10-28-2008, 07:01 AM
beerman wrote:
A member of my beer brewing group was discussing this recently. He is fairly young, in his mid 20's, young married, has his first child. He applied for a home loan and was approved for over $200k even though he is the sole income for the family at under $50k/yr. He said that was bullshit so he bought a house for $135k with a 15yr loan. He is quite please with himself and so am I.
There's nothing new here. The people giving loans were greedy, the people accepting the loans were greedy and stupid to boot. What is the answer? Hell if I know but the bailout goes forward wether we want it to or not.
The primary recipients are those who require their current investments to retain their worth. Those of us 20 years away from retirement are just experiencing inflation.
Mr. Beerman. Where I live there were ZERO homes for sale at $135,000, not even in the slums. Your buddy would have needed about $450,000 for his starter home in deep East Oakland or East Palo Alto. People wanted homes and the Real Estate Brokers and Banks figured out a way to make that happen. They never thought the market would crash like this. They thought it would only get higher and higher and they could make the terms more palatable down the line somehow. How many people do you know losing their homes that have callously calculated to buy a house and stick it to the bank? I bet not a single person.
As for your friend, a $200,000 loan at a decent interest rate would suss out to around a $900 dollar a month house payment. An Apartment costs more than that. Except maybe where you live. In nearly free house land.