We have an ARM, have had it for 10 years. It's currently at 3.5%

I guess it depends on the bank.

I have two arms. They work pretty well for tasks such as lifting, pushing, and pretending to fly around my apartment like an airplane.

ARMs, in and of themselves, are not bad things. giving them to people who can't afford them is.

WaltzingMathilda: ARMs, in and of themselves, are not bad things. giving them to people who can't afford them is.

If you know you're only going to own the house for the short term, it can be a "win-win".

If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

AuntofDogface: WaltzingMathilda: ARMs, in and of themselves, are not bad things. giving them to people who can't afford them is.

If you know you're only going to own the house for the short term, it can be a "win-win".

they are also good for short term cash flow for people who can afford the hit in 5, 7 or 10 years when the loan expires.

also, those ARMs weren't from 5 or 6 years ago. i was offered one last summer.

My arm is about to adjust to a lower rate. Heh.

Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

Just did a re-fi on my house for 4.6% and took a few years off of the loan in the process. A variable right now would be insanity. Rates can only go up from here.

We have learned NOTHING!

Tell me about those bonuses, Goldman?

And Citi just sent me an offer for a $6,000 "whatever you need it for" loan! Where do I sign up?

Dinki: We have an ARM, have had it for 10 years. It's currently at 3.5%

I guess it depends on the bank.

Yeah, my ARM that I've had for 6-years just reset to 3.5% too... I guess it really does pay to be financially responsible too...

Electric Boogaloo!

NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

So true. The avalanche of "look how responsible I am with my money" posts are sure to follow.

I also enjoy playing "spot the real estate agent" in these threads.

Hello.

The banking casino is open again!

The short-term memory of the unwashed, which was once fixed on fear will return to greed.

Calling all new irresponsible suckers...line up to the left!

In laymans terms, rates aren't going up just yet...but beware - once there's an ample supply of people suckered in....;-)

A credit score of 720 is pretty good and that should translate into a lower risk profi... eh, who am I kidding. This is bad idea. Any builder or bank offering ARMs at this point should have their FDIC membership removed and never get another dime of bailout money.

NightOwl2255

and a large penis or breast (which ever applies).


So... just the one, then?


*goes shopping on Amazon*

Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

Sounds exactly like a few people I knew that went under. You just DON'T know what the next five years will be like.

/ARM?

What economy melting ARMS might look like, BROTHER!

sigdiamond2000: NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

So true. The avalanche of "look how responsible I am with my money" posts are sure to follow.

I also enjoy playing "spot the real estate agent" in these threads.


I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

How exactly does one "know" what things will be like 5 years from now?

/The Stupid. It burns.

There's nothing wrong with an ARM.

Provided it has a cap on the interest and it has a cap on the size of the adjustment and you have an honest banker who explains what your max payment could end up being.

/Credit Union FTW.

ARMs CAN be a great deal. You just have to make sure the terms are agreeable, just like any contract/mortgage. If you're going to sell your house at some point soon, maybe an ARM is better for you. If you re-finance at the end of the terms, you are going to end up taking a step backward, but if you're smart about it and have a reputable lender, this isn't any different than a normal re-financing... though you are at the whim of the market as far as the specifics... good deals can still be found.

DO NOT DO LENDING TREE... Someone(s) WILL call you within minutes of your application and then they will never stop, and who knows what "bank" they represent or where they're located.

BabyShaker: I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

It makes some people feel bad about themselves.

Whodat?: We have learned NOTHING!

Tell me about those bonuses, Goldman?


Of course we learned something.

If you're a big bank, the government will bail you out, no matter what you do. Why should they change their business model?

Is this also a good place for me to mention that my 401k is only about 3 grand away from being equivalent to stuffing my money in a mattress?

NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

I'd also like to point out that I don't own a television, I built my own computer for $75 in parts and whatever woman you find most desirable has unacceptably sharp knees.

BabyShaker: I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

There's nothing wrong with being proud about it at all. But bragging about it on an internet forum is sort of pathetic.

Spindle: Is this also a good place for me to mention that my 401k is only about 3 grand away from being equivalent to stuffing my money in a mattress?

Yeah, this does seem like a good place to mention that you are irresponsible with your money.

I have a 30 year fixed at 4.75 and that's the right mortgage product for me...HOWEVER it really pisses me off to see IDIOTS - and there's no other word for it really, these people are IDIOTS - who vilify ARM's like they're the ebola virus. They're a mortgage product people - that's it. One of the many choices available to us and extremely appropriate in particular situations. There are many examples when they are absolutely the perfect mortgage product for a given situation. Were they overused? Definitely. Were they purchased by people who had no reason using on? Undoubtedly. Did unscrupulous bankers push people into ARM's when it was the wrong product for the client? Without question. That's on them. There's nothing wrong with ARM's under the right circumstances and they are often the best choice. If you don't understand which mortgage product would be the best one for your own situation and why you should wait to buy a house until you do.

tjfly: Any builder or bank offering ARMs at this point should have their FDIC membership removed

All right - one of the idiots I was talking about earlier

The important part is the "to buyers with credit scores of at least 720."

That's the responsible part of responsible lending. The vehicle didn't cause the crash.

BabyShaker:

I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

These threads tend to fill up with anecdotal stories from people who aren't one of the millions of people that have been thrown out of work in the last year. In short, most people are "financially responsible" when everything is hunky dory.

Don't we have the RIGHT to bear arms? How dare the banks take those loans away from us?!

ARMs have been around for a long time, they didn't change and become suddenly evil in the last few years.

The type of people who were being allowed to GET them changed, which was the problem.

the_sidewinder: /ARM?



//ARM?

Well when the Fed swoops in to bail you out due to your irresponsible behavior as a bank you have no risk. In fact in a way the banks are rewarded for their greed by having dibs on my tax revenue.

Arms themselves aren't bat. Having people plan their finances on the low portion of an initial arm and being to stupid to realize that it could be a problem is.

*clears throat*

I just paid off my mortgage in less than five years by scamming old people into sending money to "Nigeria." I have a 40' yacht with two 60" flatscreen televisions that I only use to view high-quality porn. No credit card debt, no student loans. People who can't afford to be rich are scumbags.

/how was that?

Maxor: Arms themselves aren't bat.

ARMs are very useful financial instruments in certain situations and certain markets. If you're expecting rates to go down to warm up a cooling market or if you're planning on doing a refi (or sale) around the time the the special rate expires you can save a pile of money.

ARMs aren't a bad thing any more than a hammer is a bad thing even though you can smash someone's brains out with a hammer. If you're buying something you'll be able to afford with the payments where they'd be when at the cap they're not even really that risky.

Spindle: Is this also a good place for me to mention that my 401k is only about 3 grand away from being equivalent to stuffing my money in a mattress?

heh, mine too. My annualized rate of return for the last 10 years is 1.3%, it's lost money vs. inflation. I hope it recovers in the next 15 years before I need it.

/at least the company matching makes it worth having. 25% biatches!

credit score of at least 720...

I wasted my time reading that.

rocketkitty: *clears throat*

I just paid off my mortgage in less than five years by scamming old people into sending money to "Nigeria." I have a 40' yacht with two 60" flatscreen televisions that I only use to view high-quality porn. No credit card debt, no student loans. People who can't afford to be rich are scumbags.

/how was that?

2/10

Too funny to be seen as a troll....

If Toll Brothers truly only has a 1.7% default rate on their mortgages in this environment then more power to them; they clearly know how to screen their applicants. I'm willing to bet as part of their process they measure the applicant's ability to repay should the loan adjust upward to it's maximum potential.

It's not the adjustable rate mortgage that has caused all of these problems we're faced with today; it's giving them to people regardless of their credit history without verifying their stated income and ability to repay the loan in the first place.

there is nothing wrong with arm's. It's the liberal's in congress who believe everybody should be equal, therefor forcing banks to loan to people who suck at life.

Wizzin: BabyShaker:

I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

These threads tend to fill up with anecdotal stories from people who aren't one of the millions of people that have been thrown out of work in the last year. In short, most people are "financially responsible" when everything is hunky dory.

There's more to being financial responsible than just picking the right credit card or negotiating the best mortgage terms. In fact, overall, it really doesn't make much difference what type of credit people have -- the idiots who live beyond their means are always going to run into trouble, even with the best borrowing terms in the world.

Financial responsibility includes things like planning for potential unemployment, a medical problem or other unseen expenses, natural disasters, etc.

Oh, and it also includes things like ensuring you actually have marketable skills in case you do lose your job and have to find another one.

Even when things aren't "hunky dory", the responsible people usually end up just fine because they've planned ahead.

Next round of foreclosures and financial idiots will soon be realized. Many people with home equity lines of credit (2nd mortgage in many cases) will notice that the current rate they are paying is less than on their first mortgage. A number of people will also notice that they have room under their line of credit to absorb the balance of their first mortgage and consolidate all to a single payment at a lower rate. For now. Rates on lines of credit are generally of the ARM variety and this has the potential to hurt them in the long run. Bailout II soon to follow. We need to stop paying for stupid. Let stupid suffer the consequences.

///The ARM?

Hey, remember those ARMs from 5 or 6 years ago that did their part to melt down the economy?

swing and a miss...how 'bout this; "Hey, remember those people who signed up for ARMs 5 or 6 years ago, didn't understand what they were signing up for, and did their part to melt down the economy by bailing on their mortgage payment commitment, expecting the federal gov.to bail them out, destroyed their properties before leaving them, or blamed lenders for preying on their stupidity, rather than take some responsibility themselves?"

AuntofDogface: WaltzingMathilda: ARMs, in and of themselves, are not bad things. giving them to people who can't afford them is.

If you know you're only going to own the house for the short term, it can be a "win-win".

Sure it can if the housing market doesn't collapse and you're able to unload it in time with out taking a loss...

Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

That naive view is exactly what got millions of people in trouble. You should only get an ARM if you can afford the payment at the capped rate WHEN you get the ARM. Everyone was lulled into thinking that low interest rate credit was universally available and would be forever. In five years interest rates might be in double digits, or credit may be very hard to come by, there's no way to know.

Englebert Slaptyback: NightOwl2255

and a large penis or breast (which ever applies).


So... just the one, then?


*goes shopping on Amazon*

Well played you magnificent bastard. I knew I had you favorited for a reason.

the_sidewinder: /ARM?

Thank you so, so much.
You better be handing out newsletters!

/ARM: What a netbook is SUPPOSED to be. Not these $399 Dell BullS&*( things that run windows like a snail runs a marathon.

No thanks.

/Have a fixed rate at 4.75%.

NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

Why not have both?

BabyShaker: I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

No reason other than it makes you sound douchy. If you're cool with that and the derision that comes with it, then fire away.

BTW, and ARM is not the same animal as a balloon mortgage. With the rates staying in the sub 5% range, no one with an ARM is having problems. It's the people who got a 2.5% rate that jumps to a 8% rate that are in trouble.

I knew ARM controlling 95% of the mobile cpu market would spell doom for us all.

But did they heed my warnings? No.

Thunderpipes: NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

Why not have both?

I hear there is some pron out there like that but I wouldn't know.

/Deletes temp files...

What about Wild ARMs?

JohnBigBootay: I have a 30 year fixed at 4.75 and that's the right mortgage product for me...HOWEVER it really pisses me off to see IDIOTS - and there's no other word for it really, these people are IDIOTS - who vilify ARM's like they're the ebola virus. They're a mortgage product people - that's it. One of the many choices available to us and extremely appropriate in particular situations. There are many examples when they are absolutely the perfect mortgage product for a given situation. Were they overused? Definitely. Were they purchased by people who had no reason using on? Undoubtedly. Did unscrupulous bankers push people into ARM's when it was the wrong product for the client? Without question. That's on them. There's nothing wrong with ARM's under the right circumstances and they are often the best choice. If you don't understand which mortgage product would be the best one for your own situation and why you should wait to buy a house until you do.

Are you blind? 5 year Option ARMS and Neg AM loans that were written being between 04 and 07 are now just starting to come due..and it will make the sub prime collapse look small. $750B in these loans are coming due over the next 3 years. These are the white collar guys who bit off more than they can chew. Now they are not only below water, but many of them are UNEMPLOYED. Wait until the next wave of foreclosures hit... TIMBER!!!

... but that's okay, you go on believing that everything's okay and that people who think ARMs don't cause housing bubbles are ill informed.

@rlbgator - That's an awesome book.

The Corporation: I knew ARM controlling 95% of the mobile cpu market would spell doom for us all.

But did they heed my warnings? No.

Who's the ARM of which you speak? Would it be a corporation or, maybe, The Corporation?

Englebert Slaptyback: NightOwl2255

and a large penis or breast (which ever applies).


So... just the one, then?


*goes shopping on Amazon*

User Gorgor has been banned from responding to this post

grizzlyjohnson:
BabyShaker: I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

No reason other than it makes you sound douchy. If you're cool with that and the derision that comes with it, then fire away.


This. Really it is douchy to brag about things. It be like me mocking BabyShaker for not having the fiscal skills to buy their houses in cash like some of us can. No matter how great you view yourselves, you'll going to be looked as irresponsible and no good by someone else or just showing off.

4.3BN in profits, so I am getting a kick out of these new sucker mortgages.

I have a 5/1 ARM in its 7th year.

It is about to readjust in two weeks from 5% to 3.2%.

grizzlyjohnson: Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

That naive view is exactly what got millions of people in trouble. You should only get an ARM if you can afford the payment at the capped rate WHEN you get the ARM. Everyone was lulled into thinking that low interest rate credit was universally available and would be forever. In five years interest rates might be in double digits, or credit may be very hard to come by, there's no way to know.

Hell, even a basic understanding of the costs of selling a home wouldn't hurt if you approach house buying as three year investment.

I just relocated and the people we bought the house from lost their shorts in large part because they didn't consider the costs of selling a house, even though they knew they would only be there for probably 2 years.

On a $300k house, that's about $18k in realtor fees alone, much less all the other random costs involved. They also didn't help matters in that they did absolutely no improvements or maintenance on the house even though it was already starting to need it. All this in an area not near as 'hot' as the ones that were in the news two years ago.

Cool! Does this mean my home value will skyrocket soon?

dead_dangler: Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

How exactly does one "know" what things will be like 5 years from now?

/The Stupid. It burns.

Are you a Global Warming Economic Recovery Denier?

But I need an ARM to give me a DUTCH RUDDER.

Hey if banks want to do these risky ARMs, knock yourself out.

Right after you sign this agreement you won't take a dime of taxpayer money should something go wrong with your cunning plan.

To qualify, home buyers must have credit scores of at least 720.

Dammit! I want another bubble.

People that have score of 720 or higher might actually use these in the right way.

/definite maybe.

ClarkstonCracker: there is nothing wrong with arm's. It's the liberal's in congress who believe everybody should be equal, therefor forcing banks to loan to people who suck at life.

This.

There is a little problem in this country of people taking PERSONAL responsibility for their actions.

I know someone who lost their home because of an ARM reset. When his mortgage payment went up, his response was to just stop paying his mortgage and start playing stupid about how things work.

It's a tough pill to swallow for those of us who make personal responsibility a priority in our lives.

tjfly: Are you blind? 5 year Option ARMS and Neg AM loans that were written being between 04 and 07 are now just starting to come due..and it will make the sub prime collapse look small. $750B in these loans are coming due over the next 3 years. These are the white collar guys who bit off more than they can chew. Now they are not only below water, but many of them are UNEMPLOYED. Wait until the next wave of foreclosures hit... TIMBER!!!

... but that's okay, you go on believing that everything's okay and that people who think ARMs don't cause housing bubbles are ill informed.

What do you mean 'come due'? Do you mean they're going to revert to adjustables after the fixed period is over? Duh - that's how they work. That said, rates are still incredibly low right now. There's tons of consumers who are actually seeing their rates GO DOWN when the fixed period is over. Either way, I don't get your point and you completely missed mine - which was simply that ARM's are fine products for people in particular situations. Does that mean there won't be people who get in trouble with them and have a lot of pain ahead? No - of course not. Lots of people bought the wrong product. Again, duh. There are tons of reasons to buy an ARM. Let's say you're moving to an area, want to buy a house but you know you're going to be moving in five years? Well, then an ARM is a perfectly reasonable choice. Or let's say you want a starter home now but you have have a large sum of money coming at some specific point in the future and you know you'll be trading up. Why pay 30 year rates on a 7 year loan? The danger in ARM's - which you completely ignored - frankly I think that's because you don't actually know how they work - is when you get into a property you intend to stay in and can only afford it because of the lower ARM rate (say on a 5/1) and the five years pass - then when we're in a higher rate environment (which we are not in now) your payments could go up quite a bit when the adjustable hits. Of course that's a danger. And why that person shouldn't have been in an ARM in the first place. Once again, duh. That doesn't mean the mortgage product is evil, just that it was used improperly. It's a tool - it has a proper use and it can be used improperly as well.

Sky Masterson: It is about to readjust in two weeks from 5% to 3.2%.

according to tjfly you're about to get wiped out from the coming superstorm of having to endure lower mortgage payments. That said, you're lucky rates are what they are today. If you have a job and decent credit it's probably not a horrible idea to look into a long term solution if you plan on being in the house a long time. Rates will definitely be going up - the question is when, and by how much. You don't want to get trapped in a situation where rates are rising fast but you can't refi.

limeyfellow: grizzlyjohnson:
BabyShaker: I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

No reason other than it makes you sound douchy. If you're cool with that and the derision that comes with it, then fire away.


This. Really it is douchy to brag about things. It be like me mocking BabyShaker for not having the fiscal skills to buy their houses in cash like some of us can. No matter how great you view yourselves, you'll going to be looked as irresponsible and no good by someone else or just showing off.

That and you're just looking like you're pretending you never made any mistakes or went through any learning process. Here in Mormonland I know lots of people who followed the established social template, mission at 19, get married when you come back, get a degree, get a job, buy a house, have as many kids as you can, don't buy things on credit. I suppose there are folks out there that never got themselves into financial trouble, or any kind of trouble, but I'd never trade my life experiences for perfect fiscal responsibility from the get go.

Sure I'm in pretty good shape now that I'm older, but only as a result of plenty of hard knocks from school of same. But then it would be just as douchy for someone like me to brag about picking people's teeth out of my knuckles or having been shot at or seeing the inside of a mexican jail.

Am I the only one that finds stories about successfully conforming to society's expectations sad and boring? Or the people that are proud of them lame and pathetic?

JohnBigBootay: Sky Masterson: It is about to readjust in two weeks from 5% to 3.2%.

according to tjfly you're about to get wiped out from the coming superstorm of having to endure lower mortgage payments. That said, you're lucky rates are what they are today. If you have a job and decent credit it's probably not a horrible idea to look into a long term solution if you plan on being in the house a long time. Rates will definitely be going up - the question is when, and by how much. You don't want to get trapped in a situation where rates are rising fast but you can't refi.

Do they still do those convertable ARMS where you can lock in a fixed interest rate?

Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

Well, your crystal ball had better be really, really good to determine where the rates will be and what your situation is 5 years from now...

NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).


I've got a large breast...but only the one. I must be a freak.

But on a side note, we should all be HAPPY that the guv-mint is giving us the RIGHT to bear A.R.M.s. They're just someone else's A.R.M.s that we have to pay for because the numbnuts got way in over thier head.

I think I'll keep my pair of grizzly bear arms on my wall, thank you very much.

Spindle: Is this also a good place for me to mention that my 401k is only about 3 grand away from being equivalent to stuffing my money in a mattress?

That's way better than mine! At least if I had stuffed it in my mattress, the value wouldn't go DOWN :(

NightOwl2255:and a large penis or breast (which ever applies).

Hey! I Thailand there are some people that have both!

//Well, that happens in the US, UK and other places that have fat people also, but those guys aren't very sexy

Doh! -- In Thailand

I laugh at suckers who pay mortgages. Im doing just fine in my moms basement.

BabyShaker: sigdiamond2000:So true. The avalanche of "look how responsible I am with my money" posts are sure to follow.

I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

Well, totally incompetent, fiscally irresponsible people don't have credit cards either....

Iwouldhitit: NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

I'd also like to point out that I don't own a television, I built my own computer for $75 in parts and whatever woman you find most desirable has unacceptably sharp knees.

You forgot to mention how you paid for your car in cash, have at least a year's salary in savings for potential unemployment...and how your children are so perfectly behaved, random strangers compliment you on your superior parenting skills.

/NTTAWWT

Wait, are we talking about regular ARM loans, or Ballonn ARM loans?

The former is simply a 20- or 30-year variable-rate loan that fluxuates from year to year, based in part on the Fed interest rate, and on market trends. It can be lower than a fixed-rate loan for several years, then be slightly higher few years after. These types of laons are best used when buying a home during a peak year, because the rate and monthly payments are more likely to go down as time passes. You can then refinance to a fixed-rate loan a few years later, once interest rates have dropped to level more acceptable for fixed-rate loans.

The latter is a loan that offers a deep-discount teaser rate, that suddenly balloons to a triple (or even quadruple) the teaser rate after a set amount of time. These are the high-risk loans that brought this country to the brink of disaster.

Bukharin: My arm is about to adjust to a lower rate. Heh.

Ditto. Mine dropped a point. The most it can change next year is to go back to where it was (which is still pretty low).

UHC2005

Well played you magnificent bastard. I knew I had you favorited for a reason.


I'm on someone's favorites list?? How about that! (seriously)

*does Numfar's dance of joy*

Am I missing something, or is ARM just another name for a variable-rate mortgage? Is there a difference of some kind?

tjfly: Are you blind? 5 year Option ARMS and Neg AM loans that were written being between 04 and 07 are now just starting to come due..

Boy, Am I ever glad that I refinanced the ARM I got when I bought my house in '04 in '06 (or was it '05) to a Fixed Rate Mortgage, just before the Mortgage market went FUBAR! I knew I had to refinance it to a Fixed, BEFORE it did the ARM thing and started adjusting, when I got it!

However, if I had waited another year to refi (it wasn't due to start adjusting for anther 1.5 years when I refied), I would of been screwed!

Fjornir: ARMs aren't a bad thing any more than a hammer is a bad thing

If you're going to use that analogy, I would liken ARMS to a bulldozer rather than a hammer in that pretty much anyone can use and should have access to buying hammer while a bulldozer is a more complex instrument that a vast majority of the population really doesn't need and, furthermore, can be more dangerous if used improperly or in the hands of those who shouldn't be using it.

A pay-option ARM is a supped-up bulldozer with spinners driving the wrong way on a freeway at 70 MPH. Are there some people that could potentially handle this? Sure, but the vast majority can not and should not be able to try to do so since their actions can affect the vast majority of us "sanctimonious" fiscally responsible people driving the correct direction on the freeway in a sedan.

Im renting, so im really getting a kick out of some of these replies.

Perducci: Oh, and it also includes things like ensuring you actually have marketable skills in case you do lose your job and have to find another one.

That's not sufficient!

There are several (ex)colleagues of mine that were "laid-off" when my company decided to "off-shore" a lot of IT positions last year. They are all highly skilled IT professionals with BS (and some with MS) degrees and years of experience.

Most of them are still looking for jobs :(

grizzlyjohnson: douch

Oh, do you also have a pic of your "awesome looking", home schooled wife?

You'd better lock in a fixed rate soon because when the gov't is on the hook for all this money being printed, the fed will be forced to raise interest rates. They should've been 10-13% the last decade, not artificially lowered to almost 0.

ARMs are like owning guns or pitbulls. The responsible individual can handle these in a smart and safe manner. The problem is alot of dumbasses get these and it blows up in their face. Their dog attacks a child, they end up shooting their spouse twirling the gun like a cowboy, and their house goes into foreclosure because the rate shot threw the roof.

You just can't save some people from themselves, but I guess Fark would be a dull world if it were true.

NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

I have a large breast.

Singular.

Nuclear Monk: Hell, even a basic understanding of the costs of selling a home wouldn't hurt if you approach house buying as three year investment.

I just relocated and the people we bought the house from lost their shorts in large part because they didn't consider the costs of selling a house, even though they knew they would only be there for probably 2 years.

On a $300k house, that's about $18k in realtor fees alone, much less all the other random costs involved. They also didn't help matters in that they did absolutely no improvements or maintenance on the house even though it was already starting to need it. All this in an area not near as 'hot' as the ones that were in the news two years ago.

Because, apparently, dumping even more money into a house for improvements, when you know you will be moving in 2 years time is a financially good thing? Especially with the market conditions such that values are dropping and said "improvements" won't raise the selling price at all?

BabyShaker: sigdiamond2000: NightOwl2255: Flab: Is this where we brag about our fixed-rate mortgages, and making extra payments on the principal as well to shorten the mortgage duration?

Yes, this is the place. Also, no credit card debt, a gigantic 401K, a Roth IRA that dwarfs the GDP of most nations and a large penis or breast (which ever applies).

So true. The avalanche of "look how responsible I am with my money" posts are sure to follow.

I also enjoy playing "spot the real estate agent" in these threads.


I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

Because nobody really cares how well you're doing.
Now make with the cat pictures, puns, and photoshoppery.

grizzlyjohnson: Do they still do those convertable ARMS where you can lock in a fixed interest rate?

Never looked into a product like that. I'm primarily talking about the garden variety loan generally offered to regular folk. When the average guy goes into a bank the first products offered are generally fixed rate mortgages at 30/15 years or 5/,7, or even 10/1 ARM's whereby you get a fixed rates for say the first 5 (or 7 or 10) years and then it converts to a variable rate - something like LIBOR or COFI + 2% as an example. That said, there are many many different variations on this - I'm talking about the most common examples. If I had any advice to give I'd say the more complicated the loan structure is and the less you understand it, the less likely I'd think it to be a good option for you. As for 'interest only' mortgages I do think there's a time and place for them but they are few and far between and they are grossly overused.

JohnBigBootay: That's on them.

that's on US you mean, right????????moron.

You have got to be sh*ttin' me. Srsly? As I type this, someone in this country is losing their house RIGHT NOW because they did something stupid like take out an ARM to buy what they could not afford, helping to collapse the entire farking world economy in the process.

Now they want to do it again. This proves exactly how stupid people actually are.

/I hate people

NightOwl2255: The Corporation: I knew ARM controlling 95% of the mobile cpu market would spell doom for us all.

But did they heed my warnings? No.

Who's the ARM of which you speak? Would it be a corporation or, maybe, The Corporation?

You haven't heard of them yet because they don't want you to.

LOL. Thanks for the insight everyone.

Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

Do you know you'll have a job, or a job which pays at least as much in five years? If you don't know, they may not be a good idea. Many of the people who have defaulted on ARMs did so as the economy went to shiat and they lost their jobs, not just because the interest rates went up 3 or 4 points.

Not only that, why not buy the house you can afford now at your current salary (or don't if you can't afford it) instead of taking out some crazy-ass voodoo loan and hoping things change later so that you can refinance at a fixed rate?

rewind2846: Gwendolyn: If you know you'll be in a position to get a much better fixed rate in five years I think they are a good idea.

Do you know you'll have a job, or a job which pays at least as much in five years? If you don't know, they may not be a good idea. Many of the people who have defaulted on ARMs did so as the economy went to shiat and they lost their jobs, not just because the interest rates went up 3 or 4 points.

Not only that, why not buy the house you can afford now at your current salary (or don't if you can't afford it) instead of taking out some crazy-ass voodoo loan and hoping things change later so that you can refinance at a fixed rate?

I plan on buying a foreclosed property. Raleigh, NC for 50-100 foreclosed, or 100-200 regular sale.

Bo Giggity: Hey, remember those ARMs from 5 or 6 years ago that did their part to melt down the economy?

swing and a miss...how 'bout this; "Hey, remember those people who signed up for ARMs 5 or 6 years ago, didn't understand what they were signing up for, and did their part to melt down the economy by bailing on their mortgage payment commitment, expecting the federal gov.to bail them out, destroyed their properties before leaving them, or blamed lenders for preying on their stupidity, rather than take some responsibility themselves?"

subby here... I believe that's what I said, just in a much shorter sentence. Read deeply. :-)

rewind2846: Not only that, why not buy the house you can afford now at your current salary (or don't if you can't afford it) instead of taking out some crazy-ass voodoo loan and hoping things change later so that you can refinance at a fixed rate?

Whoa. That's crazy talk. Next you'll be telling me I should live within my means and only buy things that I can actually afford.

naris: grizzlyjohnson: douch

Oh, do you also have a pic of your "awesome looking", home schooled wife?

Wanna buy some?

Most people in this country have no idea what living within your means entails. They are like my 2 year old who wants what she wants when she wants it.

I would like to know how much the average person pays each year in interest payments. Getting out of debt and staying out of debt is something we should all aspire to.

Sure!! I'll take one! Why not?

I'll buy a brand new car, 7 rooms of furniture, and several LED TV's too.

When I can't afford it any longer, Obama and the taxpayers will help me out, I've got nothing to lose!

ARMs haven't gone away. they are standard offerings of all major mortgage lenders. just not usually at 3.75%.

rewind2846: You have got to be sh*ttin' me. Srsly? As I type this, someone in this country is losing their house RIGHT NOW because they did something stupid like take out an ARM to buy what they could not afford, helping to collapse the entire farking world economy in the process.

Now they want to do it again. This proves exactly how stupid people actually are.

/I hate people

I've had a couple of ARMs and it turned out just fine. If you know what you're getting into, and figure out what the payment is going to be when the rate adjusts, and you don't buy more house than you can afford, they're smart because they save you a lot of money up front when you buy a house and you're generally putting out money left and right. Like someone said above, it's not the loan that killed the economy, but the misuse of it. It's really not that complicated to understand an adjustable rate mortgage. Also it's really not that hard to understand that the mortgage broker trying to sell this shiat does NOT have your best interests at heart.

farkinawsome: that's on US you mean, right????????moron.

I find you to be very elegant, reasonable, and I think your rebuttal is extremely pervasive. I'm certain that you have an excellent grasp of the technicalities related to the matters we're discussing here and I have no doubt you are quite effective at whatever it is you do down there.

not2conceited: I would like to know how much the average person pays each year in interest payments. Getting out of debt and staying out of debt is something we should all aspire to.farking pinko commie.

JohnBigBootay: There's nothing wrong with ARM's under the right circumstances and they are often the best choice.

And this is part of the problem... no matter what humankind invests, there will be someone, somewhere, somehow who will figure out a way to use it for purposes either that are stupid or evil or both.

People set up charities to scam other people who want to donate to worthy causes. Bernard Madoff stole billions from his best friends for decades. Credit card companies... well, basically everything they do.

If lending institutions are going to make ARMs one of the products they sell, they should treat them like responsible gun owners treat their firearms... locked in a safe and unloaded, with the bullets locked away elsewhere so that children and other irresponsible persons don't get hold of them. They are much too dangerous to be tossed out like candy from a broken pinata.

Whatever the regulations are for fixed rate mortgages should be doubled for voodoo loans, with much harsher penalties for banks who don't follow them and customers who don't pay attention.

no matter what humankind invents

/FTFM

TheSelphie: What about Wild ARMs?

GodDAMN that was a great game.

SlothB77: ARMs haven't gone away. they are standard offerings of all major mortgage lenders. just not usually at 3.75%.

Nor are they new. I bought a house 15 years ago with an ARM and I don't think they were new then.

rewind2846: You have got to be sh*ttin' me. Srsly? As I type this, someone in this country is losing their house RIGHT NOW because they did something stupid like take out an ARM to buy what they could not afford

Lots of folks losing their house right now. Lots of folks signed up for more than they could afford. But that has fark-all to do with ARMS - people would be in the same damn boat with a fixed mortgage. ARM's resetting right now are generally NOT making payments rise and if they do, not much. If you bought too much house or lost your job you bought too much house or lost your job - the loan structure doesn't have a rat's ass to do with it at present because rates are really low right now. It COULD cause problems later - I dare say it WILL - rates have to go up. But ARM's themselves are not the problem right now. Also, you are correct to blame people who bought, but you seem to be letting the banks completely off the hook for writing irresponsible loans. banks have a legal fiduciary responsibility to their shareholders to properly vet loan applicants and they abdicated this responsibility - the blame shoudl fall on BOTH parties, but primarily on the banks who did not follow their own rules.

So...

1) ARMs themselves aren't the problem, it's the people who use them, be it lenders, brokers, and borrowers.

2) Repackaging and reselling loans isn't a bad idea by itself, it's the people running the companies which took part in it.

Well - I guess I'm a little sick of hearing what isn't the problem. I tend to agree that ARMs can maybe be useful sometimes. But it's irresponsible to continue to let them exist when the lenders, brokers, and borrowers are improperly incented to misuse or misoffer them. You can't just set up a system with many moving parts, inspect all the parts individually, and conclude that yes all of them are OK if used properly.

ClarkstonCracker: It's the liberal's in congress who believe everybody should be equal, therefor forcing banks to loan to people who suck at life.

rewind2846: If lending institutions are going to make ARMs one of the products they sell, they should treat them like responsible gun owners treat their firearms... locked in a safe and unloaded, with the bullets locked away elsewhere so that children and other irresponsible persons don't get hold of them.

Interesting analogy and I was going to make a similar one. One often hear gun rights supporters (and I support 2nd amendment rights) often say we don't need new laws, we need to enforce existing laws. I totally agree. ARM's aren't the problem - banks granting loans to people they should not have loaned money to in amounts greater than they should have loaned out is the problem. If they had followed their own existing credit guidelines our mess would be much smaller. But when real estate was screaming no one wanted to miss the boat so they greatly relaxed their standards or threw them out the window altogether.

Sweet. Now maybe I can take my negative credit score (thanks to that lying, cheating, whoring ex-wife who also killed the local Beauceant chapter with the explicit consent of the York Rite) and get myself a modest house of my own design. I have no problem with being my own GC and framing contractor. Who know, it might actually happen. I might also crap out a cold fusion reactor.

True story: A mortgage broker we interviewed circa 2006/2007 was recommending that we take out a bigger loan than we would otherwise have wanted, and invest the balance in some financial products he claimed would pay a higher % than our interest rate.

(!)

I didn't ask too much about the financial products themselves - though I think he said the yield was 11% and upwards - because I told him that we weren't interested in increasing our risk in this manner, and I thought it was a bad idea. He actually tried to convince me that it was _lowering_ my risk.

(!)

I was going to mention that he does business out of Los Altos, CA, but it turns out that his website is defunct.

ClarkstonCracker: It's the liberal's in congress who believe everybody should be equal, therefor forcing banks to loan to people who suck at life.

I would say enabling banks to make risky loans, when said risk is then transferred to Fannie or Freddie does not help. Ultimately, the home buyer that looks at the house he really can't afford, but decides he can pay the teaser rate and will figure the rest out later is to blame.

emetib:

1) ARMs themselves aren't the problem, it's the people who use them, be it lenders, brokers, and borrowers.

Absolutely true. An ARM is a perfectly legitimate mortgage product, and frankly an extremely useful one in many cases. Look - what difference does it make whether or not you default on an ARM or a fixed rate mortgage? the answer is none. Frankly I think lots of people say ARM when they mean to say "Interest Only". Two completely different things. ARM's are not a problem in a low rate environment and I don't know why people are focusing on them. They WILL become a problem when rates go up - they just aren't now.


2) Repackaging and reselling loans isn't a bad idea by itself, it's the people running the companies which took part in it.

repackaged credit default swaps are a HUGE problem and we got here because the industry was almost completely unregulated and the ratings agencies were asleep at the wheel. we allowed products to be created which no one understood - they built an economic time bomb that was bound to go off as soon as real estate prices went down and no one told them they couldn't do that. Somewhat akin to a life insurance guy selling a million dollar policy on one person - to a thousand different people but collecting premiums only sufficient to pay ten of them if I actually died. Everything's great when I'm alive and the agent is collecting a premium from a thousand different people - not so great when I die and he has to pay the death benefit but only has 1% of the money he needs. Insurance agents aren't allowed to do that - it's against the law and it's regulated. Credit default swap sellers had no such oversight.

Loreweaver: Wait, are we talking about regular ARM loans, or Ballonn ARM loans?

The former is simply a 20- or 30-year variable-rate loan that fluxuates from year to year, based in part on the Fed interest rate, and on market trends.

The latter is a loan that offers a deep-discount teaser rate, that suddenly balloons to a triple (or even quadruple) the teaser rate after a set amount of time.

And both of them involve one crucial factor - speculation. When you take out either of these loan products, you are speculating that interest rates will be lower at some future time so that you can afford to refinance at a rate you can actually afford. With a fixed rate there are no "what ifs" because you are buying what you can afford according to what you make right now, with only the normal variables that most people have in their financial lives like possible job loss, a high cost illness, and so on.

Speculation is what makes bubbles. Bubbles are bad, except when they are in soda.

What's wrong with ARMs?

We've gotten a 5 or 7 year ARM every time we lived in a house we planned on moving out of. ARMs are a GREAT product, provided you don't go around selling houses to people who are only getting ARMs because they can't afford the payments on a fixed mortgage.

If any of you Farkers are dumb enough to buy one of those things, I know a hot African chick with big tits and $16 million she would like to stash in your bank account.

Falin: What's wrong with ARMs?

We've gotten a 5 or 7 year ARM every time we lived in a house we planned on moving out of. ARMs are a GREAT product

Provided you know your time frame and have some cushion you are precisely who the product is designed for. Again, why pay rates for 30 year money when you're only borrowing for 5 years?

olddinosaur

If any of you Farkers are dumb enough to buy one of those things

there are few things on fark that give me a bigger laugh than your financial advice

By the way I personally have a 30 year fixed at 4.75 because it's the proper product for me and my situation. You people who want to throw out the baby with the bathwater crack me up. It's reactionary and shortsighted. Do you throw away your hammer when you smash your thumb or do you resolve to be careful with the hammer next time?

olddinosaur: If any of you Farkers are dumb enough to buy one of those things, I know a hot African chick with big tits and $16 million she would like to stash in your bank account.

ARMs have saved me a good bit of money over the last 10 years or so.

StandsWithAFist: You forgot to mention how you paid for your car in cash

I paid mine off in less than six months. Close enough?

Hosebeatings: I paid mine off in less than six months. Close enough?

Deadbeat - I paid cash up front.

Arms? Fannie Mae meltdown?? Democrat Barney Frank would like a word:



Link (new window)

olddinosaur: If any of you Farkers are dumb enough to buy one of those things, I know a hot African chick with big tits and $16 million she would like to stash in your bank account.

this is like walking into a sports thread and saying "dude, there is no better quarterback on earth than Michael Jordan" or a comic book thread and saying "the best part about Superman was that he drove that kick ass Batmobile"

i.e., you clearly have absolutely no idea what you're talking about

WaltzingMathilda: olddinosaur: If any of you Farkers are dumb enough to buy one of those things, I know a hot African chick with big tits and $16 million she would like to stash in your bank account.

this is like walking into a sports thread and saying "dude, there is no better quarterback on earth than Michael Jordan" or a comic book thread and saying "the best part about Superman was that he drove that kick ass Batmobile"

i.e., you clearly have absolutely no idea what you're talking about

michael jordan didn't drive the batmobile until season 4, dumbass.

Perhaps it's just time to stop gauging our economy on destructive things (urban sprawl & building houses for people who can't afford them) and work on getting some constructive manufacturing jobs back into this country? I for one would love to see China fall back into its well deserved hell-hole status. Watching wal-marts close would also be a big bonus for the country.

dead_dangler: BabyShaker: I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

It makes some people feel bad about themselves.

Awesome, clears that up.

Now can you explain why you should be so proud of being fiscally responsible that your need to post it on FARK?

/Reminds me of the Chris Rock skit

I've been a mortgage banker for 23 years.
ARMs are stupid loans.
If you can't afford a fixed rate loan, get a cheaper house, or rent.
They should be illegal.

biffstallion: Arms? Fannie Mae meltdown?? Democrat Barney Frank would like a word:
Link (new window)

I really don't see why certain people want to try and heap this at Frank's feet while ignoring the real criminals in all this mess - banks which lent money to people to buy houses they couldn't afford, and sellers who screwed up the market thinking they could retire on the proceeds of the sale of their house at someone else's expense. No one held guns to these corporate heads to make them loan money for houses which were way overpriced, or to the people who bought houses ten years ago for 25% of what they are trying to scam someone else out of now... they did it because they were greedy and as long as real estate prices went up, they couldn't lose - foreclosure or not.

Some here have said, "Well, Barney Frank and the other democraps changed the law so that these banks could do this" (channeling inner freeper)... but if the laws against murder, rape, child molestation, rape and assault were changed tomorrow, would you wake up monday morning with your machete out and your pants down and stroll to the local schoolyard? Do you refuse to commit certain acts only because there are laws against them? These banks were just waiting to take insane risks for more profit, and once the loopholes in the law were opened, they did just that. Corporations are whores which put profit above all else, even common sense.

The rules were altered so that banks would more easily do business with underserved (due to racism, neglect and other factors) neighborhoods, with the logic that more homeowners can equal lower crime rates, better schools, an expanded tax base, and higher standards of living there. All of this was predicated on a NORMAL housing market, not a bubble.

Instead, the greed of both the banks and the sellers kicked in, and prices shot through the roof as both groups saw the easy money... sellers knew that banks would lend people money to buy their houses no matter how high they jacked up the price, and banks knew that even if the buyer defaulted they would have a property on their books which might sell for twice what they lent the buyer who defaulted. Neither group could lose, or so they thought.

Lawmakers do have their share of the blame, don't get it twisted... regulatory agencies which looked the other way as long as people were making money, lawmakers who didn't call corporations on the carpet as long as the campaign contributions kept coming in, and a general "let business do what it wants" attitude in Washington for most of this decade have resulted in the biggest and most complex economic clusterf*ck in almost 90 years. Frank is just too convenient a whipping boy... but when you're the party of "NO" (No ideas, NO substance, NO plans, NO common sense) I guess you go with what you've got.

WaltzingMathilda: ARMs, in and of themselves, are not bad things. giving them to people who can't afford them is.

Yup. That was the crux of the problem all along: people biting off more than they could chew. The ARM thing just caught a few folks who were right on the borderline. Stupid people do stupid things.

hitlersbrain: Perhaps it's just time to stop gauging our economy on destructive things (urban sprawl & building houses for people who can't afford them) and work on getting some constructive manufacturing jobs back into this country? I for one would love to see China fall back into its well deserved hell-hole status. Watching wal-marts close would also be a big bonus for the country.

So we shoud manufacture parts for houses that aren't going to be built or products that won't be sold to the people best suited to afford them?

What version of dumbass are you anyhow?

That actually a pretty good deal - as long as you're not stretching to get people to qualify. In 7 years you can pay down a lot of principal with the difference between that and a 5.5% fixed. And inflation will have taken care of the difference in payment amounts by that time.

This all assumes, of course, that you're giving this loan to someone with a stable job and at least 2 brain cells to rub together - and has had the ability to save up at least 10% for a down payment + closing costs + buffer fund.

emetib: True story: A mortgage broker we interviewed circa 2006/2007 was recommending that we take out a bigger loan than we would otherwise have wanted, and invest the balance in some financial products he claimed would pay a higher % than our interest rate.

(!)

I didn't ask too much about the financial products themselves - though I think he said the yield was 11% and upwards - because I told him that we weren't interested in increasing our risk in this manner, and I thought it was a bad idea. He actually tried to convince me that it was _lowering_ my risk.

(!)

I was going to mention that he does business out of Los Altos, CA, but it turns out that his website is defunct.

This is exactly why our economy can't have nice things.

There's a lot of talk in this thread about the "blame" due to the purchaser of the adjustable/variable rate mortgage and not nearly enough attention paid to the wolf-like practices of lenders and commissioned brokers, some of whom would do ANYTHING to get that loan shoved down the throat of the buyer who *gasp* has a trusting nature. Spamming "caveat emptor" does not excuse liars and cheats who focus on shafting others under the cover of some novel/popular financial instrument.

I knew a guy who worked at Countrywide for a while and according to him, there was definitely an "at-any-cost" attitude in their mortgage sales depts. Focus was on getting the highest commissions and no-one really cared how they did it. And when I was in college, you should have seen all the credit card companies on campus whose reps KNEW FOR A FACT that most of their marks would overspend and owe tons of fees. Banks have instituted similar fees because it is now PROFITABLE for their customers to have insufficient funds. And then we have Enron and Madoff and the teflon attitude of Goldman Sachs...

It seems that this country is plagued by a willful doublethink that we are all "good" people at heart, but simultaneously that either this constant level of predation either doesn't exist or is actually ALLOWABLE based on blaming the victims ("they deserved it for being so dumb").

A psychologist would likely label this as the mark of sociopathy/psychopathy. We've got a market filled with psychopaths.

Ah, how sweetly I remember:

ECHOES FROM 2007: "----dinosaur, you are such a freaking troglodyte you belong in a cave! I will have you know, I just bought a 4 + 2 for $550 K at 1.9% and my payments are only $985, and I know this house will go up because houses always go up, never down---I know that because MY REAL ESTATE AGENT TOLD ME SO!! What could possibly go wrong?"

Well, ask me what could possibly go right, it's a shorter list.

First, your "fixed" rate turns out not to be so fixed when they flip the loan, so your 1.9% becomes more like 6.5%, your $985 payment has ballooned to about $2400, but I doubt your salary has kept pace, your $550 K house has crashed in value to $200 on the books but you might get $120 tops in a distress sale, but it is still being taxed like it was worth $550 and you owe $500 against it--or you could walk off if you wish, and try to rebuild your life when you are half a million in debt, and have the lawyers and bill collectors swarming all over your ass.

That about cover it?

The functional rule here is, the Lord giveth and the Lord taketh away, but Murphy will get your ass every freakin' time.

The Real Estate crash of 2008 was caused by people spending money they did not have to buy houses they could not afford from banks which should have known better, all in the hopes that some sucker investor would come along and buy something for three times what it's worth from a sucker loan holder who only paid twice what it was worth.

Fat chance.

For everyone else, what I said in 2007 still holds:

1. Buy the cheapest house you can possibly find.

2. Consider a real junker absolutely dirt-cheap, and fix it up; this is called "sweat equity."

3. Get ahead on your mortgage payments so you have a cushion in case something goes wrong, then pay the thing off as fast as possible.

4. Own it outright, then live there for at least a few years while you build up savings.

5. When you are ready to move up, you will be able to do so with a lot more confidence.

For the record, the worst economic downturn in the last 20 years has been a minor irritation to me, but it has been a disaster to millions of people, so I must be doing something right.

But strange thing: I haven't heard a peep out of those people who used to flame the hide off me in 2007; maybe they haven't got $20 a month to spare for wi-fi?

protectyourlimbs: dead_dangler: BabyShaker: I'm sorry, can someone explain just why I shouldn't be proud of being fiscally responsible??

It makes some people feel bad about themselves.

Awesome, clears that up.

Now can you explain why you should be so proud of being fiscally responsible that your need to post it on FARK?

/Reminds me of the Chris Rock skit

To make some people feel bad about themselves.

/you're not very good at this, are you?

olddinosaur: For the record, the worst economic downturn in the last 20 years has been a minor irritation to me, but it has been a disaster to millions of people, so I must be doing something right.

But strange thing: I haven't heard a peep out of those people who used to flame the hide off me in 2007; maybe they haven't got $20 a month to spare for wi-fi?

my only problem with your statement is you think your way is the only way, and that there is absolutely NO situation in which an ARM is a good idea ... simply stunning lack of curiosity on your part

Void_Beavis: hitlersbrain: Perhaps it's just time to stop gauging our economy on destructive things (urban sprawl & building houses for people who can't afford them) and work on getting some constructive manufacturing jobs back into this country? I for one would love to see China fall back into its well deserved hell-hole status. Watching wal-marts close would also be a big bonus for the country.

So we shoud manufacture parts for houses that aren't going to be built or products that won't be sold to the people best suited to afford them?

What version of dumbass are you anyhow?

Are you sure you responded to the right post?

Where did I say we would should manufacture parts for houses? A country builds its economy by exporting stuff, not building houses. Which of the handful of billionaires in China is going to buy our exports (if we had any that is). Building unneeded houses just jacks up our need to import gasoline, it does nothing for the economy.

olddinosaur: Ah, how sweetly I remember:

First, your "fixed" rate turns out not to be so fixed when they flip the loan, so your 1.9% becomes more like 6.5%, your $985 payment has ballooned to about $2400,

I have no earthly idea what you are talking about. But it ain't a fixed rate mortgage. Net of taxes( which you must pay whether or not you borrowed to buy the house) and minor adjustments in insurance my mortgage payment will be the same 25 years from now if I stay in the house that long.

What is "flip the loan' with respect to a fixed rate mortgage? You generally come in here with lots to say about money matters but your general understanding of economics in general and finance in particular is so weak it's difficult to even figure out what it is you're trying to say.

Look - I love the folksy wisdom. I have some of it on occasion too, but 'buy the cheapest house you can find' and 'own it outright for a few years'?

Now there's certainly some people who should 'buy the cheapest house you can find' but certainly your intellectual development has not been retarded to the point that you can't see that's not very good advice for everyone has it? Also your 'own it outright for a few years' chestnut isn't just stupid, it's really, really stupid. I mean sure, it would be great if I paid cash for my house, but that's simply not an option for oh, 98% of us. I know, I know - then only 2% of us should buy hoses. Good luck implementing your ideas grandpa - I do not want your newsletter. feel free to continue trying to confuse everyone else though.

Oh, and the 'math' you tried above? Check it - it's not what we call 'close'.

Okay Farkers, here's how it works:

1. You buy a house for $550 large, at 1.9% fixed, on condition that the interest MAY ABSOLUTELY NEVER BE INCREASED UNDER ANY CIRCUMSTANCES for as long as I hold the mortgage.

2. Also, there is a clause which says: If the loan is flipped, then the recipient MAY ABSOLUTELY NOT INCREASE THE INTEREST UNDER ANY CIRCUMSTANCES for as long as he holds the loan.

3. That seems solid enough; you sign.

4. Your original lender flips the mortgage, your payment stays the same; that is in the contract.

5. But the buyer flips it again, and snips off that troublesome rider saying he can't jack the rate. Now your interest goes through the roof, ands so does your payment.

All you have to do is assume that anyone smart enough to have $500 large to lend would not simultaneously be stupid enough to lend it at 1.9%, which doesn't seem like much of a stretch.

Taking out an ARM is like letting the banker sleep with your wife, so long as he doesn't have sex with her. Works all right for a while---but after a while he gets tired of just putting his arm around her, and wants to feel her up a little. Then he wants to finger her, then he wants to go a little farther---and before you know it, he is screwing the hell out of her, and it is your fault because you let her into his bed in the first place.

There's a guy on this thread who says he has been a mortgage banker for 23 years, let's be fair and let a pro judge my wisdom.


NYPete31: I've been a mortgage banker for 23 years.
ARMs are stupid loans.
If you can't afford a fixed rate loan, get a cheaper house, or rent.
They should be illegal.

hitlersbrain:
Where did I say we would should manufacture parts for houses? A country builds its economy by exporting stuff, not building houses. Which of the handful of billionaires in China is going to buy our exports (if we had any that is). Building unneeded houses just jacks up our need to import gasoline, it does nothing for the economy.

If an economy needs to export to grow, how do you explain the world economy growing? Exports to Mars?

The economy grows because money is a way of keeping score of wealth. Wealth grows by people producing useful stuff - i.e. increasing wellbeing. Growing more crops or making more widgets, as long as they're actually useful; unneeded stuff just clogs up warehouses.

What doesn't grow the economy is selling the same thing (a house, a .com stock) at a higher price than before, even though no actual value has been added. That way lies madness. And insanity.

If your ARM is resetting in the next 12 months, you might consider refinancing to get a fixed rate (or e.g. a 10/1 ARM so the first 10 years are fixed). Interest rates are pretty darn low at the moment, don't expect them to go much lower..

olddinosaur: . But the buyer flips it again, and snips off that troublesome rider saying he can't jack the rate. Now your interest goes through the roof, ands so does your payment.

that's illegal. all you have to do is sue if that happens. just because your loan gets sold doesn't mean the terms can change. i don't know what world you live in man.

What amazed me during my re-fi (closed in June) was that they offered me a loan with an LTV of 105%. I was flabbergasted anybody was still doing dumb shiat like that. ARMs are almost trivial in comparison to that level of stupidity.

olddinosaur: 1. You buy a house for $550 large, at 1.9% fixed,

OK, well, number one - there's no such thing. "Fixed rate mortgage" is a banking term. It has a meaning. No one is commercially selling a 1.9% fixed rate mortgage on residential housing. They do not exist.

5. But the buyer flips it again, and snips off that troublesome rider saying he can't jack the rate. Now your interest goes through the roof, ands so does your payment.

Ok - so you're saying someone can buy my fixed rate mortgage from wells fargo, sell it to party B, and then party B sells it to party C and party C unilaterally changes the terms of my loan. Got it. You don't think men landed on the moon do you?

All you have to do is assume that anyone smart enough to have $500 large to lend would not simultaneously be stupid enough to lend it at 1.9%

Completely agree. They won't on a 30 year fixed - never would for that matter. You find me 30 year money at 1.9 and I'll take all they'll give me and quit my job. 30 year treasuries are yielding 4.25. You figure it out.

Taking out an ARM is like letting the banker sleep with your wife

No, taking out an ARM is a perfectly reasonable thing to do for people who meet certain criteria and understand the terms and risks involved. they are the wrong mortgage product for lots of people - probably most. And it's the wrong product for me right now. But it's not the wrong product for all the people all the time. That's completely asinine.

Then he wants to finger her

Ok, that's really gross dude. Enough with the folksy fingering analogy

There's a guy on this thread who says he has been a mortgage banker for 23 years, let's be fair and let a pro judge my wisdom.

As long as you understand it's ridiculously easy to find a few thousand pros who would judge your wisdom differently. Mortgage brokers are paper pushers - no particular degree or expertise required. They don't set the borrowing guidelines - they just ignore them or find ways around them. Wanna be a mortgage broker in wa. state? Got $1000.00 - ok, you're a mortgage broker. Congratulations.

WaltzingMathilda: that's illegal. all you have to do is sue if that happens. just because your loan gets sold doesn't mean the terms can change. i don't know what world you live in man.

Old Dinosaur has some realllly strange ideas about banking. Mortgages in particular.

JohnBigBootay: Mortgage brokers are paper pushers - no particular degree or expertise required.

Quoting myself... by the way, no offense intended to the many fine, knowledgeable, reputable and experienced mortgage brokers out there and there are many. there's just lots of the other kind too. Not as many as there were, but still...

*
I have learned three very important facts in my life:

1. Some 'breathers' are just too stupid to live.

2. Most people believe murder is wrong. (hence problem #1)

3. Government and companies will continue screwing everyone for everything they have until "we" change it!!

Side-note: When I heard they started running ARM loans again:

At first I was like all....


Then I was like:


But then I decided!!!


/The last one is to BOTH the government for allowing it, to the banks for doing it,
// ....and lastly for the dumba$$es that will inevitably do it!!
///Onto better articles

That'll cost you and ARM and a leg.

Hey..you guys need to sign up here. Hurry Hurry!!! Get yours today!

ObamaLoans.com (new window)

hitlersbrain: Where did I say we would should manufacture parts for houses? A country builds its economy by exporting stuff, not building houses. Which of the handful of billionaires in China is going to buy our exports (if we had any that is). Building unneeded houses just jacks up our need to import gasoline, it does nothing for the economy.

Who is the biggest customer or conumer of goods in the world? The United States. So if your biggest customer for your product is domestic you build your manufacturing wealth as you state it not by exporting but by producing and selling in the US if you manufacture here.

And I completely disagree. With the assessment that the houses are unneeded. They aren't selling because people aren't buying. Banks got their hand smacked and aren't making dangerous loans for now. That single mom with two kids would need that home. There's a ton of apartment dwellers who need that home.

The building products and supply industry is a huge industry here in the US. So by your statements, are those not really "manufacturing" jobs? I guess those folks don't need a manufacturing job so long as we're building shiatty unneeded cars that Jack up the price of gas and don't sell either.

And sorry for the punctuation errors on my last post. Fark isn't too iPhone friendly.

RECAST vs RESET

LEARN THE DIFFERENCE PLEBES

the_sidewinder: /ARM?

HA! That's what I thought when I first read the article title too!

Though I'm very happy with Atmega at the moment.

olddinosaur:

5. But the buyer flips it again, and snips off that troublesome rider saying he can't jack the rate. Now your interest goes through the roof, ands so does your payment.


This is patently false. The contract is between two parties. It cannot be "flipped" to another party and have the terms changed. Contracts do not work that way unless you have explicitly signed saying they can (and regarding homes, most courts would throw this out as unconscionable).

If you know someone who has had this happen they either:

1) Refinanced
2) Are paying an actual criminal and not a mortgage holder
3) Are lying
4) Are confused about what kind of mortgage they had

What you are saying does not happen outside of it being an explicitly criminal action or the mortgagee expressly agreeing to it.

Came looking for Nvidia Tegra news. Leaving disappointed.

Bought an N770 5 or 6 years ago. Would have been entertaining to read about its part in melting down the economy.

Business degree - Finance/Economics
20 years investing experience
..and it is my humble opinion that ARMS are a bad idea.

Sure! Sign me up, biatch.

Jake Steed: Business degree - Finance/Economics
20 years investing experience
..and it is my humble opinion that ARMS are a bad idea.

You're a real ITG, aren't you?

ARMs are fine for the non-stupid who can do math and understand their own finances. (AKA not living on the edge of their income)

Bawney Fwanks!!!!

Accolade: DO NOT DO LENDING TREE... Someone(s) WILL call you within minutes of your application and then they will never stop...

True. They never let up.

All the offers I got had some kind of trap. Like the one with a prepayment penalty. On a mortgage!?!