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Old 03-27-2015, 03:06 PM
 
18,532 posts, read 15,510,571 times
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Quote:
Originally Posted by Mircea View Post
Have you read the fine print in your mortgage and credit card agreements?

Ooops...

Mircea
You're assuming the mortgage is an ARM.
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Old 03-27-2015, 03:08 PM
 
3,792 posts, read 2,376,733 times
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Quote:
Originally Posted by ncole1 View Post
You're assuming the mortgage is an ARM.
A lot of the mortgages in Iceland had inflation clauses in them. Do read the fine print of those fixed rate mortgages.
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Old 03-27-2015, 10:12 PM
 
Location: Ohio
24,623 posts, read 19,105,746 times
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Quote:
Originally Posted by ncole1 View Post
You're assuming the mortgage is an ARM.
Um, no, you are.

Quote:
Originally Posted by ContrarianEcon View Post
A lot of the mortgages in Iceland had inflation clauses in them. Do read the fine print of those fixed rate mortgages.
Yes, you got something right.

The technical/legal term is "escalation clause" (for those interested in doing research on it).

Escalating...


Mircea
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Old 03-28-2015, 09:47 AM
 
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Quote:
Originally Posted by Mircea View Post

Yes, you got something right.
This is the second time we have agreed on something so purgatory already has frozen over
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Old 03-28-2015, 11:45 AM
 
Location: Ohio
24,623 posts, read 19,105,746 times
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Quote:
Originally Posted by ContrarianEcon View Post
This is the second time we have agreed on something so purgatory already has frozen over
The escalation clauses are a really big deal.

It's shocking to me, that people would buy a home, but then totally refuse to spend $75 to $200 to have a real estate attorney review and explain all of the loan documents.

Some of these escalation clauses, when they kick in, start pegging to the prime rate. For those who don't know, Monetary Inflation in the 1970s resulted in a 13+% Prime Rate in an attempt (which failed) to decrease the money supply.

The circumstances today are very different. If the Prime Rate was set at 13+%, I'm certain it would have more of impact now, than it did in the 1970s.

Agreeing...

Mircea
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Old 03-28-2015, 12:16 PM
 
3,792 posts, read 2,376,733 times
Reputation: 768
Quote:
Originally Posted by Mircea View Post
The escalation clauses are a really big deal.

It's shocking to me, that people would buy a home, but then totally refuse to spend $75 to $200 to have a real estate attorney review and explain all of the loan documents.

Some of these escalation clauses, when they kick in, start pegging to the prime rate. For those who don't know, Monetary Inflation in the 1970s resulted in a 13+% Prime Rate in an attempt (which failed) to decrease the money supply.

The circumstances today are very different. If the Prime Rate was set at 13+%, I'm certain it would have more of impact now, than it did in the 1970s.

Agreeing...

Mircea
Now a tax on the balance owing on debt should side step that escalation clause...

Another reason why we can't raise the prime.

13% prime now with the debt load we are carrying would cause an implosion. Economically speaking. Tax the balance owing on debt. rain in inflation without tripping those clauses. But they would cry foul. nothing quite like changing the rules in the middle to make people cry.

on a side note. Greenland's ice sheet is on an exponential growth curve in ice flow. Short estimate is 20 years to 23 foot rise in ocean level. (My guise is about 25% chance of that happening.) More like 50 to 100 years. That would put a lot of banks collateral underwater. so the loans would be too. Time to sell sea level property. And cut your exposure to harm from a 23 foot sea level rise. As when it comes to bank runs he who panics first panics best.
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Old 03-29-2015, 05:07 AM
 
Location: Atlanta
4,439 posts, read 5,510,075 times
Reputation: 3395
Quote:
Originally Posted by Mircea View Post
The escalation clauses are a really big deal.

It's shocking to me, that people would buy a home, but then totally refuse to spend $75 to $200 to have a real estate attorney review and explain all of the loan documents.

Some of these escalation clauses, when they kick in, start pegging to the prime rate. For those who don't know, Monetary Inflation in the 1970s resulted in a 13+% Prime Rate in an attempt (which failed) to decrease the money supply.

The circumstances today are very different. If the Prime Rate was set at 13+%, I'm certain it would have more of impact now, than it did in the 1970s.

Agreeing...

Mircea
I know for a fact, 100% percent that my mortgage payment will NEVER increase - even if inflation reaches 10,000%.

If we do have a bout of hyperinflation, you can beat I'll pay it down as fast as I can with devalued dollars as quickly as they can - if they try to pull some crap that I need to pay more than was was specified in the contract then they've got another thing coming...lol.
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