Low Interest Rates are hammering the poor

originally posted by: MenWIthHugeApplause

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

In the U.S. at least less than 10% of mortgages are variable rate today. 10 years ago it was closer to 30% of mortgages, but with low interest rates not many folks here get an adjustable loan today.

In the Yukon, I bought a plot of land for $10,000 or so in 2006. My next door neighbour did the same. He spent about $50,000 putting a house on it.

A few weeks ago, he sold his land with the crappy house on it for a cool 1/4 million.

a reply to: MenWIthHugeApplause


I think there was confusion to the country you were talking about.
In America most of your mortgage information was incorrect.
You are probably right about Britain.

Fixed rates are the norm here for homes and autos.

originally posted by: MenWIthHugeApplause
Fixed US mortgages are usually only fixed for a limited time. This is what cause the meltdown in 2009. After 5 years, most US people have to find a new mortgage, by which time the interest structure might be utterly different.

You are correct, fixed mortgages are only fixed for a limited time...the duration of the mortgage. All of which is stipulated, in detail, in the mortgage documents.

originally posted by: MenWIthHugeApplause
a reply to: jefwane

Fixed US mortgages are usually only fixed for a limited time. This is what cause the meltdown in 2009. After 5 years, most US people have to find a new mortgage, by which time the interest structure might be utterly different.

Those were deferred interest mortgages. Bad idea

originally posted by: Atsbhct
a reply to: MenWIthHugeApplause

Absolutely no one is forced to borrow money from places like CashMoney.

Evidently, you have absolutely no idea of who some people (don't) manage their finances. --If even you want to call their mouth-to-mouth, month-to-month existences on never enough money "managing."

Buy preferred stocks that have a par value of $25 a share and you can earn 4-5% interest safely. It isn't that hard to make money folks.

originally posted by: MenWIthHugeApplause

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

Do your homework & buy at a fixed rate. If you buy a house and settle for an ARM, expect disaster. My mother refi'd our house when I was a teenager (in the 90's) and settled for an ARM because the intro rate period was cheap & appealing. You can guess what happened later on.
My husband and I are looking to buy in the next year or two. ARMs are not an option.

As far as interest-accruing accounts go, I don't even bother with that for regular checking. No point when it's not sitting in there long enough to accrue anything in the first place. That's what a savings account is for. I also don't recommend settling for whatever IA savings account your bank has, shop around. We don't have enough for a money market account right now (burned through our savings last year, rebuilding it now) but you can build up to that by was of a modest IA account. I'm using Barclays for that, 1% APY is pretty damned good for small starter balances. When we get a pile saved again, I will definitely park it in a MMA, since the IA rate is much higher.

a reply to: MenWIthHugeApplause

No they are not, most people get either a 15yr fixed or a 30 year fixed. The most common ARM is a 5/1 which is fixed the first 5 years and then adjusts annualy with interest rates. Before the 2008 collapse the ARM had become more popular, but it blew up in the whole worlds face.

There are two primary mortgage formats in the United States, the fixed-rate and the adjustable-rate (ARM). Fixed-rate mortgages remain the most common, and most popular, mortgage product for US home buyers. With a fixed-rate mortgage, interest rates are set during the loan's origination and they remain constant throughout the life of the loan. Fixed-rate mortgages are offered at a variety of terms, Fixed-rate mortgages are offered at a variety of terms, typically in 15, 20 or 30 year formats, with a 30 year fixed-rate mortgage be the most popular throughout the US.

Mortgage Calculator

Ludicrous bunk. It has NOTHING to do with mismanagement of finances.

A low paid worker who is suddenly not paid for SEVEN MONTHS by the Canadian Government or a single mother who has a kid who is sick or a person in a road accident might suddenly need to borrow and with the banks refusing at these level of interest rates, where do they go?

Basic fact: Low interest rates are completely screwing up the Main Street capital and borrowing markets.

originally posted by: Nyiah

originally posted by: MenWIthHugeApplause

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

My husband and I are looking to buy in the next year or two. ARMs are not an option.
r.

Buying a house at the top of the property bubble? You need serious psychiatric help!

originally posted by: MenWIthHugeApplause

originally posted by: Nyiah

originally posted by: MenWIthHugeApplause

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

My husband and I are looking to buy in the next year or two. ARMs are not an option.
r.

Buying a house at the top of the property bubble? You need serious psychiatric help!

Compared to the state we used to live in, the state we live in now is dirt cheap. $50k for a house with 5 or 10 acres of land in the boondocks isn't overpriced by any means. What planet are YOU on?

a reply to: Aliensun

I have every idea how some people poorly manage their finances. It doesn't make it any less of a choice to go to payday loan companies. No one is forced to.

a reply to: Nyiah

Yes it is. It only looks cheap by comparison.

In 1989, a friend bought an apartment that looked cheap for 60,000 pounds sterling. Three years later plus one crash, his next door neighbour sold his for 18,000 pounds sterling.

There was a cheap plot in Detroit that sold for $60,000 in 2006. Looked cheap. I bought that plot myself for $1,000 three years later. Looks cheap? It is now worth $600.

originally posted by: Atsbhct
a reply to: Aliensun

I have every idea how some people poorly manage their finances. It doesn't make it any less of a choice to go to payday loan companies. No one is forced to.

You are really off your trolley.

All possible alternatives have been crushed flat by artificial interest rates.

a reply to: Nyiah

Real estate is always local. I believe menwithhugeapplause is either Canadian or British. The adjustable mortgage is probably standard to him like a fixed is to us. Several areas in the US and Canada have had huge increases in real estate value based on a variety of factors. In parts of California for example silicon valley money has driven property values through the roof. In the Vancouver area of Canada Chinese investors trying to put their money into hard assets have driven property values up greatly there. Sounds like you live in an area similar to what I live in. We didn't get too out of hand in the run up before 2008 and though there was a drop in value after, it wasn't that bad as long as you kept a job or had some equity already. Values local to me have largely recovered and then some from the 2008-09 crisis. If they hadn't I'd still be alright as I bought property well below my means to service a mortgage. I pay less in mortgage with taxes and insurance escrowed in than people I know who rent a 2 bedroom appartment.

originally posted by: MenWIthHugeApplause
a reply to: Nyiah

Yes it is. It only looks cheap by comparison.

In 1989, a friend bought an apartment that looked cheap for 60,000 pounds sterling. Three years later plus one crash, his next door neighbour sold his for 18,000 pounds sterling.

There was a cheap plot in Detroit that sold for $60,000 in 2006. Looked cheap. I bought that plot myself for $1,000 three years later. Looks cheap? It is now worth $600.

ANY purchase has the potential to drastically increase or decrease in value at any given time. If we buy a 1500 sq ft house on 5 acres in a rural area at $65k (regardless of actual appraised value), I'm not delusional enough to expect it to retain the value at purchase in a static sense here. In time, it could be worth a ton, or worth nothing. Property ownership is a gamble in terms of appraised value. You should know this.

a reply to: Nyiah

Doesn't sound bad to me at all, at a 4% interest, you'd probably be looking at less than $600 month in payments including insurance and taxes, and that is with very little down. As long as you have job opportunities in easy commuting distance that provides enough income to service that, it doesn't sound bad. There is a definite difference in the way you should view a property meant as a primary residence and property meant as either a short or long term investment. Adjustable rates are much more common for flippers and speculators than people who are actually going to live on it.

originally posted by: jefwane
a reply to: Nyiah

Real estate is always local. I believe menwithhugeapplause is either Canadian or British. The adjustable mortgage is probably standard to him like a fixed is to us. Several areas in the US and Canada have had huge increases in real estate value based on a variety of factors. In parts of California for example silicon valley money has driven property values through the roof. In the Vancouver area of Canada Chinese investors trying to put their money into hard assets have driven property values up greatly there. Sounds like you live in an area similar to what I live in. We didn't get too out of hand in the run up before 2008 and though there was a drop in value after, it wasn't that bad as long as you kept a job or had some equity already. Values local to me have largely recovered and then some from the 2008-09 crisis. If they hadn't I'd still be alright as I bought property well below my means to service a mortgage. I pay less in mortgage with taxes and insurance escrowed in than people I know who rent a 2 bedroom appartment.

Indeed it is. MWHA is having a difficult time remembering this, though. Frankly, I'd rather trade up to similarly sized house & a lot more land for 25% minimum less paid out a month (all taxes, principal, interest & HOI considered) versus renting. But hey, if he wants to think it's overpaying on a buy, whatever.

a reply to: jefwane
Yep, that's smack in the middle of the payments goal range. We'd like to see a mortgage no higher than $800, but $600 is ideal. Either figure is still cheaper than our current rent is.