Open House Picks: Six Months Later
Comment: Freeze! Open House Picks 10/03/08 [Brownstoner] Previous Six Months Later Posts [Brownstoner]
Comment: Freeze!
Open House Picks 10/03/08 [Brownstoner]
Previous Six Months Later Posts [Brownstoner]
Adam…if you are reading this, how many of your current mortgages are being done fixed vs, ARM????
Yes Dave in youre little fantasy world of theses 3 areas there has been an aberation of the mortgages of the entire country! “Really??? How many??? Or at least what % ??? Please cite a reference for the factual basis behind this statement.” as you said. If you spent some time doing some Due diligence you would not be so dumb but maybe its the genes
lech — I agree with all that. I don’t know why ARMs are even legal, even simple floating rate mortgages without any “toxic” features. if people are so fancy that they actually have a view on long term interest rates, they can get an interest rate swap from your stockbroker.
It’s already a huge bet to make over a 30y period that you’ll always have income to pay your mortgage — why add the chance for it to double or triple? I remember rates above 15% from the late 70s.
I’m pretty sure the product was originally promoted by banks because the floating income (to the bank) allowed them to match uncertain short term rates on deposits. it makes sense for the banks. but now that a) the system has gone tits-up, and b) banks sell on most of the mortgages, I think it will all change.
fortunately or unfortuntely, we probably won’t see rates themselves crush a lot of homeowners in time for congress to be outraged, and we may live with ARMs for a lot longer.
Wait for our next period of inflation, then you’ll see the conventional ARMs default in another global horror show.
My advice is as follows: If you can’t buy a property with at least 20% down and a 30-year fixed-rate mortgage, that means you can’t afford it. Move on and downsize your expectations.
That is exactly it lechacal. No way to state it more clearly and effectively than that. nicely said.
Re: ARMs, I also have a 7/1 ARM. We bought a “starter”-type apt in Park Slope two years ago. As we have 2 kids under age 4, we knew we’d outgrow the place in 5-7 years and want to move, so why pay the 30-yr fixed rate (we were offered 6.25) when we could pay the cheaper ARM rate (5.75)? I guess I don’t understand the argument against doing it this way. 30-years seem to work best for people who have some expectation of living in the place more than 10 years. And aren’t most buyers in Brownstone Brooklyn these days young families who see their purchase as a step towards something bigger? That’s my experience, anyway.
i think it’s becoming clear that sales will grind to a halt over the next few years as sellers refuse to take a loss and buyers refuse to pay peak prices. renting looks better than ever though…
Yes, Bklnite…that’s a good point. Recent ARMS throughout the country werea ll done under less stringent lending guidelines which makes them far worse.
brickoven…you got that data for PS, CG & CH ARMs yet??? Just askin since you seemed so certain.
ARMs are good for most people. It must be true, Alan Greenspan said so.
Seriously though, I bought a house in the 90s with a 7/1 ARM, but I put 25% down & had a decent understanding of what I was getting into. Lived there for 8 years before selling, and the only rate adjustments were down (Thanks Alan!), so it worked out for me.
The recent junk – option ARMs / liar loans w/ little or no money down all on the assumption that prices always go up and you can always refinance – that’s different.
Thanks Dave. Except maybe advice relating to yellow snow or land wars in Russia in the winter.