See in your case it made sense, even if you went with an ARM because you had a game plan to Refi once your credit was re-established. I don’t see any resentment in your post, it was simply the way it was. You got what you got & you improved it when it was possible. You are exactly the reason we give people with b-c credit the opportunity to buy. You helped yourself & you got what you wanted/needed. You are absolutely correct in what you said about the $500k loan, you cannot keep up with the payments when you don’t have the income. Stated loans(Liar Loans) are really what has hurt this industry along with people that made some bad decisions. Always go with the fixed if it’s available, always.
[Stated loans(Liar Loans) are really what has hurt this industry along with people that made some bad decisions.]
True.
And how many of those stated loans were part of the repeating cycle where folks were refinancing in order to use equity to pay off tens of thousands of dollars in credit card debt?
Credit-cards and sub-prime are a match made in Hell.
Also, most folks don't realize that "Banks" were not the primary source of sub-prime loan origination. The majority of the damage was done by private corporations like Ameriquest.
They had no depositors but they did have the ability to create mortgages and then sell those mortgages to investors via asset (mortgage) backed securities.
In fact, the term Sub-prime "Lender" is probably a misnomer. Ultimately they were not lending their own money - but that of the large institutional investors who got stuck with sub-prime paper.
"Originator" would be a much more accurate term than "Lender".
Originator... or Thief.