Posted on 12/11/2006 1:39:38 AM PST by goldstategop
Oh...my...God...
This guy is borrowing an extra $1,200 per month. His mortgage company deserves to take the bath that it will soon get.
Some loan products are just bad ideas...
Wish all mortgages were like that :-)
I don't necessarily believe passing new legislation should be done to protect the dumb from themselves. Clearly the guy bought more than he can afford. It's his own fault, nobody elses. If you can't afford a house at these historically low interest rates, you have no business owning one. go rent.
He's the anti-stock advisor; find what he's buying and SELL!
I have just recently moved to NC to be near family. The street I live on has at least 4 young couples who have left FL and moved here to NC
All I can say is WOW...
The article is awfully insulting ain't it? Reads like an editorial for Weekly Reader, and every word longer than four words is followed by its definiton...
"Clearly the guy bought more than he can afford. It's his own fault, nobody elses. If you can't afford a house at these historically low interest rates, you have no business owning one. go rent."
Heck, he didn't "buy" a house so much as he found a way to milk mortgage companies for money that he's never going to repay. He's been skimming $20k per year from them.
They've been paying *him*.
welcome...come on in and join the NC state FR board!
He would see little of that, however, because he's already seen so much. Over the years he has taken out $190,000 in cash through refinancings.
Hertzberg's home equity paid off his credit cards, financed trips around the world that allowed him to indulge his passion for photography, bought a $32,000 Toyota Avalon and enabled some lousy investments. He bought dot-com stocks and lost money. To recoup those losses, he bought commodities — and lost money faster.
"Free money always has the unfortunate effect of making people go overboard," said Hertzberg, whose living room is strewn with financial publications including American Cash Flow Journal and Donald Trump's "How to Get Rich." "You'd be surprised how fast $190,000 can go."
...Last fall, he went to a mortgage broker and refinanced again to make his payments easier to bear. He thought he would have a five-year window before the principal started coming due.
But the day of reckoning is arriving early. By paying the minimum, Hertzberg has increased the size of his loan in a little over a year from $320,000 to $332,616.
..."I'm waiting for a 100-year loan," [Hertzberg] said. "My heirs can worry about paying it off."
As I was reading this, I first thought the guy was just an Idiot. By the time I was through the piece, I decided that he is a con artist who has been gaming the system in order to get cheap rent & never had any intention of paying down the principle.
You do know that the overnight rate the Fed is targeting is higher than the yield on the 30 year bond, don't you?
That's because everybody is dumber than you.
Florida is a quagmire.
Between the Floridians and the illegal Mexicans, NC will never be the same.
In San Diego, a half-million would get you maybe a 1500 sq ft house on an 1/8 acre lot.
So? They probably only put a few thousand dollars of their own money into the houses. They got to live in a home for a while, a nice home, and now that it is clear they can't afford it, the bank will take the house off their hands and they can go back to renting, or into a smaller home that they should have been in to begin with.
These loans are bad, but the people who took them because they had no choice aren't really the ones I care about, because THEIR alternative was simply NOT to buy a home, and that's where they will end up (albeit with a few thousand less in their pockets).
I worry more about people who took 2nd mortgages on houses they owned for years, based on low interest rates and inflated home prices. They could lose their homes which otherwise were not in danger at all, simply because they wanted money the easy way.
I don't feel bad for him, he's gotten to have a lot of fun and now he'll get our without having to pay for it (other than losing the equity he might have put into his home).
Then you cant be that old, cause I remember my parents buying stuff on Lay-Away at KMart. The difference being, is that people back then had to save up because there was no credit. I am purchaseing an apartment right now and taking out a 30year fixed loan for 40% of the purchase price.
However, 2 of my parents neighbors had to sell to avoid foreclosure. They were able to afford big screen TVs and chain-smoking and game controllers.
It is a question of vision, do you want to live moment by moment or for the long-term? The fool in the article deserves no sympathy.
They probably dont teach the "Ant and the Grasshopper" in elementary school any more.
It takes a special kind of investor to lose money going long on an asset class that has gone up in price 300%.
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