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Thread: Refinancing a home loan may get tougher

  1. #16
    Elite Member Algernon's Avatar
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    Quote Originally Posted by pacific breeze View Post
    I am just listening to a radio program about this very subject and it's true. Most people in highly urban places or densely populated countries don't expect to own their own home. This idea that everybody has to have their very own McMansion is not only terrible for the environment, it props up a whole bunch of other industries. It reminds me of the auto industry.

    When real estate becomes unaffordable for the vast majority of the population as it is here -- it's about 3/4 of income as opposed to the traditional 1/4 -- renting and long-term leases are really the way to go.
    The ability/feasability to own a home varies so much in the US. The costs of living and the prices of homes are so very different in different parts of the country, as you probably know. In some cities, I agree, it would make no sense to buy a home, but that isn't always the case. We bought our house (which btw I always think it's silly to say I am a 'homeowner' when the bank owns my damn house for the next 25 years) almost 5 years ago and pay less for our mortgage than we did rent. We definitely do not have a McMansion, but I know what you are talking about, lol. We have a 40-year-old home in an urban area that is not too big, just right for us. By the time we bought our house, I had been getting thouroughly frustrated with everything about renting. For us, it made perfect sense to get a mortgage...but I realize that we live in a LCOL area and that makes all the difference.
    Value the future on a timescale longer than your own. -Richard Dawkins

  2. #17
    Elite Member louiswinthorpe111's Avatar
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    Quote Originally Posted by JamieElizabeth View Post
    ALL people need a DECENT home to live regardless of credit worthiness of the bank or the individual, don't you think?

    It must be a very competitive and unstable market, regardless of individual mistakes, but they instill such fear?

    I don't know how someone could actually believe this:

    "Addition: Also, many of these "high risk" lenders are going bankrupt. HSBC just filed for bankruptcy last week, so for those "credit challenged" people, getting a mortgage is definately going to be tougher."

    They can't just put someone on the street like that!
    First, how am I instilling fear? This is reality. In my state, 1 in 5 ARM mortgages are foreclosures. And I don't live in a heavily populated state.

    If you can't refinance, a mortgage company is not kicking you out in the street, you will just pay more money which can strap you financially. Most people on ARM's are financially challenged with 50-55% debt to income ratios. An extra $200 per month can put a huge strain on people. Many get stuck between a rock and a hard place.

    Your credit score is what determines most aspects of your life, car loans, mortgages, even some employers are running credit reports as part of background checks.

    Jamie, I am assuming you are young and have no mortgage.

  3. #18
    Elite Member cynic's Avatar
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    Quote Originally Posted by IceQueen View Post
    I can't see how you came to that line of reasoning based on what JamieElizabeth wrote. Obviously if your education and job allows you to buy a nicer home, then you will have a nicer home than someone who does not. I'm not sure how you can assume they will have the "same type of housing" that you do.

    Also, your second paragraph really doesn't hold water in housing markets that are over-inflated where you yourself may not even be able to 'afford' a house.

    I do think that people should have shelter, but people do not 'need' to own, and can rent. If they do own - then it does not have to be more than a roof over one's head. I've seen some pretty nice trailers and mobile homes that would suffice as well.
    When someone has a loan for a house that is completely beyond their means....then that person is trying to get something they cannot afford. When the mortgage isn't paid, that affects all of us who do pay their mortgages.

    If you cannot afford a house, then I do not feel you are "owed" one....that is my line of reasoning......she was discussing home ownership and mortgages.....

    If I could not afford a home in an inflated area....then I would move somewhere else....I would not expect the mortage company to pay for it....nor the government either......

    It might be the mortgage companies' fault for approving these mortgages.....but either way, the other consumers will pay the price for the defaults....

  4. #19
    Elite Member JamieElizabeth's Avatar
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    I have never been under the impression that "renting" is better than owning. Now, I might change my mind.

    What was irritating about the article is the "prepayment" penalty. To me, that is utter non-sense.

  5. #20
    Elite Member louiswinthorpe111's Avatar
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    FYI--Texas is one of the states that doesn't allow a pre-payment penalty. According to all my paperwork, they are under the same exception as the state I live in, which doesn't allow them, either.

    In most cases, financially, renting is not better than owning, because of the tax deductions. But for some people, especially in California, there's no way they'll ever be able to afford a house, so renting is the only option.

  6. #21
    Gold Member IceQueen's Avatar
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    Quote Originally Posted by JamieElizabeth View Post
    I have never been under the impression that "renting" is better than owning. Now, I might change my mind.

    What was irritating about the article is the "prepayment" penalty. To me, that is utter non-sense.
    I don't find the prepayment penalty as a big deal though - the borrowers needed to shop around and find one that didn't have it. It's been my experience that the loans that have prepayment penalty usually have a lower interest rate (like .25%) which if you calculate over the long run, may or may not be worth it(probably not), or the the people who get the prepayment penalties have terrible credit and may not have qualified for the home (and more than likely shouldn't have purchased said home), or they just didn't read the loan's fine print and rushed into it (expensive lesson).

  7. #22
    Hit By Ban Bus! AliceInWonderland's Avatar
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    Quote Originally Posted by A*O View Post
    I don't think the problem necesarily lies with tougher refinancing on mortgages, it lies in the fact that people are living WAY beyond their means in the first place and racking up ridiculous amounts of often unnecessary debt. Even in this day and age people don't understand money, how it works and that sooner or later you ALWAYS have to pay it back..
    agree big time; but these loan officers make it way too easy for these dreamers to obtain these ridiculous loans - everyone's to blame in this market crash unfort. but some will find a way to make it work well for them.

  8. #23
    Gold Member IceQueen's Avatar
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    Quote Originally Posted by cynic View Post
    When someone has a loan for a house that is completely beyond their means....then that person is trying to get something they cannot afford. When the mortgage isn't paid, that affects all of us who do pay their mortgages.

    If you cannot afford a house, then I do not feel you are "owed" one....that is my line of reasoning......she was discussing home ownership and mortgages.....

    If I could not afford a home in an inflated area....then I would move somewhere else....I would not expect the mortage company to pay for it....nor the government either......

    It might be the mortgage companies' fault for approving these mortgages.....but either way, the other consumers will pay the price for the defaults....
    Gotcha - I agree with all of that, I don't think anyone is 'owed' anything either. If they want a house so badly, seriously they could buy a mobile or a manufactured home. They have no resell value, but if 'owning' is such a big deal - then it shouldn't matter.

  9. #24
    Elite Member louiswinthorpe111's Avatar
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    *UPDATE*

    As of Monday, March 5, many lenders have restricted their guidelines. Raised the minimum credit score, raised the Loan to Value percentage on re-fiances, and restricting 100% loan, including 80/20 combos.

  10. #25
    Hit By Ban Bus! AliceInWonderland's Avatar
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    ^ well they gotta start covering their asses. did you see what happened to Fremont lenders - all these employees got the pink slip the other day totally by suprise here in Southern California.

  11. #26
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    Quote Originally Posted by JamieElizabeth View Post
    ALL people need a DECENT home to live regardless of credit worthiness of the bank or the individual, don't you think?
    A comfortable safe place to live within their financial means certainly. A overpriced keep-up-with-the-Jones McMansion that plunges you into debt, no. Actually owning a home is a priviledge, not a constitutionally guarenteed right. It's quite simple, if you cannot make the necessary sacrifices to keep your credit clean, save a decent down payment amount and pick something reasonable for your income/area then no, you don't deserve a house, you should stick to living in apartments, townhouses or trailers. No shame in those dwellings but why should society give you a break to live beyond your means just because you have unrealistic expectations and silly entitlement issues.

    It must be a very competitive and unstable market, regardless of individual mistakes, but they instill such fear?
    They are not saying anything that Alan Greenspan, the Chairman of the Federal Reserve, hasn't been saying for years that everyone that thinks life owes them has been willfully ignoring. This is the destabilizing affect that lending large amounts to those who cannot pay has. Wholesale ARM and Interest Only mortgages lead to recession. Refer back to my first paragraph, those not willing to make the changes/sacrifices it takes to qualify for traditional mortgages for home ownership have no business trying to own a house. Truth is scary, huh?

    I don't know how someone could actually believe this:

    "Addition: Also, many of these "high risk" lenders are going bankrupt. HSBC just filed for bankruptcy last week, so for those "credit challenged" people, getting a mortgage is definately going to be tougher."
    This is the Wall Street Journal talking, not a gossip rag, not a right wing spin meister but a legitimate, credable news source that thoroughly researches all their content. News of the high risk lenders going belly up is available at all news sources and in the governments Dept of Labor statistics. It is true.

    They can't just put someone on the street like that!
    Sure they can. Be stupid enough to think you need a huge honking house without having any real money or idea of how to pay it back and you'll be out. It's fair, it's the law and it happens to fools all the time.

    Where I live we are seeing a huge amount of foreclosures and home resales because some dreamer got in over his head, the rate changed and reality hit. I hate this people because they have created this climate of instability.

  12. #27
    Hit By Ban Bus! pacific breeze's Avatar
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    Breaking news, but not to those of us who live here: Vancouver is the second-most expensive city in North America after New York. That is based almost solely on real estate prices. It's not something to be proud of, IMO.

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    Quote Originally Posted by pacific breeze View Post
    Breaking news, but not to those of us who live here: Vancouver is the second-most expensive city in North America after New York. That is based almost solely on real estate prices. It's not something to be proud of, IMO.
    Try the DC area. It's right up there with Los Angeles and NYC for stoopid expensive outrageous prices.

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    Hit By Ban Bus! pacific breeze's Avatar
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    Do falling-down old houses in nice neighbourhoods sell for $3.5 million in one day? That is what happens here now.

    The news was from an official real estate report the other day.

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    Quote Originally Posted by pacific breeze View Post
    Do falling-down old houses in nice neighbourhoods sell for $3.5 million in one day? That is what happens here now.

    The news was from an official real estate report the other day.
    I have seen that happen but with a little less dough. The house across the street from me (a two bedroom 900 square feet rambler) went for 600K in two days. Now the market is a little down and it's taking a week or two.

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