Famed Columnist gives rotten mortgage advice

[patb]

[quote=Eugene]Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.[/quote]

That’s what I was aiming at.

The HELOC is utterly underwater, screw them, they have nothing.

What are they going to spend 50K on foreclosure?

Keep paying the first and ride out the wave.

or

Stop paying both, save the money and when the first comes
to foreclose string it out, and move into an apartment.

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

if we go into 100% inflation, then sure, he has a decent asset,
but, I kind of doubt that will happen.

[svelte]

[quote=patb]

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

[/quote]

Fifteen years. Not a lifetime.

Let’s use a simple example.

Someone buys a home for $1M.

Let’s say it goes down 50%, not just 35%.

So it is now worth $500K.

If inflation is just 5%, it will take that house fifteen years to reach $1M.

I can hear some ppl now:
“houses won’t rise in value for a few years”
“today’s dollars vs future dollars”

None of that holds much water. So tack on a few years to the 15 if you feel prices will be flat for awhile…maybe twenty years until it hits $1M. And I’ve used a worst-case scenario of 50% fall in value, and realistic inflation rate of 5%.

Last I checked, fifteen years is not a lifetime.

[svelte]

[quote=patb]

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

[/quote]

Fifteen years. Not a lifetime.

Let’s use a simple example.

Someone buys a home for $1M.

Let’s say it goes down 50%, not just 35%.

So it is now worth $500K.

If inflation is just 5%, it will take that house fifteen years to reach $1M.

I can hear some ppl now:
“houses won’t rise in value for a few years”
“today’s dollars vs future dollars”

None of that holds much water. So tack on a few years to the 15 if you feel prices will be flat for awhile…maybe twenty years until it hits $1M. And I’ve used a worst-case scenario of 50% fall in value, and realistic inflation rate of 5%.

Last I checked, fifteen years is not a lifetime.

[svelte]

[quote=patb]

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

[/quote]

Fifteen years. Not a lifetime.

Let’s use a simple example.

Someone buys a home for $1M.

Let’s say it goes down 50%, not just 35%.

So it is now worth $500K.

If inflation is just 5%, it will take that house fifteen years to reach $1M.

I can hear some ppl now:
“houses won’t rise in value for a few years”
“today’s dollars vs future dollars”

None of that holds much water. So tack on a few years to the 15 if you feel prices will be flat for awhile…maybe twenty years until it hits $1M. And I’ve used a worst-case scenario of 50% fall in value, and realistic inflation rate of 5%.

Last I checked, fifteen years is not a lifetime.

[svelte]

[quote=patb]

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

[/quote]

Fifteen years. Not a lifetime.

Let’s use a simple example.

Someone buys a home for $1M.

Let’s say it goes down 50%, not just 35%.

So it is now worth $500K.

If inflation is just 5%, it will take that house fifteen years to reach $1M.

I can hear some ppl now:
“houses won’t rise in value for a few years”
“today’s dollars vs future dollars”

None of that holds much water. So tack on a few years to the 15 if you feel prices will be flat for awhile…maybe twenty years until it hits $1M. And I’ve used a worst-case scenario of 50% fall in value, and realistic inflation rate of 5%.

Last I checked, fifteen years is not a lifetime.

[svelte]

[quote=patb]

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

[/quote]

Fifteen years. Not a lifetime.

Let’s use a simple example.

Someone buys a home for $1M.

Let’s say it goes down 50%, not just 35%.

So it is now worth $500K.

If inflation is just 5%, it will take that house fifteen years to reach $1M.

I can hear some ppl now:
“houses won’t rise in value for a few years”
“today’s dollars vs future dollars”

None of that holds much water. So tack on a few years to the 15 if you feel prices will be flat for awhile…maybe twenty years until it hits $1M. And I’ve used a worst-case scenario of 50% fall in value, and realistic inflation rate of 5%.

Last I checked, fifteen years is not a lifetime.

[temeculaguy]

I see a very high horse and of course I have a step ladder so I’m gonna get on it. I’ll loan you my step ladder if you like.

This is not a stock play, this is not about getting a good deal on priceline for a hotel room. This is a debt that someone took, someone promised to pay and from what we can tell, they can afford to pay back. They should honor their debt, keep their promise, learn from the lesson and think twice next time. There are a few pieces of advice, a few promises in life that you are supposed to keep, not because they make a profit, but becuase karma is a bitch and integrity cannot be re aquired. Monogomy is like that too. Lets say that you are in a monogomous relationship, that you promised to only have sex with one person, you are supposed to keep that promise, nothing can make you do it but yourself. If you are involved in a terrible hunting accident and your genitalia is removed, then through something beyond your control you will not be able to fullfill your obligation but you didn’t break the promise (that is like losing your job). But if Beyonce hits on you in a bar, asks you to go home with her, well, it’s decision time. Are you a man of your word?

The following commandments were never published in any religious text, I made them up, but they are far more relevent today.

1. Pay your debts, pay your tab, pay your own way.

2. Don’t steal, good deals are permitted and encouraged.

3. Don’t tell someone you love them unless you mean it, but if you do, tell them often and show it.

4. Take care of your children and at some point, your parents, even when it’s inconvenient.

5. Drink good wine, eat good food, but avoid sugar.

That’s it, sometimes you win, sometimes you lose, sometimes you have to lick your wounds, stand up and walk out of the room like a man, even if you limp a little.

[temeculaguy]

I see a very high horse and of course I have a step ladder so I’m gonna get on it. I’ll loan you my step ladder if you like.

This is not a stock play, this is not about getting a good deal on priceline for a hotel room. This is a debt that someone took, someone promised to pay and from what we can tell, they can afford to pay back. They should honor their debt, keep their promise, learn from the lesson and think twice next time. There are a few pieces of advice, a few promises in life that you are supposed to keep, not because they make a profit, but becuase karma is a bitch and integrity cannot be re aquired. Monogomy is like that too. Lets say that you are in a monogomous relationship, that you promised to only have sex with one person, you are supposed to keep that promise, nothing can make you do it but yourself. If you are involved in a terrible hunting accident and your genitalia is removed, then through something beyond your control you will not be able to fullfill your obligation but you didn’t break the promise (that is like losing your job). But if Beyonce hits on you in a bar, asks you to go home with her, well, it’s decision time. Are you a man of your word?

The following commandments were never published in any religious text, I made them up, but they are far more relevent today.

1. Pay your debts, pay your tab, pay your own way.

2. Don’t steal, good deals are permitted and encouraged.

3. Don’t tell someone you love them unless you mean it, but if you do, tell them often and show it.

4. Take care of your children and at some point, your parents, even when it’s inconvenient.

5. Drink good wine, eat good food, but avoid sugar.

That’s it, sometimes you win, sometimes you lose, sometimes you have to lick your wounds, stand up and walk out of the room like a man, even if you limp a little.

[temeculaguy]

I see a very high horse and of course I have a step ladder so I’m gonna get on it. I’ll loan you my step ladder if you like.

This is not a stock play, this is not about getting a good deal on priceline for a hotel room. This is a debt that someone took, someone promised to pay and from what we can tell, they can afford to pay back. They should honor their debt, keep their promise, learn from the lesson and think twice next time. There are a few pieces of advice, a few promises in life that you are supposed to keep, not because they make a profit, but becuase karma is a bitch and integrity cannot be re aquired. Monogomy is like that too. Lets say that you are in a monogomous relationship, that you promised to only have sex with one person, you are supposed to keep that promise, nothing can make you do it but yourself. If you are involved in a terrible hunting accident and your genitalia is removed, then through something beyond your control you will not be able to fullfill your obligation but you didn’t break the promise (that is like losing your job). But if Beyonce hits on you in a bar, asks you to go home with her, well, it’s decision time. Are you a man of your word?

The following commandments were never published in any religious text, I made them up, but they are far more relevent today.

1. Pay your debts, pay your tab, pay your own way.

2. Don’t steal, good deals are permitted and encouraged.

3. Don’t tell someone you love them unless you mean it, but if you do, tell them often and show it.

4. Take care of your children and at some point, your parents, even when it’s inconvenient.

5. Drink good wine, eat good food, but avoid sugar.

That’s it, sometimes you win, sometimes you lose, sometimes you have to lick your wounds, stand up and walk out of the room like a man, even if you limp a little.

[temeculaguy]

I see a very high horse and of course I have a step ladder so I’m gonna get on it. I’ll loan you my step ladder if you like.

This is not a stock play, this is not about getting a good deal on priceline for a hotel room. This is a debt that someone took, someone promised to pay and from what we can tell, they can afford to pay back. They should honor their debt, keep their promise, learn from the lesson and think twice next time. There are a few pieces of advice, a few promises in life that you are supposed to keep, not because they make a profit, but becuase karma is a bitch and integrity cannot be re aquired. Monogomy is like that too. Lets say that you are in a monogomous relationship, that you promised to only have sex with one person, you are supposed to keep that promise, nothing can make you do it but yourself. If you are involved in a terrible hunting accident and your genitalia is removed, then through something beyond your control you will not be able to fullfill your obligation but you didn’t break the promise (that is like losing your job). But if Beyonce hits on you in a bar, asks you to go home with her, well, it’s decision time. Are you a man of your word?

The following commandments were never published in any religious text, I made them up, but they are far more relevent today.

1. Pay your debts, pay your tab, pay your own way.

2. Don’t steal, good deals are permitted and encouraged.

3. Don’t tell someone you love them unless you mean it, but if you do, tell them often and show it.

4. Take care of your children and at some point, your parents, even when it’s inconvenient.

5. Drink good wine, eat good food, but avoid sugar.

That’s it, sometimes you win, sometimes you lose, sometimes you have to lick your wounds, stand up and walk out of the room like a man, even if you limp a little.

[temeculaguy]

I see a very high horse and of course I have a step ladder so I’m gonna get on it. I’ll loan you my step ladder if you like.

This is not a stock play, this is not about getting a good deal on priceline for a hotel room. This is a debt that someone took, someone promised to pay and from what we can tell, they can afford to pay back. They should honor their debt, keep their promise, learn from the lesson and think twice next time. There are a few pieces of advice, a few promises in life that you are supposed to keep, not because they make a profit, but becuase karma is a bitch and integrity cannot be re aquired. Monogomy is like that too. Lets say that you are in a monogomous relationship, that you promised to only have sex with one person, you are supposed to keep that promise, nothing can make you do it but yourself. If you are involved in a terrible hunting accident and your genitalia is removed, then through something beyond your control you will not be able to fullfill your obligation but you didn’t break the promise (that is like losing your job). But if Beyonce hits on you in a bar, asks you to go home with her, well, it’s decision time. Are you a man of your word?

The following commandments were never published in any religious text, I made them up, but they are far more relevent today.

1. Pay your debts, pay your tab, pay your own way.

2. Don’t steal, good deals are permitted and encouraged.

3. Don’t tell someone you love them unless you mean it, but if you do, tell them often and show it.

4. Take care of your children and at some point, your parents, even when it’s inconvenient.

5. Drink good wine, eat good food, but avoid sugar.

That’s it, sometimes you win, sometimes you lose, sometimes you have to lick your wounds, stand up and walk out of the room like a man, even if you limp a little.

[sdrealtor]

I’m not here for ethics on this one. If the HELOC was taken out as the 20 on an 80/20 loan when he bought the place its a purchase money loan. If they foreclose on him they get nothing and have no recourse. He could stop paying the 2nd and may be able to negotiate a short pay settlement on the HELOC. A de facto loan mod/principal reduction if you will.

[sdrealtor]

I’m not here for ethics on this one. If the HELOC was taken out as the 20 on an 80/20 loan when he bought the place its a purchase money loan. If they foreclose on him they get nothing and have no recourse. He could stop paying the 2nd and may be able to negotiate a short pay settlement on the HELOC. A de facto loan mod/principal reduction if you will.

[sdrealtor]

I’m not here for ethics on this one. If the HELOC was taken out as the 20 on an 80/20 loan when he bought the place its a purchase money loan. If they foreclose on him they get nothing and have no recourse. He could stop paying the 2nd and may be able to negotiate a short pay settlement on the HELOC. A de facto loan mod/principal reduction if you will.

[sdrealtor]

I’m not here for ethics on this one. If the HELOC was taken out as the 20 on an 80/20 loan when he bought the place its a purchase money loan. If they foreclose on him they get nothing and have no recourse. He could stop paying the 2nd and may be able to negotiate a short pay settlement on the HELOC. A de facto loan mod/principal reduction if you will.

[Author]

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