Adjustable rate mortgages should be outlawed.

I hear you.
We were about to refi ours and decided to stop due to the heavy pre pay penalty. We're going to wait till the 2 year time limit is up then go through with it.

Are you getting the run around?

Somebody educate me... there's a new street behind our house and 13 of the 21 houses back there built in the last 20 months are now for sale. Most of the folks we've talked to that are selling (as well as our Realtor friend) all tell me its due to their ARMs going out of control.

Its easy for me to sit on my low fixed rate loan and to criticize by saying, "Hey, you signed the damn thing!" but there must be something else going on here. Have they climbed "beyond their projected rates" too quickly or something?

Honestly, I hate to see that many people having to sell; on the other hand, some of them are way too young to be building 4,000 square foot homes and mortgaging themselves up to their teeth with an ARM.

You know the bad thing is my interest rate is already 7.8% on the first loan i have. I have never missed, or been late with apayment. INfact I pay a little extra every month. Now unless they are going to adjust it down I dont see how they can touch my rate and raise it. IM gonna call them and say hey you know all the problems with mortgages right now. Think of that before you go raising my rate. And I know some of you might not think its a big deal that my mortage total is only 869 a month but I have a budget I try to live on each month.

WE had no down payment, sub standard credit and agreed to an 80/20 mortgage that was adjustable after 2 years. Only way to get in.

Luckily our adjustable is only once every 6 months and a max of 1.5% so we wont get killed the first 6 months but we want to get out ASAP.

We're 18 months into this loan and have fixed our credit enough to get a regular loan, no ARM, and a low rate. Our house has also gone UP in value where many havent. And if your house loan was nearly equal to your appraisal, then try to refi, you've got no room to move.

When does it adjust? Have you tried to refi?

According to my bill Jan 1st. The only time it has gone up. I have to call a lady tommorow who is gonna see if she can help me. I have been in the house 21 months. Fixed as much of my credit as I could but my wifes credit is still up there. Of course they dont care how long you have been at a job these days anymore.

I don't understand why someone would accept an ARM. Seems to me that you're asking to spend more money. It's not like a credit card where you can just drop it easily. It's giving someone a license to screw with you. What's the lure in them? Do they start at low rates?

My 2 loans are 7.25 and 8.5. You accept the loans because you figure you can refi at the end of 2 years.

Chias terms are apparently different then mine though, seems his ARM is more aggressive. Hopefully he can find an answer.

The lure of the ARM is the siren call of a low monthly payment NOW...and the future seems SO far off, and SURELY you'll just refinance then....etc.

And then the future arrives, and they have trouble affording the home that they just paid interest on...and as the housing market went DOWN, so the house is worth LESS than they paid for it...the morgage is now skewed to a larger mortgage to property value ratio....etc.....and they are in a weaker credit position, etc....

(They're fucked)

So - I have a 30 yr fixed 5.75%....and I'm glad I didn't go ARM'd and dangerous.

Basicly what TJ just said. Also, the mortgage people have changed the qualifying for new loans and people don't qualify for their existing homes to get a refi. It's all voo-doo economics. ARM's, interest only loans, and balloons should be outlawed. Homeowners and mortgage companies are being screwed.
Also, it's the trickle down effect and it will affect everyone.

On one hand I feel badly for people who get screwed by this, on the other hand I want to slap them and ask what they expected to happen. I guess overall there are probably a lot of people who got slick-talked into it and didn't really understand the situation, or maybe it was the only way they could afford a house at the time, but then I wonder why they didn't educate themselves and spend some time saving and building credit.

Credit in general confuses me. When I'm faced with a situation in which I can't afford something, I just don't buy it. Others in that situation throw it on their credit card. Go figure.

Wow.

My wife and I bought our house in 2003.

5.5%, FIXED.

And our credit stunk like Rosie O'Donnell left in the sun for a week . . .

I have an ARM, but it's fixed for the first 10 years. I have 4 years left before it adjusts, and fortunately (or unfortunately) I have to refinance the house within the next 5 months per the marriage settlement agreement... So I'll lose my great fixed rate (5.75%) and get hit with something much worse, nowadays. But oh well, nothing I can do.

On the other hand, I have no intentions whatsoever of being in this house for a full 4 more years, regardless. I'll be out in 2 or less, no matter what, if I have to live in a frickin' apartment I will... I hate my house.

What do y'all suggest for a quick refinanced loan; I'm seriously considering going for an interest only payment for 5 years, then conventional or ARM for the remainder, becuase I know 100% that I will be out of this place in 2, and there's not a whole lot of equity I'm going to be "missing out on" by making an interest only payment for a couple years, that's for sure. Not when we're only talking a home loan for $42k!

It's about financial responsibility. People bought homes beyond their means and were right at the edge of what they could afford when the ARM rates were low. Now that they're adjusting, foreclosures are going through the roof.

I like my 5% flat fixed 20 year note. It'll be paid much sooner than that.

X2

At first I had some sympathy for those causing all this economic trouble......then I got my latest statement from my stockbroker.

Their ignorance is costing me money. At that point it crosses the line from sympathy to Joe Pesci from Goodfellas.

Signed an adjustable rate mortgage and can't afford it now? Fuck you, pay me!

You just HAD to have a house bigger than everyone elses? Fuck you, pay me!

You can't afford the mortgage because you bought a new Hummer and a new Acura? You guessed it - fuck you, pay me!

No sympathy at this point. What reasoning could someone use to think that mortgage rates would ALWAYS stay at historic lows? I'm sitting here doing the right thing, owning a modest home that I can afford (on one modest income) and even refi'ed the note down to a 15 year fixed - and I'm the one getting hit in the wallet because other people can't manage their finances.

All that said, I do really hope that those of you in this mess can claw your way out. But I'm not saying that because I really care about you. I'm saying it so you'll quit clobbering my life savings!

Preach on, my brother... this is exactly what's happening in my neighborhood. 25 year-old couples who EXPECT to have a 4,000 square foot house, boat, hum-vee, manicured landscaping, granite kitchens, and home theaters RIGHT OUT OF COLLEGE.

You gotta EARN it, bitch. I didn't have my first boat till I was 40; but I wrote a check for it and I don't make payments.

This whole generation of "I'm entitled to it immediately" people needs to sober up.

No shit...when I was 25 I lived in a 1 bedroom shithole 640 sq foot apartment.

Just so you guys know and dont think I am to big of an idiot. I bought a 20 year old 1500 sqft house fro 108K. The value of my house went up this year to 118K. I did not buy above my means. When they did the payments it was the same amount as if I was living ni an aprtment.

Until your ARM starts to go up.

If your house was only 100k why in the world would you get an ARM??? Don't tell me you couldn't find $10k to put down. If you can't save $10k then you have other problems. Your payment should be ~$1K/mo. I'm assuming you have a dual income so that house should ---extremely--- affordable if it was FRM (fixed rate mortgate). [I know someone who just bought practically the exact same house in San Antonio. She got a 15y FRM and she can still afford to live in Cali. All on her own.]

You're right though ARM should be banned. It's just so banks can feed off those who can't or are too lazy to do math.

I hear contacting the bank and trying to work things out works well so you're on the right track. I also hear some banks are requiring a letter describing why you need mortgage help. I'd hurry up on getting the REFI to FRM work going. Rumor is Feds are considering cutting Rates by half a percent so hopefully you can benefit from that.

Good luck!

I wish I could have saved 10k. Problem is because of my job I have a hard time saving money because I have to spend so much of it to work. I probably also screwed myself by going through a friend and the company his mom works for for mortgage help.

I have had a veterans loan fixed at 5% on my house valued at $115,000 since I purchased it 8 years ago. It's a small (1400sq) ranch as we are saving for a bigger house. I can't believe how many people are in hot water over ARMs. It sucks. I hope everyone weather's the storm as losing your home gotta suck. I couldn't even imagine what I'd do.

I talked to one couple (brand new MBA out of the U of MN, maybe 28) who lived in their house for 11 months before the ARM adjusted on the 12th month. Now, almost two years later to the day, not only is the bank foreclosing, but they OWE more on the house than they agreed to pay for it two years ago! So... they're moving out now, the bank owns the home, and they still owe the bank another 12k.

Its SO hard for me to talk to that guy and pretend that I feel sorry for him. I'm sure his red SAAB Turbo is the next thing to go.

Hahaha! I only hope that none of these clowns get help from the government. Can't afford a big house with a shiny car? Too bad. Get back to your second job and Ramen. Muhahahaha!!!!

Some years ago IT companies were going through tough times. Days of caviar, bonuses and BMWs were over and many of us were looking for different careers. I saw software engineering jobs going to India and naturally, I wanted to re-map my bread-winning path. One of my friends suggested getting into real estate and flipping houses. That was never going to be over. Dude, "How could you not see it. Real estate is not IT. Just get a house, some hose. Flip it later. People will always buy property and even a retard can get a credit nowadays." Others simply wanted me to buy some real estate because it was cool.

One day (about 1.5 years ago) I made a mistake saying that history would repeat itself and the eventually people will not be able to afford variable rate mortgages if something were to happen. This really screwed up my lunch that day because I instantly became a guy who did not know jack about business. People were telling me fabulous stories about how their house went from 200K to 240K over night. Of course, nobody wanted to sell it because the price was going to go up and up and up. A problem with housing? I must have been smoking some crack.

At some point I did feel like I was losing something. A friend of mine got a $300K house, 2 brand new cars, a ton of brand new quality furniture, a boat. She made less than I did, but for some reason she qualified for a whole lot of credit. I did my calculations and, crap, I could be living right next to her in a bigger house.

I am glad that my normal sense never left me. After seeing people lose tons of cash during the IT bust, I gave myself a word not to jump on a roller coaster that came up full and went down half empty. The buddy of mine who has a house has recently mentioned that her rate when up and that she can barely afford to live in a nice house in that pretty neighborhood. "How could I have known?" she says.

The point of my friend (and many others) is well taken. This is the United States. We are number one!!! We should work 35 hours per week, enjoy the fruits of cheap labor elsewhere and be entitled to anything. Clean water, electricity, food. All this stuff comes for granted. Every twenty-something year old has a right to have an expensive house, two cars (hell, make it three), and a 35-hour work week

When the first news of shady sub-prime market hit, I e-mailed some of my friends who said that the real estate was never going to experience a downturn. Gotcha beetches! Now I just sit and relax. It is pretty exciting to live in Cali, I'll tell you that. People are starting to figure out that a mobile home w/o wheels is not worth 1,000,000 and all the house flippers are running like crazy. I do not know who is at fault mortgage companies or people who thought that they could afford half-million dollar home on their $50K/year salary. Some of the houses on my street have been for sale for a long long time. Their prices are going down but you still must be crazy to buy one. In any case, this is a good lesson for the rest of us.

By the way, if you're interested in making money, I just got a tip for you: Precious metals. That is solid. Better than dot-coms and any real estate