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Old 01-06-2009, 06:51 AM
 
Location: Londonderry, NH
41,478 posts, read 52,833,092 times
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Advertizing is based on the concept of convincing people they have a problem and your product will fix the problem. HGTV taught the gullible that their self worth and societal status depended on having more house than they could afford and the banks created a product that made the over priced houses seem affordable. The buyers walked away feeling good about themselves at least for a while.

Now the iron gods of the economy are forcing the prices down to a level related to the real income. People that bought at a reasonable price with the intent to live in, instead of speculate with, their houses are going to be fine. The speculators, even the inadvertent speculators, are going to get hammered.
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Old 01-06-2009, 08:20 AM
 
Location: Wherabouts Unknown!
7,771 posts, read 17,230,289 times
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GregW wrote:
The speculators, even the inadvertent speculators, are going to get hammered.
How it really is: The speculators, even the inadvertent speculators, ARE getting hammered.
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Old 01-06-2009, 09:51 AM
 
107 posts, read 258,374 times
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I am waiting for a new series to come out To be called Bankruptcy or Foreclosure and it should air after property virgins.
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Old 01-06-2009, 09:58 AM
 
2,197 posts, read 6,817,682 times
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Advertising has always been intended to sell people things they may or may not need. Nothing new there.

Why blame a TV network? Is it CNBC's fault that the economy is in a recession? Does "Three and a Half Men" teach people that drinking and slacking makes you rich? Yes, the media can be influential, but free will trumps TV and always has. It's ridiculous that we use the media to excuse people for making bad decisions and poor choices. Yes, some people are getting hammered, and the blame should go right where the fault does-- with the person who chose to buy the nails.
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Old 01-06-2009, 11:52 AM
 
4,182 posts, read 5,914,566 times
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Quote:
Originally Posted by hindsight2020 View Post
Ah but here's the catch. In the world I live in the math is different. In my world 120K + 0K = 120K and thence 60K + 60K ≠ 120K ...it = 60K The failure of Americans to grasp this economic paradox, compounded with their failure in recognizing AND accepting the erosion of their purchasing power in the last 20 years is what has given rise to the current state of affairs. One may not agree with my math, but the current state of things tends to agree with my position....A household is only benefited by the presence of two incomes when one income is all that is required to fulfill the household. However when TWO incomes are required to afford said household, you cannot afford said household. Dual income households is the fundamental proof of the fallacy of home affordability in this country, yet people look at this with a glazed over look on their faces, it amazes me.....
Good point. Buy a house assuming only one income is needed to pay the mortgage, even though there really are two income earners in the household. That way, if one earner loses a job, it will not be a disaster. My own rule of thumb is even more conservative: base your mortgage amount assuming the lesser of 2 incomes will be paying for it. If husband makes $250K and wife makes $150K, then get a mortgage that matches the $150K income.
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Old 01-06-2009, 12:20 PM
 
Location: Wherabouts Unknown!
7,771 posts, read 17,230,289 times
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ndfmnlf wrote:
Buy a house assuming only one income is needed to pay the mortgage, even though there really are two income earners in the household.
That's almost exactly how my wife and I approached the purchase of our most recent home. We based affordability on just one income ( the slighty higher one in our case ), AND we stayed well below the maximum paymnet that we qualifed for with that income.

It was more a stroke of luck than financial genius that put us in a position to exercise such a strategy. Our previous home tripled in value during the 16 years we owned it, so we had a big chunk of equity to use as a downpayment on our current home. If you are fortunate enough to do that, you can keep the mortgage waaaay low.
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Old 01-06-2009, 01:21 PM
 
349 posts, read 800,865 times
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Quote:
Originally Posted by Humanoid View Post
The interest is not compounded as you are paying down the loan each month, you are paying almost double because the loan is so long. For the first 10 years or so of the loan the majority of your payment goes to interest. For example, the first year of a 30 year mortgage (at 6%), your payment of $1,200 would be composed of around $200 principle (the amount you are paying off) and $1000 interest.

Personally, I think 30 year mortgages are a scam. I much prefer 15-year mortgages. For $200k, it would be $1650 (at 5.7%, 15-years are usually .30~.40% less rate wise). Of your $1650 payment, $700 or so is principle the first year. For an additional $450/month you cut the life of your loan in half.
thank you for clearing that up. 30 year mortgages ARE ridiculous.
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Old 01-06-2009, 01:23 PM
 
180 posts, read 330,948 times
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I've always said that for every article on how low interest rates were going there should've been a comesurate article on how high home prices were rising.

yeah, you're only paying 5% but the home you just bought costs 110% more!
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Old 01-06-2009, 02:07 PM
 
Location: San Antonio
944 posts, read 2,845,555 times
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Very true Metamucil, and the SMART first time buyers are going to have to think long and hard before falling for the new, low, interest rates. The only way that it makes sense to take advantage of them is if the low interest rates are PERMANENT. This is because the moment interest rates rise to where they should be, the house price will fall and these new buyers will likely be underwater or at least lose their down payment!! The math is pretty simple. It's the denial that's complicated.
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Old 01-06-2009, 09:48 PM
 
5,654 posts, read 17,624,408 times
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Funny, the spouse and I were just discussing this concept yesterday... that house flipper show was kind of bad, introduced a whole world of incompetents to that field, people that thought they could do it, just put in a granite countertop and it's all good. And double your money in a year... there were a couple in our neighborhood that did cosmetic flips that later turned into disasters for the homeowners.

Personally I always had an issue with HGTV in that they call it home and garden.... not much gardening there. they should call it home and "tasteful landscaping that will increase your home value" TV. In this economy, they should run shows on how to tell people to install and upkeep their own veggie gardens and orchards! I know many fellow gardeners who have contacted the channel about this very subject and it falls on deaf ears there BTW.
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