Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
The End of the Bull Market in Real Estate is Near...
Old 05-13-2019, 08:40 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 1,922
The End of the Bull Market in Real Estate is Near...

From an e-mail solicitation an agent friend received...

Extra-Extra, Read All About This... Exciting News!

The 40-year mortgage is back

Are your clients struggling to get into the housing market?

Can’t get their dream home because the monthly payment is just a little out of their reach for the short term?

Now they have an option to afford the home they want and have a lower monthly payment!!!
Purchase or Refinance
10 years of interest only payments
Year 11, it converts to principle and interest
Rate is determined upfront
Minimum FICO 600
Minimum Down payment 10%
Self-employed...Don’t show enough income on taxes? It's ok too!!!
More Info Please!

According to National Association of Realtors (NAR)
The average length of time people stay in their home, is 10 yrs.
Why not try and save during that time?


Shades of 2006...
__________________

Another Reader is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-13-2019, 08:52 PM   #2
Thinks s/he gets paid by the post
Just_Steve's Avatar
 
Join Date: Apr 2016
Location: Dutchess County
Posts: 1,250
Quote:
Originally Posted by Another Reader View Post
Shades of 2006...
Let the good times roll
__________________

Just_Steve is offline   Reply With Quote
Old 05-13-2019, 09:04 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Nov 2015
Posts: 1,555
People always say never forget, that is until there's a couple of bucks to be made by forgetting.
bobandsherry is offline   Reply With Quote
Old 05-14-2019, 05:14 AM   #4
Recycles dryer sheets
 
Join Date: Jan 2019
Location: fostoria
Posts: 316
WOW, 10 years of interest only payments ? That will ruin some young lives, and cause another 2008 style collapse at some point.

Schools need to teach personal finance to prevent scams like this from getting big.
ckelly78z is offline   Reply With Quote
Old 05-14-2019, 05:24 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Posts: 2,571
You can tell it's good by how many exclamation marks they use!!!!!
__________________
Old enough to know better.
joeea is offline   Reply With Quote
Old 05-14-2019, 05:24 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Posts: 2,571
Quote:
Originally Posted by ckelly78z View Post
WOW, 10 years of interest only payments ? That will ruin some young lives, and cause another 2008 style collapse at some point.
40 year mortgages with 10 years of interest only payments aren't going to be the cause of any collapse. It would take a lot more than that.
__________________
Old enough to know better.
joeea is offline   Reply With Quote
Old 05-14-2019, 05:55 AM   #7
Recycles dryer sheets
Christine's Avatar
 
Join Date: Dec 2014
Posts: 306
Just saw the movie The Big Short. Have anyone seen some nice Credit Default Swaps recently?
Christine is offline   Reply With Quote
Old 05-14-2019, 06:59 AM   #8
Recycles dryer sheets
 
Join Date: Dec 2016
Posts: 78
As soon as I read “10 years of interest only” I shuddered.
Carol1862 is offline   Reply With Quote
Old 05-14-2019, 07:29 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 4,196
Quote:
Originally Posted by Carol1862 View Post
As soon as I read “10 years of interest only” I shuddered.


I agree. Way more damaging than the 40 yr term.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 05-14-2019, 07:46 AM   #10
Recycles dryer sheets
Stonewalker's Avatar
 
Join Date: Mar 2019
Location: Pearland
Posts: 87
Quote:
Originally Posted by joeea View Post
40 year mortgages with 10 years of interest only payments aren't going to be the cause of any collapse. It would take a lot more than that.
True, but it is a sign of a certain mindset that causes people to walk into that kind of financial deal. It is that renewed mindset that makes me think the OP is on the right track.

Let's face it - most people on this forum are wise enough to at least see the financial cliff and try to hang glide from it instead of drop off it.
__________________
Retired 2015. Jesus follower. Author, Husband, Dad, Futurist, Dreamer.
Stonewalker is offline   Reply With Quote
Old 05-14-2019, 08:13 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Posts: 2,274
I never understood the allure of a 40 year mortgage, since in the early years, your payment is mostly interest anyway. It's not going to reduce your overall payment much, versus a 30 year.


For instance, I just refinanced my place to a 30 year fixed at 3.875%. $472,500. Principal and interest is $2221.87/mo.


A 40 year, with everything else being the same, would be $1938.19/mo, a savings of around $284 per month. That seems pretty inconsequential to me.


However, a 40 year, where it's interest-only for the first 10 years, and then it basically goes to a 30 year? Well, with the same terms (3.875%, 472.5K), the interest payment on that is $1525.78. A savings of $696.09/mo.


Now, I wouldn't want to do something like that, because I'd hate the fact I wasn't building equity. But, I could see some people being seduced into that. Especially, if they think real estate prices will rise in the near future, so they'll build equity that way.


However, I have the feeling that a 40-year mortgage, or one of these 10/30 or whatever they call it things, would have a higher interest rate than a straight-up 30 year?
Andre1969 is offline   Reply With Quote
Old 05-14-2019, 08:58 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 1,922
Not likely to be conventional mortgages... Someone is looking to make these and then sell them somewhere. MBS, anyone?
Another Reader is online now   Reply With Quote
Old 05-14-2019, 09:16 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 8,701
One thing I have learned from consumer information services over the years is that the same scams come and go, seeking new victims every time they return. They may be dressed up in different clothing and with new 50˘ words to describe them, but lipstick on a pig..........
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 05-14-2019, 09:36 AM   #14
gone traveling
 
Join Date: Dec 2018
Posts: 656
+1. / reminds me of the junk mail I get with companies promoting too good to be true agenda.
Nick12 is offline   Reply With Quote
Old 05-14-2019, 10:06 AM   #15
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 524
I can see the 40 year mortgage having an application. The difference between the 30 yr and 40 yr can provide an additional $50K in purchasing power. Here in the SF Bay Area, that could be the difference needed to get your first home. While I hate to 10/40, it could have an application too. It could be the difference maker for some people.
jkern is offline   Reply With Quote
Old 05-14-2019, 10:14 AM   #16
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 15,956
One sign is when a critical mass of buyers define "affordable" in terms of their initial monthly payment, and little else.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Old 05-14-2019, 10:20 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 7,023
Quote:
Originally Posted by Andre1969 View Post
....

For instance, I just refinanced my place to a 30 year fixed at 3.875%. $472,500. Principal and interest is $2221.87/mo.
....

.... I'd hate the fact I wasn't building equity. But, I could see some people being seduced into that. Especially, if they think real estate prices will rise in the near future, so they'll build equity that way.

.
Why would you do that if you hate building equity ?
Previously, I've done the opposite, and go for a shorter term, so that the place is paid off faster.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is online now   Reply With Quote
Old 05-14-2019, 11:17 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Posts: 2,274
Quote:
Originally Posted by Sunset View Post
Why would you do that if you hate building equity ?
Previously, I've done the opposite, and go for a shorter term, so that the place is paid off faster.

I, personally, just refinanced because I had just bought the place in September of last year, and was at 4.75%. I was only 7 months into the mortgage. This refinance dropped my monthly payment by around $250.


And what I said was was that, in reference to that 10/40 mortgage, I wouldn't like it myself, because of the fact it WOULD NOT build any equity in those first ten years. But, I could see that attraction, for others, who are only focusing on the lower payment.



At 3.875%, I'm not in a huge hurry to get the place paid off. But at the same time, I don't want that big balance hanging over me forever!
Andre1969 is offline   Reply With Quote
Old 05-14-2019, 12:16 PM   #19
Recycles dryer sheets
 
Join Date: Oct 2018
Posts: 144
This is a great loan for the lenders. Much like payday loans, and other legal loan sharks. Notice how a FICO score of only 600 is required. At any level this loan is a bad idea for the borrower.
Vacation4us is offline   Reply With Quote
Old 05-14-2019, 12:19 PM   #20
Thinks s/he gets paid by the post
 
Join Date: Jun 2010
Location: France
Posts: 1,285
I remember an earlier housing downtown in the UK, when a commentator said (approx) "The problem is that we have a 10-year cycle and people have 8-year memories".
__________________

__________________
Age 58, retired July 1, 2012; DW is 61 and working for one more year (really!). Current portfolio is 2000K Euros, split 40 stocks/20 bonds/20 RE/20 cash. Renting house, no debts.
BigNick is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 3 (0 members and 3 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Real Estate/Equities Market Bull Run yakers Stock Picking and Market Strategy 2 09-25-2016 05:39 AM
Are the end times near? calmloki Other topics 8 05-29-2010 06:11 AM
Paul Farrell - The End is Near beowulf FIRE and Money 15 10-20-2009 05:09 PM
The end is near.... RockOn FIRE and Money 2 06-04-2008 07:18 PM
Real Estate Agent in Down Real Estate Market TromboneAl Other topics 4 06-09-2007 10:20 AM

» Quick Links

 
All times are GMT -6. The time now is 08:50 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.