Posted on 01/30/2008 3:45:42 PM PST by Lorianne
Edited on 01/30/2008 3:49:56 PM PST by Admin Moderator. [history]
What could be worse than getting behind on mortgage payments? Owing your lender more than your home is worth.
That's what's happening to homeowners across the country, many of whom just a couple of years ago opted for interest-only or adjustable-rate mortgages. For them, just as their loans reset and interest rates rose, home values began to plummet, leaving them with negative equity; this is where their mortgage is greater than the value of their home.
Of course, some homeowners started off walking a shakier tightrope than others. Many subprime borrowers acquired piggyback mortgages, where a second mortgage covered the downpayment, leaving them with negative equity from the beginning. Indeed, 79% more U.S. homes entered foreclosure last year than in 2006, according to data from RealtyTrac, an Irvine, Calif.-based real estate research firm. Congress's Joint Economic Committee estimates that 2 million Americans will lose their home over the next two years, a figure in line with most research firms and rating agencies.
Unless you're talking about eminent domain.
This interest only loan, does it require a down payment. How long do you only pay interest. When my hubby and I went for a load 16 years ago we were only allowed double our income. I bet today we get a 1/2 mill dollar house (not that we could afford that).
No problem. If you get into a scenario and have a question, just freep me. No charge for freep mail.
When my hubby and I went for a LOAN 16 years ago we were only allowed double our income.
Just correcting my spelling!
Not worth the argument. My point is that is not a “lease.”
That is the argument of Kiyosaki of “Rich Dad, Poor Dad” fame. He is not an economist, he is a scam artist.
MI, AZ, CA and NV are hit hardest. And I agree; “owing” (it’s not “owning”) more home than you can afford is always a bad financial plan, no matter what your income level. ;)
“That is the argument of Kiyosaki of “Rich Dad, Poor Dad” fame. He is not an economist, he is a scam artist.”
I sell books for a living. Sadly, his books are the first to sell in that genre. I TRY to get people interested in the real economics of FACT, as taught by Thomas Sowell, but they want a quick fix and a feel-good strategy with their finances.
Heck. Even Dave Ramsey is smarter than Kiyosaki, but Kiyosaki is laughing all the way to the bank...
Sez who? English landowners, at least since 1066, have always owed some obligation to the Crown, be it taxes, personal military service, or both. Failure to pony up to the King, or some intermediate lord in between, could forfeit your estate.
Absolute land ownership, or allodial title, where the land owner has zero obligation to the government, is not part of the English tradition. The closest the English speaing world comes to it is probably tribal lands held by aboriginal peoples. The idea is that their title pre-dates the current state, be it Arizona, or New Zealand, and thus they don't owe obligations to that state. If your land title traces back to the King of England, the Republic of Texas, or the United States, you have a fee title and owe obligations to the government if you wish to keep it.
Thinking requires work, feeling doesn’t. Scam artists sell feelings.
Happy Independence Day, UB. I have a few years to go yet . . .
Sure. People need to understand what they are buying, which is not real property but the right to exercise a certain degree of control over real property - somewhat more control than a renter would have. And in a world of homeowners associations and restrictive zoning laws, the difference is not nearly as great as it once was.
If the point were clearly understood that people borrow vast amounts of money for the right to pay "government rent" instead of "standard rent", I think maybe the rush to the mortgage office might slow down a bit. ;)
Thanks. I recently heard (can’t recall where) that existing housing in Albuquerque is expected to continue to increase in value by at least 5% this year. If true, I’m sure it was an average taking into account the entire area. As I travel between Texas and Albuquerque regularly, I continue to see a lot of out-of-State U-hauls headed into the City.
Better that than comming from CA.
I think I misread your post. I thought you were talking about adding $50K in improvements and then selling for $605K
Instead your using the $50K as leverage/down payment to buy a $500K house and selling it for $550K. That is pretty tough work in todays climate
We are still trying to consolidate Texas and Albuquerque properties into a single rural retirement home. However, I’m in the process of literally giving one east Texas property away and our west Texas properties have been listed for over two years. With some of the highest property taxes in the country, I think Texas has had one too many George Bush-like governors.
“If the equity in the house is sufficiently negative, there may be an incentive for the household to engage in a short sale,” says Anthony Sander, a finance professor at Arizona State University. “But the more negative the equity, the less likely the lender or servicer will be willing to agree since it increases the loss.”
This is the guy who called the crash of the housing market and the subprime / CDO fiasco before it hit the press. He was attacked by Greenspan in the WSJ on the front page because he lambasted Greenspan’s failure to take action with regard to housing price growth and the “anything goes” attitude in the subprime market. Of course, the fact that Sanders was right must REALLY piss off Greenspan and Bernanke.
What does it mean to "own" property? Can I knock on your door and say that your house is mine now? No. Because you have deed recorded down at the county courthouse. Because if I knock on your door and attempt to claim your house, the deed says I can't.
Someone's got to pay to maintain the courthouses. Someone's got to pay the judges to mediate disputes. Without an independent judiciary, "my property" mean nothing more or less than what I can take and hold by force. The rule of law requires records and courts. They don''t come for free. That means taxes.
I will not -- no sane person can -- dispute that taxes are too high and too much of that money is spent on frivolous matters with little return. But when you stake out a position that all tax is theft, that no taxes are legitimate, you're talking about a position that is at odds with reality. We must have a government, and it will not come for free. Accept that conclusion, and then you're just haggling over the price.
I was recommending RE as a long-term investment because of leverage and comparing it to a similar amount invested in the stock market.
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