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(former)FormerSanDiegan
ParticipantThese loans, although scarce, never really went away. I suspect that the underwriting on them is pretty tight (e.g. 75% LTV or better, sufficient assets, and full documentation). These are not bad products for those who have sufficient assets (e.g. could pay off the loan at any time by liquidating accounts).
The real problem with these previously was that they were used with stated income and stated asset loans. These are not good products for those without sufficient assets to pay off a significant chunk of the loan.
Participant[quote=flu]
I don’t know. I don’t think they can lose. Because let’s just say this thing continues for another 7-8 years. I think they have been on IO for about 6 years. Even if rates pop up, they can just close the loan. So, I think for them, this was the smartest thing to do. Now if 30 year comformings would drop to below 4, that’s a different story… Ah, one can dream…..[/quote]
I guess you are right since they have the bank roll to pay off at any time.
Participant[quote=flu]
I don’t know. I don’t think they can lose. Because let’s just say this thing continues for another 7-8 years. I think they have been on IO for about 6 years. Even if rates pop up, they can just close the loan. So, I think for them, this was the smartest thing to do. Now if 30 year comformings would drop to below 4, that’s a different story… Ah, one can dream…..[/quote]
I guess you are right since they have the bank roll to pay off at any time.
Participant[quote=flu]
I don’t know. I don’t think they can lose. Because let’s just say this thing continues for another 7-8 years. I think they have been on IO for about 6 years. Even if rates pop up, they can just close the loan. So, I think for them, this was the smartest thing to do. Now if 30 year comformings would drop to below 4, that’s a different story… Ah, one can dream…..[/quote]
I guess you are right since they have the bank roll to pay off at any time.
Participant[quote=flu]
I don’t know. I don’t think they can lose. Because let’s just say this thing continues for another 7-8 years. I think they have been on IO for about 6 years. Even if rates pop up, they can just close the loan. So, I think for them, this was the smartest thing to do. Now if 30 year comformings would drop to below 4, that’s a different story… Ah, one can dream…..[/quote]
I guess you are right since they have the bank roll to pay off at any time.
Participant[quote=flu]
I don’t know. I don’t think they can lose. Because let’s just say this thing continues for another 7-8 years. I think they have been on IO for about 6 years. Even if rates pop up, they can just close the loan. So, I think for them, this was the smartest thing to do. Now if 30 year comformings would drop to below 4, that’s a different story… Ah, one can dream…..[/quote]
I guess you are right since they have the bank roll to pay off at any time.
Participant[quote=flu]At this rate, one of relatives who did interest only on a $1.5 million loan is looking pretty smart to me…And to think a few years ago, I asked them “are you sure”….Said folks could pay off the loan, but their loan is effectively 3.6%, while their cash on hand is earning interest about 4% in a portfolio….
Sigh, and to think I thought I was smart by doing a 30 year fixed….[/quote]
I doubt they will be ahead of the game over the course of 30 years, but for now (and I suspect the next couple years) they will be well ahead of the game.
Participant[quote=flu]At this rate, one of relatives who did interest only on a $1.5 million loan is looking pretty smart to me…And to think a few years ago, I asked them “are you sure”….Said folks could pay off the loan, but their loan is effectively 3.6%, while their cash on hand is earning interest about 4% in a portfolio….
Sigh, and to think I thought I was smart by doing a 30 year fixed….[/quote]
I doubt they will be ahead of the game over the course of 30 years, but for now (and I suspect the next couple years) they will be well ahead of the game.
Participant[quote=flu]At this rate, one of relatives who did interest only on a $1.5 million loan is looking pretty smart to me…And to think a few years ago, I asked them “are you sure”….Said folks could pay off the loan, but their loan is effectively 3.6%, while their cash on hand is earning interest about 4% in a portfolio….
Sigh, and to think I thought I was smart by doing a 30 year fixed….[/quote]
I doubt they will be ahead of the game over the course of 30 years, but for now (and I suspect the next couple years) they will be well ahead of the game.
Participant[quote=flu]At this rate, one of relatives who did interest only on a $1.5 million loan is looking pretty smart to me…And to think a few years ago, I asked them “are you sure”….Said folks could pay off the loan, but their loan is effectively 3.6%, while their cash on hand is earning interest about 4% in a portfolio….
Sigh, and to think I thought I was smart by doing a 30 year fixed….[/quote]
I doubt they will be ahead of the game over the course of 30 years, but for now (and I suspect the next couple years) they will be well ahead of the game.
Participant[quote=flu]At this rate, one of relatives who did interest only on a $1.5 million loan is looking pretty smart to me…And to think a few years ago, I asked them “are you sure”….Said folks could pay off the loan, but their loan is effectively 3.6%, while their cash on hand is earning interest about 4% in a portfolio….
Sigh, and to think I thought I was smart by doing a 30 year fixed….[/quote]
I doubt they will be ahead of the game over the course of 30 years, but for now (and I suspect the next couple years) they will be well ahead of the game.
Participant[quote=jpinpb]Did you see Page 32, As of May 2009, Percent of ARMs……To Reset Next 24+ Months, 40.4%.
Inventory for San Diego county, according to SDL is 16,040.[/quote]
5-year ARMs that originated in 2005 with typical start rates of 5.5-6% would require today’s 12-month LIBOR rate to triple for the new rate to exceed the start rate …
Participant[quote=jpinpb]Did you see Page 32, As of May 2009, Percent of ARMs……To Reset Next 24+ Months, 40.4%.
Inventory for San Diego county, according to SDL is 16,040.[/quote]
5-year ARMs that originated in 2005 with typical start rates of 5.5-6% would require today’s 12-month LIBOR rate to triple for the new rate to exceed the start rate …
Participant[quote=jpinpb]Did you see Page 32, As of May 2009, Percent of ARMs……To Reset Next 24+ Months, 40.4%.
Inventory for San Diego county, according to SDL is 16,040.[/quote]
5-year ARMs that originated in 2005 with typical start rates of 5.5-6% would require today’s 12-month LIBOR rate to triple for the new rate to exceed the start rate …
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