So apparently, people who are pissed at the lost equity in the their homes buy another, cheaper house while their credit is good. They move out of house number 1 and let it go into foreclosure. They take a hit on their credit, but hey, they're already in a more affordable home.
I suspect that lending institutions didn't see that one coming. Karnaj fucked around with this message on 01-29-2008 at 09:13 AM.
Under capitalism, man exploits man. Under communism, it's just the opposite. - John Kenneth Galbraith
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And now, we sprinkle Maradon! liberally with Old Spice!
Is this what's referred to as "flipping"?
Nah, this more along the lines of "giving lending institutions a fisting." Homeowners are basically saying, "Yeah, I could pay your exorbitant mortgage. Or I could buy the house across the street, pay a reasonable mortgage, and let you deal with the property devaluation. Take my keys and the deed, please."
I wonder if this so-called trend is going to be widespread, and what the consequences would be for lending institutions. I mean, all the homeowners have to worry about is having bad credit for seven years, as they already secured their mortgage when their credit was good.
Under capitalism, man exploits man. Under communism, it's just the opposite. - John Kenneth Galbraith
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Maradon! obviously shouldn't have said:
Is this what's referred to as "flipping"?
Flipping is when you buy a shitty broken down house and pour a few grand into it and turn it into a nice home and immediately sell it for profit.
"Don't want to sound like a fanboy, but I am with you. I'll buy it for sure, it's just a matter of for how long I will be playing it..."
- Silvast, Battle.net forums
Then I got pre-approved for a mortgage last night. A $250,000 mortgage. I was only asking for $170,000. I commented that I could never afford the monthly payments on that. They started pushing the special mortgage types at me left and right. I could see where someone who wasn't all that bright could get themselves caught up in the idea of having a really nice house now instead of 10 years from now and make a bad decision, especially with all the pushing you get from the banks.
So I've changed my opinion, slightly.
"Don't want to sound like a fanboy, but I am with you. I'll buy it for sure, it's just a matter of for how long I will be playing it..."
- Silvast, Battle.net forums
"Don't want to sound like a fanboy, but I am with you. I'll buy it for sure, it's just a matter of for how long I will be playing it..."
- Silvast, Battle.net forums
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Blindy.'s account was hax0red to write:
I used to think that all this mortgage stuff was completely the consumer's fault for pushing for a house that cost more than they could afford.Then I got pre-approved for a mortgage last night. A $250,000 mortgage. I was only asking for $170,000. I commented that I could never afford the monthly payments on that. They started pushing the special mortgage types at me left and right. I could see where someone who wasn't all that bright could get themselves caught up in the idea of having a really nice house now instead of 10 years from now and make a bad decision, especially with all the pushing you get from the banks.
So I've changed my opinion, slightly.
It's true, the exact same thing happens here. A friend of mine went asking for 450,000 (which is what a small condo costs here.) and they approved him for 850,000! His reaction was the same. "I can't afford that." them: "Sure you can." him: "Uh, no, I can't." This guy is an accountant and owns a small business, someone who doesn't have that kind of handle on their money will hear them spouting all this stuff about special programs etc. and in the end will leave thinking they actually can afford double their price range. They'll be in trouble from month one.
As far as people asking for foreclosures... it's purely a business decision... Why should you keep paying 500,000$ for something that's now only worth 250,000 and has little chance of ever making it back to 500,000, let alone above that. You'll never make any money off of it, hell, it'll never be worth what you paid, so why keep paying for it?
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Kermitov's account was hax0red to write:
It's true, the exact same thing happens here. A friend of mine went asking for 450,000 (which is what a small condo costs here.) and they approved him for 850,000! His reaction was the same. "I can't afford that." them: "Sure you can." him: "Uh, no, I can't." This guy is an accountant and owns a small business, someone who doesn't have that kind of handle on their money will hear them spouting all this stuff about special programs etc. and in the end will leave thinking they actually can afford double their price range. They'll be in trouble from month one.As far as people asking for foreclosures... it's purely a business decision... Why should you keep paying 500,000$ for something that's now only worth 250,000 and has little chance of ever making it back to 500,000, let alone above that. You'll never make any money off of it, hell, it'll never be worth what you paid, so why keep paying for it?
Not necessarily. Unlike cars, houses have the ability to appreciate in value.
As for my personaly experience, I was pre-approved for $180k in the Texas real estate market. I only asked for about 140k. Its not near as extreme as other people, so I actually asked the agent I was talking to about why such approvals happen. According to her, since it is all dependant on residual income, some people are able to shift things around so that it looks like they have more residual than they actually do. For example, a couple could take the wife's name off of the loan application, refinance all lines of credit (cars, other loans, etc) under the wife's name, and that leaves a great deal more residual income showing up coming from the husband since they dont take the other debt into account when processing the loan, since they are no longer under his name.
This is something they tried to talk me into doing so they could approve me for more money. I was a bit taken aback with their brazenness of suggesting it once they had explained it to me and they came back with the comment, "But you sound so responsible! You probable make great financial decisions and this wouldnt hurt you a bit!"
Very suspect. I am still shopping around.
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Mr. Parcelan had this to say about Knight Rider:
Is it Pesco's child?
I always wondered that too because the timing was very suspect if I recall but I didn't want to actually be the one who asked.
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Azakias thought about the meaning of life:
the divorce.
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Azakias had this to say about Matthew Broderick:
neither of my kids
Under capitalism, man exploits man. Under communism, it's just the opposite. - John Kenneth Galbraith
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Azakias postedI can, with all confidence, say that neither of my kids are his. I got pregnant after the divorce.
Man, talk about rebounding. Alidane fucked around with this message on 01-31-2008 at 08:14 PM.
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Alidane stopped staring at Deedlit long enough to write:
Man, talk about rebounding.
ouch
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Alidane had this to say about Knight Rider:
Man, talk about rebounding.
Heyo!!
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Azakias got all f'ed up on Angel Dust and wrote:
Not necessarily. Unlike cars, houses have the ability to appreciate in value.
My understanding, and this is from a real estate agent friend who's airplane I maintain, is that the prices we've seen in this area in the past were artifically inflated thanks to the poor lending practices already mentioned in this thread... so the theoretical 500,000$ house that's now worth 250,000$ has little chance of ever making it back to 500,000.
In this area the 500,000 is more like 1.2 million.
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Alidane had this to say about Captain Planet:
Man, talk about rebounding.
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Kermitov had this to say about Knight Rider:
My understanding, and this is from a real estate agent friend who's airplane I maintain, is that the prices we've seen in this area in the past were artifically inflated thanks to the poor lending practices already mentioned in this thread... so the theoretical 500,000$ house that's now worth 250,000$ has little chance of ever making it back to 500,000.In this area the 500,000 is more like 1.2 million.
Oh, I thought you were coming from the angle of a house that is actually worth $500,000. I am no real estate agent, but I was thinking you were trying to say that the house lost some value once bought.
I was confused as to how the depreciation of say, a car, could compare to the possibilities of a house, which can go either way.
My mistake.
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When the babel fish was in place, it was apparent Azakias said:
Oh, I thought you were coming from the angle of a house that is actually worth $500,000. I am no real estate agent, but I was thinking you were trying to say that the house lost some value once bought.I was confused as to how the depreciation of say, a car, could compare to the possibilities of a house, which can go either way.
My mistake.
Not your fault, I wasn't clear enough in the first place.
