Many Home Buyers Can't Afford Mortgages

[sr171soars]

I know my old friend possibly paid first down before mortgage. I believe it would be 5%. Well I will contact my old friend hopefully.

Of course! He most certainly could have put a down payment but it would have to be more than 5% to get those kind of payments. Let me see $130,000 - 6,500 (5% of 130,000) = $123,500 for 30 yr at 6% equals payments of ~ $740.45. A little reduction...that is why I wondered.

If your payments are ~ 240 a month, your remaining balance would be 40,000 for 30 yrs. That means your friend would had to put down $90,000 on the $130,000 to just to get those payments (of $240...which is close to $220).

Your friend has the bucks or is doing a very creative loan.

 

[diehardbiker]

220 bux a month for 130k mortgage, that sounds very fishy to me. I don't buy that! I would believe if it is for 220 dollars a month, maybe mortgage would cover 30k, not 130k.

I hope my good credit remains for my future home. No co signer needed. They saw me always pay the payments. My car and trailer. I want new home on low interest mortgage but too late interest goes up a bit. Because war, depend on foriegn oil, gas price increases and many. I can wait another couple years. I learned smart mortgage from my old friend who pays 220 dollar a month on $130,000 2001 house I visited their nice place!

 

[Y]

Agree with sr171soars and diehardbiker...

His friend probably made a large down payment
that's why he paid only $220 a month.

Or, he probably use "Interest only" loans which is
the worst one of all "balloon type" I am getting
quite concerned lately because I noticed that
almost all banks encouraged "Interest Only" mortgage
home loans more than before !! This might mean
that nowadays it's getting harder to find a real
good mortgage just like old times.

 

[sr171soars]

...
Or, he probably use "Interest only" loans which is
the worst one of all "balloon type" I am getting
quite concerned lately because I noticed that
almost all banks encouraged "Interest Only" mortgage
home loans more than before !! This might mean
that nowadays it's getting harder to find a real
good mortgage just like old times.

Don't worry about that! You can always get the kind of loan you want. Just know your facts and what you want and most banks and other institutions will gladly do business with you. Remember, when things start going sour with these "creative" loans (believe me they will), things will change in a hurry...

 

[starrygaze]

220 bux a month for 130k mortgage, that sounds very fishy to me. I don't buy that! I would believe if it is for 220 dollars a month, maybe mortgage would cover 30k, not 130k.

Yeah I am in your shoes that wonder why my old friend has nice home and told me it is only 220 dollars a month payment. It does better than my trailer. With my 1995 16 x 80 trailer and 30 thousand dollars, I still pay $230 dollars a month with 20 year payments. 9 more years to go! Also my old friend earned Master's degree and is very smart person I met. I believe he might pay big down before mortgage. Wait I will try to talk with my old friend first maybe weekend so will let you know.

 

[Cousin Vinny]

Actually, the banks won't get hurt too much by these "questionable" loans. [...] Basically, they have ways to package their portfolios to mitigate the risks and they will be fine.

Are you sure about that? You're referring to Mortgage-Backed Securities (MBS) out there in the financial markets. Believe me, the investors in these securities are usually shrewd institutional investors & hedge funds, (and often, foreign investors, too!) and they will demand guarantees in the mortgages.

Usually, these guarantees only cover the first year or two of the mortgage being rolled into the securitization process. Thus, if a homeowner defaults in the first year or two, the bank has to buy them back from the MBS portfolio! The same buyback phenomenon happens, if fraud is found in mortgage.

The banks are on the hook for billions of dollars in MBS'es out there and some banks will probably go out of business or bleed $$$ through their noses. (Already, HR Block has bought out $102 million dollars in the past year. HR Block BuyBack)

It is us "Joe Q. Public" that won't be fine. We are the ones that pay for the risks involved!

I agree. The worse the mortgage default/foreclosure crisis escalates, the more the U.S. Govt. will have to step in and prop up the financial institutions. (e.g., a taxpayer-funded bailout package similiar to the S&L crisis during the 1980's.) My concern is that the U.S. is already in serious debt, and they just can't take up even more in bailing out our financial institutions.

 

[sillycat]

What a mess we Americans are in!! First we had dot.com crash and Greenspan lowered the interest rates even more to encourage the public to continue buying houses so to bring the economy out of the recession more quickly. Now we maybe will be in big trouble The gov't bailed out airplane companies and car companies....

 

[sr171soars]

Are you sure about that? You're referring to Mortgage-Backed Securities (MBS) out there in the financial markets. Believe me, the investors in these securities are usually shrewd institutional investors & hedge funds, (and often, foreign investors, too!) and they will demand guarantees in the mortgages.

Usually, these guarantees only cover the first year or two of the mortgage being rolled into the securitization process. Thus, if a homeowner defaults in the first year or two, the bank has to buy them back from the MBS portfolio! The same buyback phenomenon happens, if fraud is found in mortgage.

The banks are on the hook for billions of dollars in MBS'es out there and some banks will probably go out of business or bleed $$$ through their noses. (Already, HR Block has bought out $102 million dollars in the past year. HR Block BuyBack)I agree. The worse the mortgage default/foreclosure crisis escalates, the more the U.S. Govt. will have to step in and prop up the financial institutions. (e.g., a taxpayer-funded bailout package similiar to the S&L crisis during the 1980's.) My concern is that the U.S. is already in serious debt, and they just can't take up even more in bailing out our financial institutions.

Just read the link toward the end and it explains why the banks and other lending institutions really won't feel the effects like in the past... It is disingenious what they have done. Nightmare Mortgages - Yahoo! News

 

[Cousin Vinny]

Just read the link toward the end and it explains why the banks and other lending institutions really won't feel the effects like in the past... It is disingenious what they have done.

Thanks for the link. That was a good one, a detailed analysis. Still, my gut feeling is that the people who purchase MBS'es are extremely sosphisticated investors, so there must be something in the fine print that makes all of this financial activity worthwhile in the financial markets.

I'll agree that the pain will be spread out all evenly, should there be a housing/mortgage bust. The taxpayers and individual investors will bear the brunt of the losses, unfortunately. Personally, I hope there'll be a gradual slowdown, a pullback of sorts, not a full-blown crash. The dot-com crash was different, as people need housing to live.