rwbeagles-so anyone think this interest rate cut will help?

I can respect your feelings Joyce but the simple fact is...if something sounds to good to be true...it probably is. One need not be a genuis in finance to know that...

What you state above could be said about numerous things....medications, marriage, choice of treatment, weightloss, etc etc etc. One needs to own things at some point in life...and if you see a payment for a hugely expensive house that is miniscule and "so in your budget" and no red flags go up....well that's a bed you chose to lie in.

fuzzy_dogs_mom

I still lay a lot of this mess at the feet of the lenders.  They're supposed to be the financial experts, not JQ Public.  It's their job to qualify the homebuyers for their loans and I'm pretty sure the guideline they're supposed to use is that the monthly mortgage payment can't be over 1/3 of the income. It looks like a lot of people were "qualified" who shouldn't have been or who were right on the line. The lenders were more concerned with making the loan than they were in whether the homebuyer would be able to keep the house. Once the loan is a "done deal" they have no responsibility. A lot of people were also talked into ARMs without realizing how devastating that would be.  A lot of these lenders are  very smooth talkers and people without a lot of financial savvy can be easily talked into things that are definitely not in their best interest.

 

 The lenders are in a catch-22.  Banking laws were changed to allow banks to offer these loans with the noble intent of letting more low-income people achieve the "American Dream" of home ownership. It was felt that "big business" was being too stingy and not lending to the people who needed it most. Now lenders are considered predatory and accused of taking advantage of the same people they were accused of shutting out 10-20 years ago.

You know what I find distrubing is that these people bought a house paying only interest, not realizing that eventually they will have to pay on their mortgage.  Then they can't afford their $300,000+ house's mortgage, because it exceeds what they could afford in the first place.  These people were dumb.  I would have never done that, but then I worry about money.  I guess some people don't. 

Janet808

You know what I find distrubing is that these people bought a house paying only interest, not realizing that eventually they will have to pay on their mortgage.  Then they can't afford their $300,000+ house's mortgage, because it exceeds what they could afford in the first place.  These people were dumb.  I would have never done that, but then I worry about money.  I guess some people don't. 

I'm not defending what some folks did but they were betting on the price of the home rising and up until recently, that was a safe bet (based on the last few years).  I would never go with an interest only loan, but the reality is that very little of your payment goes towards principal in the first few years, so I guess they thought they'd either sell by then and reap the rewards or they'd refinance or ? It was a gamble, but I'm guessing some folks thought it was that or nothing. I also think that some people, especially here in Calif., thought that if they didn't get in the market now, they'd never be able to. Again, I'm not defending them, but I do understand how people got swept up in this. Ultimately, the banks should've said "there is no way in the world that you can afford this, so we're not approving the loan".  Just because folks were lining up at their doors didn't absolve them of practicing responsible lending.  If you happen to have any investments in financial stocks, guess who you're mad at right now?

cakana

Janet808

You know what I find distrubing is that these people bought a house paying only interest, not realizing that eventually they will have to pay on their mortgage.  Then they can't afford their $300,000+ house's mortgage, because it exceeds what they could afford in the first place.  These people were dumb.  I would have never done that, but then I worry about money.  I guess some people don't. 

I'm not defending what some folks did but they were betting on the price of the home rising and up until recently, that was a safe bet (based on the last few years).  I would never go with an interest only loan, but the reality is that very little of your payment goes towards principal in the first few years, so I guess they thought they'd either sell by then and reap the rewards or they'd refinance or ? It was a gamble, but I'm guessing some folks thought it was that or nothing. I also think that some people, especially here in Calif., thought that if they didn't get in the market now, they'd never be able to. Again, I'm not defending them, but I do understand how people got swept up in this. Ultimately, the banks should've said "there is no way in the world that you can afford this, so we're not approving the loan".  Just because folks were lining up at their doors didn't absolve them of practicing responsible lending.  If you happen to have any investments in financial stocks, guess who you're mad at right now?

I agree, my DH and I were saying the same thing about how they thought they would probably sell the house and get out of it.  Also, what I think happened too, was they started building tons of houses!  Everywhere!!  Shoot, they started building onto our plan with $250,000+ houses, I only see one actually up and inhabited!  I live in a plan of houses that are mostly ranch style homes and 50-60 yrs. old.  But, they started building all these homes, at outrageous prices.  People can't afford these homes!  When the interest rates were low, the builders and banks went overboard w/ loans and building and now everything is a mess and they're all wondering why.  Duh!  Also, this recession they keep talking about, how nobody is buying, etc.  It is right after Christmas, hasn't even been a month yet.  Maybe people are paying off what they spent at Christmas time, before over extending themselves and getting deeper in a hole.  Sheesh!  Give us time...I'm sure we'll all be shopping again real soon!  lol

 i agree with janet808. it is too soon to start talking about a recession. most of the financial stuff i have heard and read says the same. the main people hyping up the recession are the main stream media. i am wondering if it is just because they have nothing else to talk about?

a recession is having 2 successive quarters of no or negative growth. it hasnt even been 30 days yet. 

cyclefiend2000

the main people hyping up the recession are the main stream media. i am wondering if it is just because they have nothing else to talk about?

You know why they don't have anything positive to say.  It has been going on for about the last 8 years.  Only the negative gets reported.

 

timsdat

You know why they don't have anything positive to say.  It has been going on for about the last 8 years.  Only the negative gets reported.

 

So true.  The media does play a factor IMO.  And, I also feel the media would love nothing more to see Pres. Bush economy come tumbling down before the next election and they will do their best to see it happen....talk of recession....increasing inflation, etc.  I just bailed out of equity stock completely.  I moved the whole nut into the the PIMCO Total Return Bond Fund with a short term plan, bail out of equities until the next President is elected and then move it back into equities, 100% petal to the metal after the next Pres. is sworn in.  I don't care if we saw two days of increases.  I'm all in with global inflation and think it will get worse.  When Bush finally gets his nose out of the Saudi's you know what, I think we'll see the barrel start to come down and things will get slowly start to get better, but I still feel this next year is going to be rough.

I don't see the stimulus package helping much.   Our $1600 will mostly likely go into the oil tank in the basement and the rest to credit card debt.  We won't be spending much of it on consumer goods other than necessities the next year.  Most probably (middle class) are probably in the same boat.  As far as I'm concerned he (Bush) can take the 1600 and put it where the sun doesn't shine because it is NOTHING compared to the raping at the pumps and the cost of heating oil to keep my family warm the past 8 years.  I'll probably owe the state 1/2 that amount anyway in taxes.

I refinanced about 4-5 years ago and got 4.75 fixed.  They wanted me (the bank) to take the money (about 90K) and put it in my pocket.  My wife was hot for that deal but I convinced her otherwise.  Instead, I knocked 10 years off the loan and got a 20 year fixed instead of 30 years and still knocked my loan down 200 bucks a months. I also began escrowing my own taxes and insurance (I don't trust those guys either).  I also don't deal with PMI because when I got the loan about 9 years ago I went in with enough cash to escape PMI.

 Buy low and sell high should be the philosophy.  Can't say I really feel sorry for these people who got in over their heads with mortgages they can't afford.  ARM's never adjust down, they only go up...that is not rocket science.  Fixed rate mortgages are the best way to go IMO. I bought a house in a declining market (20 years ago) and sold and have taken my lumps.  I bought a house in a flat market and sold to break even.  And I bought a house at rock-bottom market.  But, I've never bought a house that was grossly inflated in the midsts of the real estate 'bubble' that I could never realistically afford.  Much of it is timing and if you keep in mind some basics, buy low and sell high you can hopefully avoid a lot of headaches.

CC.