The part where people advertise to sell loan products for profit or the part where folks who have made mistakes or had bad things happen to them get a second chance? In the 1970's, my folks literally fled to Florida because my Dad had a trucking company that went belly up. A major factor in that was because one guy was embezzling, and another guy got into an accident and refused to pay. My dad took his shot at being an entrepreneur and it just didn't work out. Eventually, he was able to buy a moblile home at a ridiculously high interest rate. Wasn't sad. Because after a short while, it was cheaper than rent, and eventually he could refinance. Financial instruments are tools. Like guns, they can be used for good and bad. I took out a 10.375% second mortgage on a piece of property. Don't regret it because it made the purchase possible, and won't refinance it because its so small that the refinance costs would eat up a lower payment. It is good business sense to take a loan at any rate if the resultant will either increase cash flow or increase equity. Just a tool for good people to better themselves. SM
SM I don't know where you live but here in the gated community of Utopian Meadows if you don't have a Fico above 780, a black amex, a Mc Mansion with a couple of GERMAN SUVs parked in the garage, and a few million in the 401K by the time you are 40 then you must be one the great unwashed and we can't understand why anyone would want to deal with you.
LOL. Gated community? Why on earth would I want to share my estate with others? If your Fico is that high, then you're doing something wrong. Turn that couple of million into 10 million by borrowing money while its cheap and letting it work for you... SM
"From mid-2005 to mid-2006, according to a statistical sampling of a representative group of 7,548 purchasers, nearly half of all first-time buyers financed the entire transaction, obtaining mortgages in the full amount of the home price. Also, 30% put down 10% or less. The research was conducted by the National Assn. of Realtors, using information on home transactions supplied by Experian, a major credit and realty data firm. The median down payment of first-time purchasers, according to the study, was just 2%. In other words, the median-sized mortgage for first-timers represented 98% of the home purchase price."
Yea, I was thinking about that..Imagine the rally the stock market would have if the powers that be lowered stock purchase margin requirements to 2%..Dow 36,000 wouldn't seem so far fetched then.
Well its only 4:1 intraday...you have to be 2:1 overnight!!! Not that i don't think it's a good idea...but the fact is 25k can only get you 100k intra day risk, but two years ago 25k would probably get you a 400-500k home....and three years to figure out how to pay for it when rates go up or the balloon is due
As usual, a good point. About 20-30 years ago the real estate market changed in a very fundamental way. Before, most mortgages were made by a local S&L that kept some of the loans in their profolio. They had a vested interest in making a sound loan with credible appraisal and underwirting. Now, all that crap gets sold, sometimes over and over. The co originating that loan only cares about one thing. There was an article in the WSJ the other day about how nobody knows where all these loans are and if the investors that have a lot of exposure, actually know the true risk.....read hedge funds. LTCM was relatively easy to manage because it was one co. What happens if the shit really hits the fan and you have dozens of these funds go under. Or they have to sell other assets to cover. The worst collapses always affect other, seeming unrelated asset classes.
4:1? 2:1? 25K down? with a 500K home? HA, try san diego where the norm is: 10:1 leverage, zero to 25K Down, on a $1,000,000 home :eek: I just saw a property sale hit Zillow, that sold less than its 2003 price (almost 50% below the Zillow "zestimate" ) :eek: Signs of a meltdown creeping in...
That is because it was most likely bought at foreclosure auction. When an appraiser goes out to appraise a home in the area, this one will not be used as a comparable for this reason. The guy who bought it at auction is happy because he has instant equity in the home.