Manc

naaah he's a bit too christian "save money so you can tythe" for my liking.......

Giantaxe

Most subprime borrowers have defaulted when their mortgage rates have increased less than 5%. And guess what? Even borrowers who have worked out a deal with their lenders to reduce their interest rate and/or principal are now defaulting in large numbers. Quite simply, too many people bought far more house than they could afford. Nothing to do with usuary in the vast majority of cases.

ugacrew

I guess that would be a fair assessment of his values. There's this huge billboard in KC that has his mug on it. Location, location, location.

Kaffy Mintcake

True. It's scary what they would approve you for a few years ago, but you have to crunch the numbers and realize ... they may approve me for that, but I can't afford that! Part of our loan had a variable rate when we bought this house (recently refinanced) and we cranked it to as high as it had gone in the past 50 years or so and asked ourselves, if the worse happened, could we still pay? We gulped and decided that wouldn't be fun, but yes we could.

Obviously if you lose your job for an extended period of time that can be very different. But I agree that too many overextended themselves.

cindyabs

I worked for a company like Welcome Wagon many years ago, and it was interesting to go into these (at the time) McMansions where there was no furniture. Why? Because the people had spent all their money on their house and had no money left to furnish it.

Manc

you're ignorant cindy.
there is a sub prime crunch dont'cha know.

ugacrew

Is that the new cereal added to the Cap'n Crunch line?




I know I'm being silly.

Steerpike

I'm obviously missing some point here. When I sign up for a mortgage, it has a term (eg, 30 years) and it is either 'Fixed' or 'Adjustable'. If it's fixed, then the rate I'm quoted is the rate I will pay for the duration of the loan (eg, 30 years). If it is an adjustable rate mortgage (ARM) then the rate is ... adjustable. It will adjust based on well defined criteria, documented in the contract by the lender, which I must read and sign that I have fully understood.

I have taken out at least 10 mortgages (purchases and re-fi's), and most have been adjustables, and I have always looked at the 'worst case' scenario presented by those documents, and then used my judgment in terms of whether or not I should sign the loan.

Now, I have not taken out a loan in recent years, but when I last did so, the rates were 100% governed by 3rd party ('independent') indexes, such as the Cost Of Funds index, the inter-bank rate, the T-Bill rate, etc - some nationally recognized 'index' that was not at all under the control of the lender. So what actually happens to the rate over time is 100% governed by the performance of these indexes, and not by the lender. So the lender is not 'escalating' the rate to deliberately screw me. Have ARM's changed in the past few years such that this is no longer the case ?

The real issues, as I see it, are that a) people got irrational in terms of their hopes and expectations of ever-increasing property values, and b) lenders stopped applying their well-established guidelines (such as, 40% debt-ratios, 3x salary, etc). For the latter, the lenders should be held responsible, but for the former, the borrower is at fault.

BritGuyTN

Agree, hes a Nashville lad so I hear him on the radio and much he comes up with is complete nonsense. I listen to him just to yell at the car stero

Along with Suze.

When an analysis was done of her investments it seems most of her money is in bonds which barely beat inflation and hardly a good example to set

At least Ramsey recomends mutual funds, albeit with fictional returns that most people would love to have

Ray

Damn you ..now I have Wagon Wheels in my head ...

BritGuyTN

Bit late to quote on this, but you are talking complete nonsense

Lenders NEVER want to foreclose. If you believe they do then you need to looen the tinfoil hat

BritGuyTN

Please quote an accurate source

I am familar with many ARM mortgages and have never heard of one that will go to LIBOR or MTA + a 20% margin after adjustment

I say BS

BritGuyTN

You continue to talk nonsense.

Morals have nothing to do with it. banks lend money based on risk

if people have terrible risk then their rates are high and they need to rent rather than buy a place - simple as that

Move to a country where shariah law is in control and lending for interest is bad. This is the USA and market forces determine prices

Manc

you're ignorant and the reasons why Americans get a bad rap abroad Britguy.....

cindyabs

It's nice to be an inspiration,