Posted on 08/21/2007 8:18:53 AM PDT by Hydroshock
“Our parents bought homes at our age. It may sound crass, but we deserved a nice home. We did what we had to do to get one.”
This is his problem right here...and this is the problem with a gazillion Americans today.
They base financial decisions on what they feel they “deserve” - or on what their parents had at whatever age.
I’m willing to bet this guy’s parents were better prepared for home ownership - that they didn’t overextend themselves - and that they probably put more thought into how they spent their money.
Anyone who makes a life changing financial decision like this cannot ASSUME that life will continue to go on unchanged!
There will always be expansions/recessions - bubbles and bursts.
People really need to quit telling themselves they “deserve” this or that.
Heck - all of us “deserve” alot of things! But we can’t afford it!
That was my thought too. If they’re making 300 grand a year, a $400kish mortgage even at 10% interest shouldn’t be too bad.
Of course, I don’t know if both of them have $900 Hummer payments, and what their dogwalker charges them...etc...etc...
They did make a rookie mistake. However, I know many FReepers have never made a mistake.
Very likely the first time in their lives they faced real consequences for their bad decisions.
I do feel sorry for these folks; lots of people make mistakes. I'm just glad I come from humble roots, I guess.
15 year mortgages make much more sense than 30s.
Your situation sounds very similar to mine. Think the WaPo will write a story about us? ;-)
Interest only loans are not the root of all evil that the press is making them out to be. But just like guns, in the hands of a moron, anything can be dangerous.
One reason I moved away from the DC area is that it is so difficult to escape the keep-up-with-the-Joneses mentality there. We lived in an 1800-square foot house and drove used cars, and on a combined income of $200,000 we could not afford to buy a bigger home in our neighborhood, and we often felt like we were poor compared to most of our friends who were buying vacation homes, drove expensive cars, etc. When everyone you know has a house nicer than yours, drives a BMW, sends their kids to private school, etc. you can quickly start to feel like a failure if you don’t have all this stuff. This couple may seem like they had a good combined income that they should be happy with, but if they have friends who are lawyers or lobbyists or mortgage brokers, they probably feel pretty middle class.
I read the article. I realize they make good money and it sounds to me like they’re not even really in financial trouble at this point. He just wants to be part of the “victim” crowd of the moment. It sounds to me like he still is in a position to avoid any real damage. But, if he is really so worried about what “might” happen to him down the road, he needs to quit spending money on vacations and fire the dog walker. I doubt there is anything in his note that says he can’t pay towards the principal balance if he wants to.
It depends.
My kid did this for almost 2 years for a guy who left his house at 6AM and returned home after 7PM. While he probably should not have gotten the dog, at least he didn’t come home to dog mess every day and the dog didn’t have to go for 13 hours without an outing.
She made good money as a 10 yo and he was happy his dog had some company and a walk in the middle of the day.
Why? Just because of the lower interest rate? Can’t you just get a 30-year, take the extra money you were paying per month on the 15-year, invest it, and be money ahead? (I have a 15-year mortgage, so I’m wondering if you can justify my decision!)
Wait until he finds out that his home is worth 20% less than what he paid for it. Being upside-down in a mortgage, there are no refinancing options.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
In general you pay a lower interest rate on a 15 yr mortgage than a 30 yr mortgage, so you are ahead right there.
I believe it's the difference between the value of the defaulted loan and the amount of money paid for the home in a foreclosure sale that is reportable as income.
LOL, what a genius. I have zero sympathy for anybody who took out an adjustable-rate mortgage in a market with the lowest fixed rates in history. None.
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