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Surprised the rate on your ARM increased?
Old 04-04-2006, 05:42 PM   #1
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Surprised the rate on your ARM increased?

Um... these people were.

http://news.yahoo.com/s/usatoday/som...djustablerates

!!!!
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 05:45 PM   #2
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Re: Surprised the rate on your ARM increased?

Read that this morning. They oughta sue Greenspan for telling them to do it while he fully intended to extensively raise rates.

Nice deal for his banker buddies.

What really surprised me is it said that one of the couples refinanced to an ARM at something like 7%, thats since risen to over 10%? What the heck were they smoking
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 05:47 PM   #3
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Re: Surprised the rate on your ARM increased?

Some of these people either

a) had a very tough time qualifying for their house and HAD to use a variable to buy the house.

or

b) had crappy credit, used the house ATM to pay off the cards so that they could consume more, and were required by their crappy credit to take a variable loan

They were smoking the "I'm entitled" blend

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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 05:54 PM   #4
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Re: Surprised the rate on your ARM increased?

"The bank doesnt want to loan you the money, and they loan money to almost everyone" should be the flashing, screaming "check engine" light of the personal finance world...
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:01 PM   #5
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Re: Surprised the rate on your ARM increased?

Getting yourself into an ARM when interest rates are close to 40 year lows.. Which direction would you expect rates to go ?*
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:21 PM   #6
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Re: Surprised the rate on your ARM increased?

My guess is that people who end up with terrible deals like this just walked into the local bank or mortgage broker's office, asked for a mortgage, were offered this one, and signed on the myriad dotted lines. No research, no comparison shopping, no wondering if their house (or any house) was affordable or whether there are alternative ways to handle their debt, just trust...in the nice man with the gold nameplate at the bank, in their own good fortune, in the Deity.
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:35 PM   #7
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Re: Surprised the rate on your ARM increased?

From what I'm reading ... most of these folks refinanced to pay off bills. I suspect Blaster is right on ... they all had subpar credit and fell right into the hands of predatory loan companies...

And what's up with this guywho bought a house in Georgia with an interest-only loan and thought within 6 months he'd be selling? Too many episodes of "Flip this House"?
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:39 PM   #8
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Re: Surprised the rate on your ARM increased?

Quote:
Originally Posted by VoyT
Too many episodes of "Flip this House"?
OMG I HATE those types of shows...they're very superficial
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:48 PM   #9
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Re: Surprised the rate on your ARM increased?

Quote:
"At the time of the loan, they tell you, 'Well, it may go up, but it's probably going to go down.' You want it to be so, so you believe it."
It doesn't say when they took out the loan, but considering that the rate increased 350 bp from 7% to 10.5%, it seems as if they went into the ARM when the Fed was at 1.25% . . . after the very first increase. Telling these folks "it's probably going to go down" is criminal.
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:51 PM   #10
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Re: Surprised the rate on your ARM increased?

And why is his ARM Mortgage higher than my 20 year fixed in San Diego? *These examples make a good story on the surface, but they don't pass the smell test. *Not typical, even for spendthrift Americans.

Not to get too off topic, but while I like to bash predator businessmen/legal loan sharks as much as the next guy, I don't feel much sympathy for people in over their heads on mortgages. *People will spend 40 hours figuring out their NCAA brackets or football pools, but can't go to lending tree or do a little research to make sure when they sign the most important documents (probably) in their life, they aren't getting a raw deal?

My MIL just vented to me she thought she was going to lose the house. She and FIL seperated about a year ago (total mid life crisis-whatever), he's paying ~$1,000 a month (they have two kids still under 18), and they bought their house over ten years ago for ~$120,000, and she makes a pretty good wage, 20 years in a govt. job. *Yet somehow she can't make what should be $1200-$1300 payment, tops?

I tried to help her, but it was no use, run up credit cards, refinance and pay off. *Nail in the coffin was getting a pool put in right before they seperated. *On the one hand, she admits she wouldn't have done it if she had known what was coming, but it should have never been that close to the edge in the first place. *

Even still, I tried to sit down with her and work the numbers, figure out what she can do. *The more I dived in, the more my head was reeling, $200+/month on "whole" life insurance on the kids? *How much for car insurance? *I told her what she needed to do, I garantee she hasn't done it. *And six months from now things will be even worse and she won't remember this conversation. *

I love her very much, she is the best MIL one could ask for in many ways, but she suffers from a mental block that I just don't think is curable. *I told DW that if it comes to it, we'll buy a bigger house and have her move in, pay us rent that is equivalent to the difference in the house payment. *She's great with her grandaughter, and I couldn't bear the thought of her living anyplace but a nice home. *
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:52 PM   #11
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Re: Surprised the rate on your ARM increased?

Yeah it's the banks fault these people were so gullible.

Out here we call that the stupidity tax.
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 06:58 PM   #12
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Re: Surprised the rate on your ARM increased?

Quote:
Read that this morning. They oughta sue Greenspan for telling them to do it while he fully intended to extensively raise rates.
I remember that and thinking wtf Funny how this story mentions "other bills" that people need to pay off. No need to go into detail on what crap they spent on and have the story rather point the finger at the banks.
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 07:03 PM   #13
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Re: Surprised the rate on your ARM increased?

Quote:
Originally Posted by Laurence
...This is why I won't:

Get trapped buying a bigger house,...
Quote:
Originally Posted by Laurence
... I told DW that if it comes to it, we'll buy a bigger house and have her move in...
Wow. Things really change fast at the Laurence house, don't they?

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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 07:09 PM   #14
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Re: Surprised the rate on your ARM increased?

O.K., O.k., but I'll only do it if some one is paying the difference!
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 07:15 PM   #15
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Re: Surprised the rate on your ARM increased?

Does anyone remember Southern California real estate in the late 80's - early 90's? People were dropping off their keys to the lenders. Sad time for residential and commercial property.
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 07:56 PM   #16
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Re: Surprised the rate on your ARM increased?

Quote:
Originally Posted by Laurence
O.K., O.k., but I'll only do it if some one is paying the difference!
I believe that would be YOU!
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 08:17 PM   #17
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Re: Surprised the rate on your ARM increased?

Wonder what part of "adjustable rate mortgage" they didn't get...
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 08:38 PM   #18
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Re: Surprised the rate on your ARM increased?

no doubt these surprised individuals are among the "40% of Americans over 55 (who) had savings and investments totalling less than $25,000" (see topic)

this might indeed be the "stupidity tax",* but the lottery that they "plan to win" to finance their retirements is undoubtedly the "idiot tax"

... makes you wonder about folks, doesn't it?
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Re: Surprised the rate on your ARM increased?
Old 04-04-2006, 08:46 PM   #19
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Re: Surprised the rate on your ARM increased?

a short while back a major network broadcasted a similar story about this couple who had to give up their mini-mansion. they showed the woman coming downstairs into her two-story height living room that she had to part with and portrayed them as victims of circumstance.

i watched this from the cozy florida room of my 1200 sf shotgun cottage (probably worth more than their mini-mansion) and much to my surprise, i had trouble sympathizing with her.
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Re: Surprised the rate on your ARM increased?
Old 04-05-2006, 06:28 AM   #20
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Re: Surprised the rate on your ARM increased?

Quote:
Now, the real estate market is cooling, interest rates are rising and tens of thousands more Americans are starting to have trouble paying their mortgages. Nearly 25% of mortgages - 10 million - carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.
Nearly 25% of mortgages are ARMs? Mostly to people with sub-par credit?

Now that's scary!

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