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I disagree with the bolded statement. Are you supposed to have enough cash saved to continue to make your payments for say, two years, if you lose your job? I have neighbors who have been out of work that long, this in a "move-up" area.
Capitalism is harshly Darwinian. Leave emotion aside. I never said you had to have any cash set aside. When you buy anything with a loan you and the guarantor are gambling. You can do a lot to hedge your bets. However if you go at it with an all or nothing strategy you will get one or the other, all or nothing. It's really very simple. I know a lot of people who made a lot of money before the "bubble" burst by selling when the selling was good. Most would have lost everything had they not sold and cashed out their positions before 2008.
Capitalism is harshly Darwinian. Leave emotion aside. I never said you had to have any cash set aside. When you buy anything with a loan you and the guarantor are gambling. You can do a lot to hedge your bets. However if you go at it with an all or nothing strategy you will get one or the other, all or nothing. It's really very simple. I know a lot of people who made a lot of money before the "bubble" burst by selling when the selling was good. Most would have lost everything had they not sold and cashed out their positions before 2008.
May you never lose your job or other source of income. You get a 30 year mortgage. The lender loans you the money assuming you will be able to pay the payments for 30 years. If the unforseen happens, it's your bad luck, but it doesn't necessarily mean you were living beyond your means.
""I was thinking" led us to purchase a century-old house marginally beyond our budget on two more acres of land than either of us (city brats, both) was prepared to handle in a town 30 miles from anywhere. "I was thinking" has resulted in extravagant birthday parties with days spent on hand-painted murals, themed food, cakes with marzipan palm trees, pyramids and pirate ships. "
Don't tell me .... it's Bush's fault.
With regards to the "lender" .... did the lender also make you hold all those extravagant birthday parties?
I dont worry. My previous business folded in May of 2009. I saw the bubble coming to a head in 2006. I sold in 2007 and reinvested all my "winnings" into a much smaller house and reduced my mortgage payment by 200%. I currently have 65% equity after only two years including the price declines. I dont look at homes with emotion. They are a place to house my family and provide me with a return on my investment. I will not buy my final house until I can pay cash which will probably be some time in about 15 years.
May you never lose your job or other source of income. You get a 30 year mortgage. The lender loans you the money assuming you will be able to pay the payments for 30 years. If the unforseen happens, it's your bad luck, but it doesn't necessarily mean you were living beyond your means.
Again more emotion. Thats the problem. See my other post about losing my business.
"Save two years mortgage payments"? Should they add living expenses as well? Even if they didn't have a 20% down payment of fork over just where are most people going to make enough money to effectively double their mortgage payments to save up for losing their job? That is impossible with interest rates below inflation. Please tell me what sector pays that well?
The debtor economy that started during the Raygun years is a result of policies that led to more and more people, and the government, borrowing money instead so saving. The financiers do not want to either pay taxes or interest. They want to keep taxes low and loan the government the difference. When republicans are in charge, including that RINO coward Clinton, the rich get a lot richer than when reasonable progressives make them pay their fair share of the taxes needed to keep the country operating in the black.
I'll go out on a limb here and say that every foreclosure has a different story behind it. However, the foreclosed farm I bought last year was bank-owned because the young owner lost his life when he accidentally drove his Harley Davidson off the road. Whether or not this was the result of an irresponsible lifestyle or something beyond the control of this young man, I truly do not know. I did find many beer cans scattered around the place as well as 9mm shot holes in the barn, the dumpster, the telephone poles and even one shot (hopefully not a 9mm) in the propane tank which gives me pause for thought.
"Save two years mortgage payments"? Should they add living expenses as well? Even if they didn't have a 20% down payment of fork over just where are most people going to make enough money to effectively double their mortgage payments to save up for losing their job? That is impossible with interest rates below inflation. Please tell me what sector pays that well?
The debtor economy that started during the Raygun years is a result of policies that led to more and more people, and the government, borrowing money instead so saving. The financiers do not want to either pay taxes or interest. They want to keep taxes low and loan the government the difference. When republicans are in charge, including that RINO coward Clinton, the rich get a lot richer than when reasonable progressives make them pay their fair share of the taxes needed to keep the country operating in the black.
There is nothing wrong with being a debtor as long as you understand the risks. People can make some serious money by using debt as a tool instead of as a means. As a contractor whose business it was to service the housing economy I saw first hand those who used debt as both a tool and a means.
May you never lose your job or other source of income. You get a 30 year mortgage. The lender loans you the money assuming you will be able to pay the payments for 30 years. If the unforseen happens, it's your bad luck, but it doesn't necessarily mean you were living beyond your means.
Kat,
you are correct that many are in that situation
but
there are also plenty who were banking on flipping those houses, or were banking on them to keep rising in value
a prime example would be that guy back in 2007 that was on CNN crying that he was going to lose his house...he has a 700k mortgage.....ON A 45k INCOME.......that was his fault he KNEW he couldnt afford it.
when I was looking for my house, I KNEW what I could afford based on NOT ONLY the principle but also on the insurance and TAXES.....they said I qualified for A LOT MORE...but I KNEW what I could comfortably afford...anyone past a 5th grade education should at least know what they can afford before signing a contract
but
yes some have lost their jobs...they should be helped..the others...its their fown fault
I'll go out on a limb here and say that every foreclosure has a different story behind it. However, the foreclosed farm I bought last year was bank-owned because the young owner lost his life when he accidentally drove his Harley Davidson off the road. Whether or not this was the result of an irresponsible lifestyle or something beyond the control of this young man, I truly do not know. I did find many beer cans scattered around the place as well as 9mm shot holes in the barn, the dumpster, the telephone poles and even one shot (hopefully not a 9mm) in the propane tank which gives me pause for thought.
Congratulations. I wish you well and hope your investment pays off in the end.
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