ago has to be appraised at $300,000 before you can take out that $150,000 home equity loan. Etc.

Of all the things that tied together to feed this crisis, IMHO, the root cause is not that certain loans shouldn't have been taken out by consumers, or made by banks. (Although arguably they shouldn't have in many cases.) A more fundamental problem was that the risk of default on these loans was not evaluated properly.

[Juniper]

Originally Posted by glatt

So you are saying that these predatory lenders were bad, but because you were too smart to fall for their tactics, you think it's OK that they were bad to stupid people?

No, it's not OK. But that's a moral issue, not a legal one.

[TheMercenary]

Originally Posted by Juniper

No, it's not OK. But that's a moral issue, not a legal one.

I don't think that is entirely true. They got bad loans for people that they knew the people could not qualify for. I do believe that 60 minutes did a whole expose on it, I will look for the link.

[classicman]

and that they knew they would bundle up and sell to another company or investor... They not only knew the loan was bad, but that they wouldn't be the one holding the bag when it happened.

[TheMercenary]

http://60minutes.yahoo.com/segment/1...prime_meltdown

[Juniper]

Originally Posted by classicman

Very well said - I too bought my first home after working 2 & 3 jobs for years to save up for the down payment. I scrimped and saved and sacrificed. I HAD to be disciplined to achieve my goal. I was and I did. No entitlements!

The people who bought more than they could afford because they didn't do their "homework" or weren't/aren't willing to sacrifice get no sympathy from me.

If you took a risk & lost thats on you - YOU pay the piper.

I forgot to add this -- before we bought our first home, we lived for 5 years in a dinky single-wide trailer, purchased for $1500. Sold it for $5K, which was the 10% down payment on our house. Nice how that worked out.

But people hear that story and say "ewww....you lived in a trailer? In a trailer park? You must be trailer trash! I'd never live like that..." Those are some of the people who are having trouble these days, aren't they? Too many young people expect to have an equal standard of living to the one they had with their parents, right away.

[TheMercenary]

I lived in a trailer when I was in HS in the 70's. People often forget where they started in life.

[Juniper]

You are correct -- I will backpedal slightly and agree the lenders are to blame...to a point.

However it's also necessary to point out that during the Clinton administration (hello, Democrats?) lenders began to be forced into giving loans to people with risky credit under the affirmative-action lending policies, sometimes approving risky loans and denying the better ones, or else they'd face prosecution.

Can't blame it all on the lenders. Or the Republicans.

[TheMercenary]

Originally Posted by Juniper

You are correct -- I will backpedal slightly and agree the lenders are to blame...to a point.

However it's also necessary to point out that during the Clinton administration (hello, Democrats?) lenders began to be forced into giving loans to people with risky credit under the affirmative-action lending policies, sometimes approving risky loans and denying the better ones, or else they'd face prosecution.

Can't blame it all on the lenders. Or the Republicans.

Ok, it's official. We now love you.

[Undertoad]

A trailer! You were lucky! We wished we could have a trailer. There were over 150 of us, living in a cardboard shoebox in t' middle of road.

[classicman]

I - OMFG - repressed memory here.... Lived with my in-laws for awhile to save money. Looking back - I think I might have rather gone bankrupt with an ARM instead. NOT! IT totally sucked living with them, but it was just a sacrifice I had to make in order to achieve my goal of owning a home.
Too many kids today don't believe they need to work or sacrifice for things - they believe they should just "have" stuff.

[Juniper]

LOL Merc --- I suspect you're in the minority now.

UT -- very funny, this is indeed starting to take on that "barefoot both ways to school, up hill in ten feet of snow and we were glad to do it" tone.

[TheMercenary]

Originally Posted by Undertoad

A trailer! You were lucky! We wished we could have a trailer. There were over 150 of us, living in a cardboard shoebox in t' middle of road.

ROTFLMAO!!!! I watched that MP skit someone posted, funny as hell.
"you were lucky to have a cardboard box! we had to live in a hole in the ground with nothing but a tarp on the top!"