OT: RE

[The Less Blob]

In the process of buying a bigger home. (Any bubble is sort of a non-issue because I'm selling my current home (simply exhanging equity in one bubble asset for another) and renting in my market will cost me like $4-$5000 a month (more than my intended home) and moving again in a year or two with a baby will be a pain, the house I'm buying has already been dropped 15%, etc.) , so renting is not such a no-brainer.) Locking in a 30 year fixed. Getting 6 1/8% rate, no points, etc. I have very good credit, though not the hugest income right now.

 

All these no interest and adjustable rate mortgages that are now bumping up, what the heck kind of rate are these people getting that's going to send the economy down the tank? Were these mainly people with horrible credit who shouldn't have bought these homes in the first place? If I can lock in at 6.125% (and I probably could have done a little better except I have a second mortgage on the new home that will be paid off from the sale of my current home), what are these folks stuck at and why can't they refinance? (I suppose if they bought with 2% down and prices have dropped 5-15%, refi isn't an option) Or are these people who can't afford their mortgages at 6.25-6.5% and could only afford to own due to the introductory tickler rate? (In which case, how on earth were they allowed to borrow this money?)

[JiveTurkeyMoFo]

Blob, I know you've tended to disagree with me on the extent and severity of this housing bubble, but I take no offense. Instead, I'm going to answer your questions by having you read the following article:

 

Liar Loans in California

 

Enjoy...or rather, try to keep down your lunch.

[The Less Blob]

Well, I still tend to think that the severity of the issue varies by region. Even the doom and gloom types tend the think NYC is going to be hit less than some other inflated areas because very little housing stock was being bought for "investment purposes" here. Flipping and being a landlord in NYC have too many transaction costs and burdens for it to be easy money here. Not saying things can't drop, they did in 1990, but we were also in the middle of record homicide rates, a crack epidemic and had inept mayor who coddled criminals and raised taxes every other week while raising city employee salaries resulting in a middle/upper middle class exodus when that happened, so I think it will be much less severe this time around. The way housing is structured in NYC has helped because most apartments are co-ops and most require a bona fide 20-25% down payment and don't allow interest only loans, thus limiting many purchases to those who can afford it. But there are condos hitting the market that aren't as stringent, which I'm sure will impact things.

 

Anything I move into I will most likely own for 5-20 years and will be putting at least 50% down, so I am less concerned about these things, but yes, I don't want to overpay either.

[The Less Blob]

hah, i read it, I'm doing a "stated income" loan too, but I don't seem to be getting hit with a high interest rate. I'm pretty certain the mortgage broker is not fudging my income, which is enough to pay for all of this, it's just that because i haven't sold my current place yet, so things are complicated.

[The Less Blob]

funny thing is, i even offered to send over our paystubs and last year's income tax returns and he said it wasn't necessary!

[JiveTurkeyMoFo]

hah, i read it, I'm doing a "stated income" loan too, but I don't seem to be getting hit with a high interest rate. I'm pretty certain the mortgage broker is not fudging my income, which is enough to pay for all of this, it's just that because i haven't sold my current place yet, so things are complicated.

 

You can get a good interest rate with a stated income loan.....that's not the issue.

 

The issue is people who don't have the income to afford the house they buy. You, as an attorney, clearly are not in that camp. The social worker in the article I posted, with her $2,750 monthly gross income and $500,000 home purchase, was the exact opposite.

 

As for how NY weathers the coming bust.....guess that depends on how many of those trendy lofts and condos were bought with exaggerated stated income loans.

[joe_collector]

The social worker in the article I posted, with her $2,750 monthly gross income and $500,000 home purchase, was the exact opposite.

 

I especially liked how these blamed their brokers for this mess, like they can't even do basic math, and are essentially victims.

[JiveTurkeyMoFo]

The social worker in the article I posted, with her $2,750 monthly gross income and $500,000 home purchase, was the exact opposite.

 

I especially liked how these blamed their brokers for this mess, like they can't even do basic math, and are essentially victims.

 

Well, if the broker truly put the disabled/unemployed husband down as self-employed with an $8,000 monthly income (without their knowedge or consent), then some of the responsibility certainly lies with him.

 

However, they signed loan paperwork they apparently didn't read or didn't understand. Inexcusable mistake # 1. And perhaps more telling, they were shopping for a $500,000 home while making less than $3,000/mth. Inexcusable mistake # 2.

[The Less Blob]

"As for how NY weathers the coming bust.....guess that depends on how many of those trendy lofts and condos were bought with exaggerated stated income loans."

 

I think even the condos want some sort of verification of income because you are responsible for common charges for the upkeep of the building, paying the janitor and other employees and they don't want you defaulting on that. actually, in some of the fancy buildings the common charges are well over $1,000/mo because of all the services, so I'm pretty sure they don't just accept your 'stated" income, but rather, ask for some proof.

 

But, buying your own home, etc., nobody is checking anything, so there could definitely be problems in suburbia that will impact things here. If I move the Westchester after things have dropped that could be a blessing in disguise, other than the $20,000 a year property taxes. Blech!

 

it really is amazing how things have changed. My father tried to be a mortgage broker in the early 90s and had a lot of viable people and businesses who wanted to refinance, but there was no (or very little) money to be borrowed. things were much tighter back then.

 

as for me being an attorney --- as of right now, I work for the government, so while the salary pays my bills (barely) and seems like a lot when you don't take into account my COL (it's a lot in tulsa or buffalo, let's say), I ain't exactly rolling in the dough! but i do get free dental, vision and virtually free medical!

[joe_collector]

And perhaps more telling, they were shopping for a $500,000 home while making less than $3,000/mth

 

Exactly, basic math.

 

Plus, I've seen this before, where home buyers just "play along" and will "worry about that later", simply because they want a house so badly.

[jimm94]

I just bought my first house, and it was very important to me to get something I could actually afford.

 

That's why I'm sitting right now in my nice new office/nerdatorium in Columbus, OH instead of a shoebox sized fixer-upper the San Francisco Bay Area.

[kc120us]

"If I move the Westchester after things have dropped that could be a blessing in disguise, other than the $20,000 a year property taxes."

 

You should consider Rockland County, it's just as nice and much less expensive.

[langur88]

Blob, I know you've tended to disagree with me on the extent and severity of this housing bubble

 

The housing "bubble" is a myth.

 

The average American buys more than he/she can afford and is in debt over their head. There will be a lot of houses, condos and SUVs up for auction in the next couple of years.

[JiveTurkeyMoFo]

Blob, I know you've tended to disagree with me on the extent and severity of this housing bubble

 

The housing "bubble" is a myth.

 

The average American buys more than he/she can afford and is in debt over their head. There will be a lot of houses, condos and SUVs up for auction in the next couple of years.

 

You're right...technically, this is not a "housing" bubble.

 

Its an "easy credit" bubble.

 

Its just that a large amount of that credit was focused into a housing market that seemed to guarantee yearly double digit gains.

 

No more.

[JLA_ALL_THE_WAY]

The social worker in the article I posted, with her $2,750 monthly gross income and $500,000 home purchase, was the exact opposite.

 

I especially liked how these blamed their brokers for this mess, like they can't even do basic math, and are essentially victims.

 

Wow! I actually agree with JC!

 

No matter how complicated the process might be, the responsibility is ultimately your own.

When I signed all the necessary paperwork for my house, I asked enough questions to make the loan officer roll his eyes. Oh well, if I don't understand something, you're going to explain it to my satisfaction...or I don't sign. It's my money, right?

 

Rick

[jimm94]

No matter how complicated the process might be, the responsibility is ultimately your own.

When I signed all the necessary paperwork for my house, I asked enough questions to make the loan officer roll his eyes. Oh well, if I don't understand something, you're going to explain it to my satisfaction...or I don't sign. It's my money, right?

 

Rick

 

Very true, although in my case my mortgage broker was genuinely impressed that I was asking some good questions about various aspects of the loan and closing process.

[The Less Blob]

"You should consider Rockland County, it's just as nice and much less expensive."

 

Tricky commute for my wife for reasons I won't get into, not that I've seen anything I like in Rockland County that seemed affordable and the taxes are almost as high. But I'll admit I haven't looked into that market as closely as Westchester, but within 45 minutes of GCT for $850K or so via internet listings I've found more appealing stuff in Westchester. Having to drive over the Tappanzee or GWB doesn't appeal so much to me.

[The Less Blob]

I believe some people are born without something in their brain that, for example, makes them only see "$199 a month" when it comes to a 36 month car lease and not see the fine print that says $3879.99 due at signing." Ditto for people who see the ads for a $500K mortgage for $1480/mo and who don't realize this is a tickler rate and even after it's explained 16 times, don't understand the concept.

[JiveTurkeyMoFo]

"I believe some people are born without something in their brain"

 

And thats all you really needed to say....

[shadroch]

Try the Outer Boroughs.Still some bargins to be found in Brooklyn,Bronx and Queens.My neighbor moved from a 5th story walkup studio on E14th to a 2 bedroom elevator building in Jackson Heights and is paying less rent per month.Is closer to the subway than before,to boot.