sois Posted August 6, 2007 Report Share Posted August 6, 2007 [url="http://biz.yahoo.com/ap/070806/american_home_bankruptcy.html?.v=23"]http://biz.yahoo.com/ap/070806/american_ho...ptcy.html?.v=23[/url] This one is pretty big to me. It says banks are now feeling the blow of spotty lending practices. What does this mean? Tighter lending practices. This is a death blow to the housing boom. I may get my cheap house after all! If people can't borrow beyond their means anymore, house prices are going to have to return to a reasonable state. This a good sign (for me) but how would I fix this going forward? Eliminate all LTCG benefits for people who buy houses as rental income/investments. That way, speculators won't drive up the prices for houses that could go to actual home OWNERS, not home renters. The direct impact will be that people won't want to invest in homes anymore, which I feel is a shitty thing away. Imagine if someone bought up all the Bengals season tickets (due to their limited supply) and artificially hiked up the prices? After all, they don't NEED them as they have their tickets. They can afford to hold the supply and extort the public. I would eliminate the exemption of gains on the sale of second residences. If you sell your main home, it should be total tax free gains (not just the $500kMFJ/$250kMFS rules) but your secondary home should be taxes as OI. Enough with the laws that only support the rich, and specifically, congressmen who have two homes in different states. Vote for sois. I'd like to see what you guys think about this. Link to comment Share on other sites More sharing options...
|Bunghole| Posted August 6, 2007 Report Share Posted August 6, 2007 [quote name='sois' post='522634' date='Aug 6 2007, 05:36 PM'][url="http://biz.yahoo.com/ap/070806/american_home_bankruptcy.html?.v=23"]http://biz.yahoo.com/ap/070806/american_ho...ptcy.html?.v=23[/url] This one is pretty big to me. It says banks are now feeling the blow of spotty lending practices. What does this mean? Tighter lending practices. This is a death blow to the housing boom. I may get my cheap house after all! If people can't borrow beyond their means anymore, house prices are going to have to return to a reasonable state. This a good sign (for me) but how would I fix this going forward? Eliminate all LTCG benefits for people who buy houses as rental income/investments. That way, speculators won't drive up the prices for houses that could go to actual home OWNERS, not home renters. I would eliminate the exemption of gains on the sale of second residences. If you sell your main home, it should be total tax free gains (not just the $500kMFJ/$250kMFS rules) but your secondary home should be taxes as OI. Enough with the laws that only support the rich, and specifically, congressmen who have two homes in different states. Vote for sois. I'd like to see what you guys think about this.[/quote] I am in the process of trying to buy a home for the first time. What's really happening in my opinion isn't that renters are defaulting on their home loans so much as it is people like me with shaky credit defaulting on their loans, even though they got them at an amazingly low interest rate. I think the problem is that a lot of modern Americans, whom play their income to the hilt against their borrowable assets, many of whom make morgtage-friendly wages, take on a morgtage that seems attractive at first until they realize that they did not put any money down and signed a 30 year loan with non-fixed rates, and when those rates go up, their salaries don't rise to meet the increase in the payment. My past credit indiscretions coupled with my massive student loans that I am paying off conspired against me...the best loan percentage we can find is 6.5%, which isn't that bad given my credit score is 600. But, we are putting down 15% on a $150,000 house, so...down payments certainly help, and I'm glad we were able to save some of it in conjuction with my parental contribution. I am blessed, and will gladly and easily pay an $1100 payment (interest, principal, insurance, property taxes and association fees) for a 2500sq foot home with 3 beds and 2.5 baths in a secluded, quiet and interstate accesible suburban neighborhood in Southeastern Indiana. Link to comment Share on other sites More sharing options...
sois Posted August 7, 2007 Author Report Share Posted August 7, 2007 I agree with your comments about borrowing, but it doesn't appear that lending practices will allow these exotic mortgages anymore. So wages remain the same and the available cash flows for homes goes down. That will drive prices down. Your house price sounds about right. $150 for a good home in a nice area sounds great. Good work! The areas I feel will be most affected by this are way overpriced areas like Reno. The saying goes here that people make Nevada wages and pay California prices. Link to comment Share on other sites More sharing options...
The Entertainer Posted August 7, 2007 Report Share Posted August 7, 2007 [quote name='Bunghole' post='522640' date='Aug 6 2007, 07:45 PM']I am in the process of trying to buy a home for the first time. What's really happening in my opinion isn't that renters are defaulting on their home loans so much as it is people like me with shaky credit defaulting on their loans, even though they got them at an amazingly low interest rate. I think the problem is that a lot of modern Americans, whom play their income to the hilt against their borrowable assets, many of whom make morgtage-friendly wages, take on a morgtage that seems attractive at first until they realize that they did not put any money down and signed a 30 year loan with non-fixed rates, and when those rates go up, their salaries don't rise to meet the increase in the payment. My past credit indiscretions coupled with my massive student loans that I am paying off conspired against me...the best loan percentage we can find is 6.5%, which isn't that bad given my credit score is 600. But, we are putting down 15% on a $150,000 house, so...down payments certainly help, and I'm glad we were able to save some of it in conjuction with my parental contribution. I am blessed, and will gladly and easily pay an $1100 payment (interest, principal, insurance, property taxes and association fees) for a 2500sq foot home with 3 beds and 2.5 baths in a secluded, quiet and interstate accesible suburban neighborhood in Southeastern Indiana.[/quote] Yep, the Adjustable Rate Mortgages (ARM) and the "Teaser" rate mortgages are more to blame than anything else. Once that 1, 3 or 5 year ARM is up, you are stuck with your payments adjusting every year. Unfortunately, those rates that started out at 4-5% (I have seen some at 1.5%) will probably jump up to 7-9%, making your payments almost double. Most homebuyers don't realize that they can "modify" their ARM's or even refinance before the fixed term is up. Your house and payment are nice!! Hope you enjoy it. Link to comment Share on other sites More sharing options...
Homer_Rice Posted August 7, 2007 Report Share Posted August 7, 2007 Bung; As a practical matter, I'd recommend two considerations: 1) Make sure you use the GI Bill. There are certain benefits with using your VA guarentee, among them is a provision that insists that there is no prepayment penalty. 2) Set yourself up to be able to easily afford a monthly prepayment for the life of the loan. For example, given the numbers you cited, regularly paying an additional $100 per month towards principal will trim 83 months off your loan (360-83=277, or not quite 7 years) and save you over $51,000 in interest over the term of the loan. That's quite a chunk. Link to comment Share on other sites More sharing options...
Jamie_B Posted August 7, 2007 Report Share Posted August 7, 2007 [quote name='Homer_Rice' post='522740' date='Aug 6 2007, 10:16 PM']Bung; As a practical matter, I'd recommend two considerations: 1) Make sure you use the GI Bill. There are certain benefits with using your VA guarentee, among them is a provision that insists that there is no prepayment penalty. 2) Set yourself up to be able to easily afford a monthly prepayment for the life of the loan. For example, given the numbers you cited, regularly paying an additional $100 per month towards principal will trim 83 months off your loan (360-83=277, or not quite 7 years) and save you over $51,000 in interest over the term of the loan. That's quite a chunk.[/quote] In addition, you can now pass your GI Bill onto your kids, where as you couldnt before. (at least Ive been told that) Link to comment Share on other sites More sharing options...
BENGALS666 Posted August 7, 2007 Report Share Posted August 7, 2007 I hear the bad news for much of the the rest of the country - but it's not quite as bad here in middle TN. My home has appreciated by over $150,000 since I had it built in '02. I was able to rework my mortgage to basically keep the same monthlies but dramatic cut in interest. I was able to buy 11 acres outside of town as a result, some pics: [img]http://jeanoroid.com/land1.jpg[/img] [img]http://jeanoroid.com/land3.jpg[/img] Link to comment Share on other sites More sharing options...
steggyD Posted August 7, 2007 Report Share Posted August 7, 2007 Good thing I purchased my house before the housing market boom. Therefore, I got my house at the price before they went crazy. So, worst comes to worst, I break even if I ever need to sell my house. Link to comment Share on other sites More sharing options...
-GoBengals- Posted August 8, 2007 Report Share Posted August 8, 2007 yea.. the subprime drop kicked me SQUARE in the nuts.. i am sub prime.. hell i am sub-sub-prime as far as credit goes... thus my 4th year in an apartment makes me want to shoot myself. SHOULD be able to get a house come june. Link to comment Share on other sites More sharing options...
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