Having been priced out - what to do?

[joeymarine]

That is part of the reason...the second reason we are beginning to see a lot fohomes foreclosed upon is that a lot of the peopl foreclosing were "iffy" buyers to begin with and most likely what happened is that they were "sold" a loan product that made the pymt just affordable and barely got the borrower into the home. Fast forward 2-3 years when the fixed portion of an ARM is up and the rate jumps 2-3 points overnight and your mortgage payment goes up 200-500 dollars a month on a morgage payment that was already stretching it.

I don't necessarily blame it on the individual, but more on the mortgage broker because the borrower wasn't educated properly on the product he was buying, such as the downfalls and what they need to do during the fixed rate period in order to refinance into a more conventional product.

but once again....that's just my $0.02.

~Joey

[TimtheGuy]

Originally Posted by joeymarine

Stocks avg 7% over what kind of a time period...and are we talking stocks in general...ie across the board if there were a fund that invested in every single stock (i'm sure they've got it somewhere) it has gone up on avg 7%/yer over how long?

I believe it is actually higher than 7% (more like 8+) and the time frame is LONG....like 50+ years.

[TimtheGuy]

Originally Posted by joeymarine

That is part of the reason...the second reason we are beginning to see a lot fohomes foreclosed upon is that a lot of the peopl foreclosing were "iffy" buyers to begin with and most likely what happened is that they were "sold" a loan product that made the pymt just affordable and barely got the borrower into the home. Fast forward 2-3 years when the fixed portion of an ARM is up and the rate jumps 2-3 points overnight and your mortgage payment goes up 200-500 dollars a month on a morgage payment that was already stretching it.

I don't necessarily blame it on the individual, but more on the mortgage broker because the borrower wasn't educated properly on the product he was buying, such as the downfalls and what they need to do during the fixed rate period in order to refinance into a more conventional product.

but once again....that's just my $0.02.

~Joey

Blame it on the mortgage broker?????? That is a PATHETIC idea!!! Does anyone take personal responsibility anymore? That is like blaming the liquor store for the drunk driver (which I am sure you are a proponent of).

[joeymarine]

Originally Posted by TimtheGuy

Blame it on the mortgage broker?????? That is a PATHETIC idea!!! Does anyone take personal responsibility anymore? That is like blaming the liquor store for the drunk driver (which I am sure you are a proponent of).

I do appreciate the analogy, but it really doesn't work...not driving drunk is just common sense (unfortunately not common enough), but I do get your point and please hear me out on this....

I am not slamming ALL mortgage brokers, because I have worked with some that do have a conscience (and like to sleep at night) and do educate their clients. I do agree with taking personal responsibility...but that doesn't absolve a PROFESSIONAL from educating someone on the product being purchased from them. The ones I am talking about are the brokers who put a first time buyer whose head is already spinning because they don't understand anything into a loan product that can have potentially damaging effects if not handled the proper way.

I do agree that you need to do your own due diligence and know what you are purchasing, but the mortgage industry is so highly specialized and there are literally thousands of different programs out there that Realtors don't even know how to explain everything because we don't even understand it all (which I feel Realtors also need to be more educated on, but that's a different thread). You can't expect someone who has never purchased a home before to understand what the potential downfalls can be of doing "106% financing and doing an 80/20 no doc loan both being 5/1ARM with a 15 year balloon" means...in fact, i'm not quite sure if what I typed makes sense....ya know what I mean?

I just feel that MTG brokers need to take a little bit more time to explain all the options and the pitfalls of different types of products and not just say "Yeah, I can put you into a home...that's no problem just get me pay stubs, last years tax returns and a verification of rent/employment."

Doing business the proper way will take you along way and bring you more business than you know what to do with.