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View Full Version : U.S. Issues My house cost $152k Over 30 years, Ill pay $400kish Current mortgage system FAIL!


Ari Chi3fs
09-23-2008, 12:25 PM
Its hard to imagine that most people pay nearly 3 times what their house is worth.

If the US govt wanted to fix this, they would change the way that mortgages hose over families.

The current system is fuct and needs to be revamped.

That is sicking... AND they fail on their own? Companies got too greedy. **** them, let them fail... do not BAIL!

That is all.

mlyonsd
09-23-2008, 12:29 PM
You're saying you have a 30 year mortgage with the principle being $152k?

Cave Johnson
09-23-2008, 12:31 PM
Go out and earn enough money to pay your mortgage off over 5-10 years, you bum, and quit complaining.

eazyb81
09-23-2008, 12:33 PM
Blame everyone except me!!!111 The system is f'd if anything hurts MEEEEEEE!!!!!111

Pablo
09-23-2008, 12:33 PM
The only way you're going to counter paying the interest on the money you borrow for your home is to pay the entire principle up front. That's just the way it is. If you have to borrow money, you have to pay to borrow that money. And if it's a large sum, you're gonna pay a ton of interest. I don't see the issue.

I suppose I should be upset that I'll pay back my student loans 2-3 fold, but I'm not. I'm just paying the price for borrowing money now that I don't have.

Brock
09-23-2008, 12:34 PM
****ING CREDIT CARDS RUINED MY LIFE!!!!!!!!11111

Iowanian
09-23-2008, 12:35 PM
You're money ahead to get a longer term mortgage than you intend to pay.

If I want 15 year payments, I get a 20 year note and make 15 year payments....more comes off the principle and I'll pay it off in less years.

I'm not feeling sorry for the industry...they've been fooking people for decades.


This problem is a product of assuming every asshole deserves to own a home...

a bigger home than they can afford.

Iowanian
09-23-2008, 12:37 PM
THE FURNITURE STORE GAVE ME $30K CREDIT FOR LEATHER FURNITURE AND I MAKE $8/hr and ruined mah liiiiiiiife.....WWWWWWWWWWWWWWWWWAAAAAAAAAAAAAAAAAAAAAAA101010101010101

Chief Henry
09-23-2008, 12:37 PM
Grow up already.

Iowanian
09-23-2008, 12:38 PM
Insert House Price Smack [/california resident bronco fan]

Garcia Bronco
09-23-2008, 12:40 PM
Its hard to imagine that most people pay nearly 3 times what their house is worth.

If the US govt wanted to fix this, they would change the way that mortgages hose over families.

The current system is fuct and needs to be revamped.

That is sicking... AND they fail on their own? Companies got too greedy. **** them, let them fail... do not BAIL!

That is all.


Well, you have to pay down your interest first. I would reccommend buying less house and paying more to reduce the principle standing and thus decrease your total payout. Read you contract first though. So contract that you can't do this.

HonestChieffan
09-23-2008, 12:42 PM
Its hard to imagine that most people pay nearly 3 times what their house is worth.

If the US govt wanted to fix this, they would change the way that mortgages hose over families.

The current system is fuct and needs to be revamped.

That is sicking... AND they fail on their own? Companies got too greedy. **** them, let them fail... do not BAIL!

That is all.


what something about interest that you dont understand? My lord and you people actually have the right to vote.

Calcountry
09-23-2008, 12:48 PM
what something about interest that you dont understand? My lord and you people actually have the right to vote.
What do you mean, YOU POEPLE?

Nightfyre
09-23-2008, 12:52 PM
What do you mean, YOU POEPLE?

I thought it was funny because I assumed you people refers to people who don't understand how borrowing works. If not, I withdraw the following:
ROFL

Amnorix
09-23-2008, 12:59 PM
General rule of thumb is that you will pay double the purchaes price for your home on a 15 year note, and triple on a 30.

The bank takes a risk loaning you the money. They get a reward for it. What's the issue?

The current nightmare is not all bank's fault, and not all borrower's fault. It's a combination:

1. stupid borrowers who thought that because the bank WOULD loan them $X, they should borrow every dime of it.

3. stupid borrowers who constantly refinanced to take out their equity to buy depreciating toys. Gotta have that big screen TV, newer car, etc.

4. greedy mortgage brokers who could give a flying f*** about anything other than their commissions.

5. stupid loan officers and banks who lost their minds during the "good times" and cared nothing about borroewr's exposure or risks to their financial institution, making more and more risky loans.

6. Lack of regulatory oversight and lack of transparency resulting in investors not understanding the full magnitude of the risks involved in investing in companies that bought subprime paper.

7. Financial institutions that overly weighed themselves down with the "enticing" returns promised by mortgage-backed paper.

8. EVERYONE'S collective failure to realize, SOMEHOW, that the mortgage market was too hot, was likely a bubble, and that residential real estate prices could not keep going up forever, with the result that when the bubble burst, several important players were overexposed, and suddenly had too many illiquid assets. in some cases, having borrowed heavily against these illiquid assets, they couldn't sell them for value fast enough to cover debts coming due. In other cases, just being SO heavy into the sector raised concerns about their long-term liquidity, which resulted in short term liquidity problems by counterparties that were afraid to do business with them, or rating agencies reducing their ratings, resulting in the need to pony up additional collateral.

Or, in summary -- What caused the problem? Mostly, stupidity and greed by borrowers and lenders.

Amnorix
09-23-2008, 01:01 PM
Well, you have to pay down your interest first. I would reccommend buying less house and paying more to reduce the principle standing and thus decrease your total payout. Read you contract first though. So contract that you can't do this.

Not precisely correct. Each payment from the beginning has at least some portion of it attributed to principal. A small amount, but steadily increasing. At about halfway through your loan about half of your monthly payment goes to principal.

Second, it's rare to have any type of prepayment penalty or prohibition on a residential real estate mortgage. For commercial loans its common, of course, but not residential real estate. At least not in my experience.

Ari Chi3fs
09-23-2008, 01:01 PM
I understand all this people. And I do have a 20 year mortgage now. I was speaking in terms of the industry as a whole.

Insult away... its good for the soul.

Interest as is... is a crock of shit. It creates money from thin air... of course, The Federal Reserve Notes do the same, so its all a moot point.

Nightfyre
09-23-2008, 01:02 PM
8. EVERYONE'S collective failure to realize, SOMEHOW, that the mortgage market was too hot, was likely a bubble, and that residential real estate prices could not keep going up forever, with the result that when the bubble burst, several important players were overexposed, and suddenly had too many illiquid assets.

Except for Ron Paul.
http://www.house.gov/paul/congrec/congrec2002/cr071602.htm
Congressman Ron Paul
U.S. House of Representatives
July 16, 2002

Mr. Speaker, I rise to introduce the Free Housing Market Enhancement Act. This legislation restores a free market in housing by repealing special privileges for housing-related government sponsored enterprises (GSEs). These entities are the Federal National Mortgage Association (Fannie), the Federal Home Loan Mortgage Corporation (Freddie), and the National Home Loan Bank Board (HLBB). According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone.

One of the major government privileges granted these GSEs is a line of credit to the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out these GSEs in times of economic difficulty helps them attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a massive unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase the debt of housing-related GSEs. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

However, despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to the GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Speaker, it is time for Congress to act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors misled by foolish government interference in the market. I therefore hope my colleagues will stand up for American taxpayers and investors by cosponsoring the Free Housing Market Enhancement Act.

Garcia Bronco
09-23-2008, 01:13 PM
General rule of thumb is that you will pay double the purchaes price for your home on a 15 year note, and triple on a 30.

The bank takes a risk loaning you the money. They get a reward for it. What's the issue?

The current nightmare is not all bank's fault, and not all borrower's fault. It's a combination:

1. stupid borrowers who thought that because the bank WOULD loan them $X, they should borrow every dime of it.

3. stupid borrowers who constantly refinanced to take out their equity to buy depreciating toys. Gotta have that big screen TV, newer car, etc.

4. greedy mortgage brokers who could give a flying f*** about anything other than their commissions.

5. stupid loan officers and banks who lost their minds during the "good times" and cared nothing about borroewr's exposure or risks to their financial institution, making more and more risky loans.

6. Lack of regulatory oversight and lack of transparency resulting in investors not understanding the full magnitude of the risks involved in investing in companies that bought subprime paper.

7. Financial institutions that overly weighed themselves down with the "enticing" returns promised by mortgage-backed paper.

8. EVERYONE'S collective failure to realize, SOMEHOW, that the mortgage market was too hot, was likely a bubble, and that residential real estate prices could not keep going up forever, with the result that when the bubble burst, several important players were overexposed, and suddenly had too many illiquid assets. in some cases, having borrowed heavily against these illiquid assets, they couldn't sell them for value fast enough to cover debts coming due. In other cases, just being SO heavy into the sector raised concerns about their long-term liquidity, which resulted in short term liquidity problems by counterparties that were afraid to do business with them, or rating agencies reducing their ratings, resulting in the need to pony up additional collateral.

Or, in summary -- What caused the problem? Mostly, stupidity and greed by borrowers and lenders.

"5. stupid loan officers and banks who lost their minds during the "good times" and cared nothing about borroewr's exposure or risks to their financial institution, making more and more risky loans."

Because governemnt would buy the loan.

Stinger
09-23-2008, 01:16 PM
.

Interest as is... is a crock of shit. .

So people should just hand out money and not get anything in return?

Nightfyre
09-23-2008, 01:17 PM
I understand all this people. And I do have a 20 year mortgage now. I was speaking in terms of the industry as a whole.

Insult away... its good for the soul.

Interest as is... is a crock of shit. It creates money from thin air... of course, The Federal Reserve Notes do the same, so its all a moot point.

Interest creates money out of thin air, eh? I'd love to see the evidence of that.

Amnorix
09-23-2008, 01:23 PM
Except for Ron Paul.

Except for alot of people. Heck, I had water cooler conversations about it. I don't get why Wall Street wasn't quicker on the uptake. Apparently the returns were too inviting or something.

Hog Farmer
09-23-2008, 01:24 PM
what something about interest that you dont understand? My lord and you people actually have the right to vote.


I don't actually think AriDouche actually has the right to vote. That privelidge was taken away years ago.

Soupnazi
09-23-2008, 01:24 PM
Its hard to imagine that most people pay nearly 3 times what their house is worth.

If the US govt wanted to fix this, they would change the way that mortgages hose over families.

The current system is fuct and needs to be revamped.

That is sicking... AND they fail on their own? Companies got too greedy. **** them, let them fail... do not BAIL!

That is all.

This is a fine example of why I no longer waste my time getting worked up over politics, or arguing with people over politics.

At the end of the day, this nation is too stupid to govern itself. Case-in-point, right here.

Amnorix
09-23-2008, 01:24 PM
"5. stupid loan officers and banks who lost their minds during the "good times" and cared nothing about borroewr's exposure or risks to their financial institution, making more and more risky loans."

Because governemnt would buy the loan.

Perhaps, though they are feeling the pain now, and I'm hoping the bailout program will not leave them scot free.

Ari Chi3fs
09-23-2008, 01:25 PM
So people should just hand out money and not get anything in return?

Its based more on the fractional reserve that I have a problem with. They loan sometimes 50x to 100x and many times more than... the amount that they actually have in their reserves, then demand a shit ton of interest back on money they never had to begin with.

Fractional reserve banking should be illegal.

The whole system is FAIL because it was setup to FAIL.

Amnorix
09-23-2008, 01:26 PM
Interest creates money out of thin air, eh? I'd love to see the evidence of that.

I think he means credit. :shrug:

Mr. Flopnuts
09-23-2008, 01:26 PM
It's amazing to me that we get bent over on a daily basis then have the gall to call people out who complain about it. You're all right!!! The system is perfect!!!! Just think, it's only around 2k per American to bail these guys out too!!!!!!

Amnorix
09-23-2008, 01:27 PM
Its based more on the fractional reserve that I have a problem with. They loan sometimes 50x to 100x and many times more than... the amount that they actually have in their reserves, then demand a shit ton of interest back on money they never had to begin with.

Fractional reserve banking should be illegal.

The whole system is FAIL because it was setup to FAIL.

Other than the fact that it has worked extremely well for a very long period, you're right!

Nightfyre
09-23-2008, 01:28 PM
It's amazing to me that we get bent over on a daily basis then have the gall to call people out who complain about it. You're all right!!! The system is perfect!!!! Just think, it's only around 2k per American to bail these guys out too!!!!!!
It seems pretty simple to me. Buy a house you can pay down faster. :shrug: Financial responsibility is hard. :rolleyes:

KILLER_CLOWN
09-23-2008, 01:32 PM
Its based more on the fractional reserve that I have a problem with. They loan sometimes 50x to 100x and many times more than... the amount that they actually have in their reserves, then demand a shit ton of interest back on money they never had to begin with.

Fractional reserve banking should be illegal.

The whole system is FAIL because it was setup to FAIL.

Exactly and what would happen if the average joe did this? can you say prison time?

Mr. Flopnuts
09-23-2008, 01:58 PM
It seems pretty simple to me. Buy a house you can pay down faster. :shrug: Financial responsibility is hard. :rolleyes:

Here's an idea. Don't buy ANYTHING you can't pay cash with. That's true fiscal responsibility right? Whoa!!! We don't want too much personal accountability flowing around though right?

Nightfyre
09-23-2008, 02:38 PM
Here's an idea. Don't buy ANYTHING you can't pay cash with. That's true fiscal responsibility right? Whoa!!! We don't want too much personal accountability flowing around though right?

The powers that be certainly don't. I plan on saving until I can put down a hefty down-payment and purchasing something I can pay down in 10 years or less. I don't run a credit card and I worked and had a scholarship all through school to keep my student loans at a minimum. That's just doing easy things to minimize debt.

Dallas Chief
09-23-2008, 02:45 PM
Except for Ron Paul.
http://www.house.gov/paul/congrec/congrec2002/cr071602.htm
Congressman Ron Paul
U.S. House of Representatives
July 16, 2002

...Mr. Speaker, it is time for Congress to act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors misled by foolish government interference in the market. I therefore hope my colleagues will stand up for American taxpayers and investors by cosponsoring the Free Housing Market Enhancement Act.

Man he totally called that one. Kind of makes me reconsider my stance on him. :hmmm:

SBK
09-23-2008, 02:51 PM
If you don't want to pay interest buy the way our grandparents and great grandparents would. 100% down nothing a month.

Garcia Bronco
09-23-2008, 03:21 PM
Not precisely correct. Each payment from the beginning has at least some portion of it attributed to principal. A small amount, but steadily increasing. At about halfway through your loan about half of your monthly payment goes to principal.

Second, it's rare to have any type of prepayment penalty or prohibition on a residential real estate mortgage. For commercial loans its common, of course, but not residential real estate. At least not in my experience.


That's why I said you have to read your contract. I have a saying that you have to buy property right. You have to understand what you are getting into. I have a fixed 30-year that I'll never see the end of. I will stay where I am until I get enough equity to get out, make money, and put it in another piece of property.

Amnorix
09-23-2008, 03:22 PM
If you don't want to pay interest buy the way our grandparents and great grandparents would. 100% down nothing a month.



They did? Really? People didn't borrow money to buy houses back then? Amazing.

Dr. Van Halen
09-23-2008, 03:55 PM
Can we get a Charlie Church on here to remind us that the Bible says it is a sin to charge interest? Also a sin to refuse to grant a loan? Anyone? Churchies?

TinyEvel
09-23-2008, 03:58 PM
By those standards my house cost $15 million (not including the furniture or vehicles, of course) [/Dane McCloud]










:D

Nightfyre
09-23-2008, 04:00 PM
Can we get a Charlie Church on here to remind us that the Bible says it is a sin to charge interest? Also a sin to refuse to grant a loan? Anyone? Churchies?

Usury is a sin!!!!!11111!one1!eleventy-one

Stewie
09-23-2008, 04:01 PM
They did? Really? People didn't borrow money to buy houses back then? Amazing.

Yeah, I read that and laughed. Maybe in the 1800s (hell they were giving real estate away back then), but not in the last 100 years.

It used to be 50% down and hella credit.
Then it was 20% down and hella credit.
In 2006 it took a warm body with no credit.

We've come a long way baby!

Nightfyre
09-23-2008, 04:02 PM
Yeah, I read that and laughed. Maybe in the 1800s (hell they were giving real estate away back then), but not in the last 100 years.

It used to be 50% down and hella credit.
Then it was 20% down and hella credit.
In 2006 is took a warm body with no credit.
We've come a long way baby!

Spoon test and give em an ARM. Silly NINJA loans.

trndobrd
09-23-2008, 04:03 PM
They did? Really? People didn't borrow money to buy houses back then? Amazing.



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ChiTown
09-23-2008, 04:31 PM
Interest as is... is a crock of shit. It creates money from thin air... of course, The Federal Reserve Notes do the same, so its all a moot point.

I can rest easy. I've heard it all now.

ROFL

Skip Towne
09-23-2008, 04:50 PM
It's amazing to me that we get bent over on a daily basis then have the gall to call people out who complain about it. You're all right!!! The system is perfect!!!! Just think, it's only around 2k per American to bail these guys out too!!!!!!

I hope I can get a loan to pay my 2K.

|Zach|
09-23-2008, 05:04 PM
If you don't want to pay interest buy the way our grandparents and great grandparents would. 100% down nothing a month.

Dude.

RJ
09-23-2008, 05:23 PM
Except for alot of people. Heck, I had water cooler conversations about it. I don't get why Wall Street wasn't quicker on the uptake. Apparently the returns were too inviting or something.



Same here, and that's the part I don't get. I had plenty of conversations on the subject, at home and at work. Some common observations were - too many houses and not enough buyers, homes selling for way over their value and people getting loans for more house than they could afford or people getting loans who couldn't afford to own a home at all. Really, this wasn't any big surprise, IMO.

Mr. Flopnuts
09-23-2008, 05:44 PM
I hope I can get a loan to pay my 2K.

LMAO Just think of folks with 10 kids. They need a 2nd mortgage.

whoman69
09-23-2008, 05:48 PM
Never heard of making an extra payment a year on the principal? You will cut down the time in half if you do that.

Mr. Flopnuts
09-23-2008, 05:51 PM
Never heard of making an extra payment a year on the principal? You will cut down the time in half if you do that.

Not half. But 1/3. You'll knock 10 years off your 30 year mortgage with 13 annual payments vs. 12. That in itself should tell us something about the problem.

Again, why not lock rates in? No bailout necessary and it helps American citizens. I guess that makes too much sense. Too many things would have to change and too many "important" people would lose a lot of money. Until someone can prove it otherwise, this is just a big ****in scam to take more from us than they already have. Smell it. It's greed.

Amnorix
09-24-2008, 05:57 AM
Same here, and that's the part I don't get. I had plenty of conversations on the subject, at home and at work. Some common observations were - too many houses and not enough buyers, homes selling for way over their value and people getting loans for more house than they could afford or people getting loans who couldn't afford to own a home at all. Really, this wasn't any big surprise, IMO.

I agree. Which is why I don't get why so many big financial institutions were overexposed in this area.

Inspector
09-24-2008, 10:32 AM
They did? Really? People didn't borrow money to buy houses back then? Amazing.

Some.

We paid cash for our current home.

And everything else we purchase. It can be done but it takes discipline and a decent income. And planning.

We simply don't do debt. I have a credit card for emergencies - out on the road with no cash and need a tow or something type of emergencies.

You'd be amazed at how quickly you can save a couple of bucks if you don't take on a bunch of debt.

HC_Chief
09-24-2008, 11:21 AM
I agree. Which is why I don't get why so many big financial institutions were overexposed in this area.

Monetization of debt. Too much liquidity in poor securities investment.