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!?!