07-22-2006, 07:47 PM | #1 |
Senior Member
Join Date: Jan 2006
Posts: 961
|
Are Mormons betting the farm?
In the NYT:
http://www.nytimes.com/2006/07/23/bu...xkP+M5/ZJfmmzg Sure, this is a CA thing, but the swath of risky financing also cuts right through Mormon country. In SLC, 58% (higher than in SanFran, Oakland and Los Angeles) of homeowners are refinancing with exotic adjustable-rate mortgages where the loan balance actually GROWS. This housing madness can't last forever, and then what? |
07-22-2006, 08:39 PM | #2 | |
Junior Member
Join Date: Jun 2006
Location: Utah
Posts: 166
|
Quote:
|
|
07-22-2006, 10:07 PM | #3 |
Senior Member
Join Date: Jan 2006
Location: Moscow, ID
Posts: 1,151
|
I took out an ARM last year. The rate is locked for 5 years. We'll be moving in 3.
__________________
I reject your reality and substitute my own... |
07-23-2006, 01:19 AM | #4 | |
Master
|
Quote:
__________________
Ernie Johnson: "Auburn is a pretty good school. To graduate from there I suppose you really need to work hard and put forth maximum effort." Charles Barkley: "20 pts and 10 rebounds will get you through also!" |
|
07-23-2006, 05:36 PM | #5 | |
Senior Member
Join Date: Jan 2006
Posts: 961
|
Quote:
I certainly don't look forward to economic disaster for this country, but as the kind of fool who didn't crunch the numbers in the first place, who was an ignorant first-time home buyer, we have a 30-year fixed in a home that we are definitely going to sell LONG before 30 years are up (it was only a $75k loan, so the cost of our error isn't too deadly), we will be in a good position to pick up a 2nd home for cheap if the market ever goes belly up. |
|
07-23-2006, 06:35 PM | #6 | |
Charon
Join Date: Jan 2006
Location: In the heart of darkness (Provo)
Posts: 9,564
|
Quote:
__________________
"... the arc of the universe is long but it bends toward justice." Martin Luther King, Jr. |
|
07-23-2006, 08:10 PM | #7 | |
Senior Member
Join Date: Jan 2006
Location: Moscow, ID
Posts: 1,151
|
Quote:
The way I see it... Living somewhere costs money. I can pay rent for the 3 years or interest on a mortgage for three years. The way I've done the math the interest comes out cheaper and I get to deduct it from my taxes. Ergo... Even if I only break even on the house it was still cheaper than renting. Even if we take a hit when we sell the house, the hit would have to be fairly substantial to overcome the benefit of having the home vs. renting.
__________________
I reject your reality and substitute my own... |
|
07-23-2006, 11:27 PM | #8 | |
Senior Member
Join Date: Jan 2006
Posts: 961
|
Quote:
Someone is going to get left holding the card, no? |
|
07-23-2006, 11:43 PM | #9 |
Demiurge
Join Date: Aug 2005
Posts: 36,368
|
for the housing market to crash, there must be a surplus of housing. That's the issue: it's still a tight market.
|
07-24-2006, 12:05 AM | #10 |
Senior Member
Join Date: Jan 2006
Location: Moscow, ID
Posts: 1,151
|
There is one big thing you're missing. This isn't just debt passing hands. The loan is based on the value of some real property. Investors are "betting" that the real property will increase in value. The only way somebody could get left "holding the bag" is if they buy the property for more than it is worth.
Other ARM loans require that you pay off the interest (at a minimum). The idea "should" work on two levels. 1- Real property values usually increase. 2- The future value of the $$ you borrow will decrease. I wouldn't go for an ARM loan if I planned to stay in the house longer than 3 years.
__________________
I reject your reality and substitute my own... |
Bookmarks |
|
|