Lenders tightening up? Umm No.

[Duck]

Asking if the loan broker gets paid is priceless.

No, he actually spends all his time soliciting loans for the good of the public. He just likes to get good deals for homebuyers. It makes him feel good inside.

[Duck]

Asking if the loan broker gets paid is priceless.

No, he actually spends all his time soliciting loans for the good of the public. He just likes to get good deals for homebuyers. It makes him feel good inside.

[gracie]

Speaking of loans….when we were getting ours, our loan guy who we have known for years….shared about all the loans he was doing. He didn’t like the interest only, odd-ball, funny loans but I remember him telling me that everyone was asking for and getting them. He said that 80% of his loans in the newer 4S/Carmel Valley area were all interest only type loans. Needless to say, we got a regular 30 fixed.

[gracie]

Speaking of loans….when we were getting ours, our loan guy who we have known for years….shared about all the loans he was doing. He didn’t like the interest only, odd-ball, funny loans but I remember him telling me that everyone was asking for and getting them. He said that 80% of his loans in the newer 4S/Carmel Valley area were all interest only type loans. Needless to say, we got a regular 30 fixed.

[Raybyrnes]

I have an opinion on the matter but what do most people think the difference would be if you took a 10 year. Fixed rate, IO loan and just elected to make payments as if it were a 30 year fixed. Proviced you are not paying any additional cost for the option of doing this why wouldn’t you.

Now you need to ask yourself am I more comfortable with a guaranteed rate of return of 6% or do I feel I can invest the difference and earn a higher rate of return.

I tend to think the IO invest the difference makes sense for me. The same thing is true of life insurance, Buy term invest the diffence. Automatic investments into index mutual funds tend to eliminate teh time it would take without haeing this as an option

[Raybyrnes]

I have an opinion on the matter but what do most people think the difference would be if you took a 10 year. Fixed rate, IO loan and just elected to make payments as if it were a 30 year fixed. Proviced you are not paying any additional cost for the option of doing this why wouldn’t you.

Now you need to ask yourself am I more comfortable with a guaranteed rate of return of 6% or do I feel I can invest the difference and earn a higher rate of return.

I tend to think the IO invest the difference makes sense for me. The same thing is true of life insurance, Buy term invest the diffence. Automatic investments into index mutual funds tend to eliminate teh time it would take without haeing this as an option

[PerryChase]

The decline will only be delayed by the easy financing that’s still available. Refinancing will give people some breathing room, but the debt will still need be repaid. We’re just kicking the can down the road.

Government to the rescue?
http://www.latimes.com/classified/realestate/news/la-re-harney27may27,0,2520596.story?coll=la-class-realestate-news

[PerryChase]

The decline will only be delayed by the easy financing that’s still available. Refinancing will give people some breathing room, but the debt will still need be repaid. We’re just kicking the can down the road.

Government to the rescue?
http://www.latimes.com/classified/realestate/news/la-re-harney27may27,0,2520596.story?coll=la-class-realestate-news

[sdcellar]

Ray– You’ve mentioned this investing the difference thing several times and while it may apply to you, don’t kid yourself that’s the reason for most people that choose IO loans.

Nope, for most of them, it’s the *only* way they can (marginally) afford houses in this ridiculous market. I’ll bet a number of those even kid themselves that they’ll pay the fully amortized payments and only go IO during the “tough” times.

The road to hell is paved with good intentions.

[sdcellar]

Ray– You’ve mentioned this investing the difference thing several times and while it may apply to you, don’t kid yourself that’s the reason for most people that choose IO loans.

Nope, for most of them, it’s the *only* way they can (marginally) afford houses in this ridiculous market. I’ll bet a number of those even kid themselves that they’ll pay the fully amortized payments and only go IO during the “tough” times.

The road to hell is paved with good intentions.

[Raybyrnes]

sdceller

I will acknowledge that there are people who do stupid things. When they can afford a $400 payment they lease a BMW instead of Buying a Honda Accord. Same is true of housing. Got to keep up iwht the Jones. But when used effectively the math seems to pan out OK. I am not going to say it is for everyone but anyone who can handle a 30 year conforming mortgage should look at both products and ask themselves if they might not be better off investing that difference. For many people they would frown if you offered them 5% on and investment yet they would throw money at a loan and try to prepay it back. Just doewsn’t seem consistant. If on the other hand you feel snake bitten by the market and have elected to go with CD and Govt Bond then I would say the 30 year conforming makes sense and would even advocate that a lender provide a 15 year amotrtization schedule so that you can set your sights on making those monthly payments. Just my read on finance decisions.

[Raybyrnes]

sdceller

I will acknowledge that there are people who do stupid things. When they can afford a $400 payment they lease a BMW instead of Buying a Honda Accord. Same is true of housing. Got to keep up iwht the Jones. But when used effectively the math seems to pan out OK. I am not going to say it is for everyone but anyone who can handle a 30 year conforming mortgage should look at both products and ask themselves if they might not be better off investing that difference. For many people they would frown if you offered them 5% on and investment yet they would throw money at a loan and try to prepay it back. Just doewsn’t seem consistant. If on the other hand you feel snake bitten by the market and have elected to go with CD and Govt Bond then I would say the 30 year conforming makes sense and would even advocate that a lender provide a 15 year amotrtization schedule so that you can set your sights on making those monthly payments. Just my read on finance decisions.

[LookoutBelow]

As long as the Chinese continue to buy MBS's…Then there are thousands of banks willing to extend credit to credit risky people for a few seconds….Thats how long it takes until the loan/mortgage is grouped into a portfolio and then sold on the market to unsuspecting Chinese/foreign investors……pretty soon theyre going to wise up and dump all of that junk for a serious discount…….For such a cerebral ethnic group as they are touted to be, I am not seeing "smartness" from Asia on this economic front…..Maybe greed is as strong or stronger in the Asian DNA as it is on the occidental….? Hmmmm…..

I have a sneaky feeling that the coming war with China is already being fought right now…only the strategy is economic and the battlefield is on Wall Street. The coming real estate/debt crash thats coming will financially ruin China, ……and not even a shot has been fired….Better than Iraq by far.

Maybe a swell today, off to wax the stick and slide a few….

[LookoutBelow]

As long as the Chinese continue to buy MBS's…Then there are thousands of banks willing to extend credit to credit risky people for a few seconds….Thats how long it takes until the loan/mortgage is grouped into a portfolio and then sold on the market to unsuspecting Chinese/foreign investors……pretty soon theyre going to wise up and dump all of that junk for a serious discount…….For such a cerebral ethnic group as they are touted to be, I am not seeing "smartness" from Asia on this economic front…..Maybe greed is as strong or stronger in the Asian DNA as it is on the occidental….? Hmmmm…..

I have a sneaky feeling that the coming war with China is already being fought right now…only the strategy is economic and the battlefield is on Wall Street. The coming real estate/debt crash thats coming will financially ruin China, ……and not even a shot has been fired….Better than Iraq by far.

Maybe a swell today, off to wax the stick and slide a few….

[PerryChase]

I agree with you LookoutBelow. So far we’re winning that war. The Chinese give us consumer goods and houses, and what do we give them in return? Paper money and a promise of future interest. A great deal for us. How can we pass up?

[Author]

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