I often joke that my wife and I bought our home at the
absolute apex of the housing boom, the precise moment after which all prices –
at least in
much. But this wasn’t exactly like buying Homestore at $150 a share. Our
daughter was now walking and our old house was feeling small. We wanted to move
into one of
only good public school districts before things elsewhere got even worse.
our first house in 1999 with 20% down. Our 30-year fixed – which started at
7.5% — was refinanced down to 6.0. No cash out for us.
home, profited nicely, and ploughed every penny into the new one. The mortgage
broker we went to first tried to sell us on some scheme involving two loans,
one of which was adjustable. Her estimate of what we could “afford” was about
double our own calculations. I can’t remember the argument she put forth,
exactly, but I emailed her afterward to tell her we were going to work with
someone else.
done our second guessing, but right now we’re just grateful. Some in our set of
30-something parents are really hurting. They took advantage of “innovative”
mortgage products to shoehorn their way into the Bay Area housing market. We
know one couple that went the interest only ARM route and now pay 50% more each
month than they did just last year. They
wonder how they will ever get out of the mess they’re in. Another regrets
dumping $80k into a kitchen using a HELOC that was “flexible like a credit
card”, and could “never go two points above prime.”
motives make a complex blend.
away from my family, I’m just glad I’m going home.
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I feel your pain. I purchased my home in September 2005 (Brilliant!) in Northern Virginia. I think my neighbor just sold for about $100,000 less than what I paid for. I can't imagine being in a situation with and ARM right now, sweating until that dreadful adjustment notice comes in the mail. I know far too many clients that are in the same boat and I wish I could help them. Their will be a lot of victims that will fall due to bad advice from loan officers that helped them purchase a home that they could only afford during the interest only period or while the ARM stays fixed.
We are so grateful that we have a 30 year fixed at a very low rate!
I have found as a real estate assistant that the Lenders are not to blame for the "fix" everyone's in; the mortgage brokers are less than honest about the various programs, especially to first time homebuyers and the realtors just want to make a commission to pay their bills; all understandable….but the homebuyer and Lender suffer most. When I see the creative financing by Brokers with 2-loans, one fixed, one adjustable and find that buyers have a hard time coming in with the funds due at closing, its fairly clear that there will be problems later for these buyers (and ultimately the lender). The Lender's loans are only as good as the docs provided by the realtors and the brokers. Not many buyers actually cheat since most aren't smart enough(!), they just want a roof over their families. The Lenders need to develop a method of having local offices wherein an Officer can meet face-to-face and ask questions of the Buyers prior to final approval and verification. Officers that DO NOT receive any commission for the loan is important. Tightening the belt by the Lender only shuts out those buyers who are really trying to make a difference in the life of their families and have provided honest and true information.