[clue-talk] The stimulus bill

[Nate Duehr]

On Feb 6, 2009, at 7:23 PM, Angelo Bertolli wrote:

> I think if anything the banks needed more intervention, not less.   
> (But the right kind.)  Even Greenspan said he was shocked that these  
> companies would actually put themselves in this situation.  In a  
> perfect market it wouldn't happen.  Unfortunately, the market is run  
> by imperfect people who are very often greedy and looking at their  
> own bottom line.  They figured they could get the money, and leave  
> someone else holding the bag.  I mean, if it were you or me, we  
> DEFINITELY wouldn't loan money to some of these people ;)


Call me old-fashioned, but I won't even loan to FAMILY unless I get a  
signed Promissory Note... of course, they can have my money anytime,  
but they need to understand it's a business transaction.


> Also, ARMs shouldn't be subsidized through tax breaks, because the  
> only reason you should consider it a good deal is if you're planning  
> on getting out of it before it becomes a bad deal.  (Did that make  
> sense?)  In other words, ARMs used for a good reason are bought so  
> they can be resold for a profit before paying off the mortgage.  All  
> others should stay away. And I definitely don't think we should be  
> subsidizing houses as investment plans.

Lots of people "planned" to refinance and then the credit markets  
dried up.

You PLAN for the worst-case scenario on an ARM, and enjoy the lower  
rates if you get 'em.

The vast majority of the time, if you can qualify for an ARM, you can  
qualify for a Conventional loan... and rates have been at their  
historically lowest numbers for almost a DECADE now.  People should be  
happy they can manage their funds well, and qualify for interest rates  
that won't be down here long, and won't come back until most of us are  
another 15-20 years older... not gamble with ARM's.  If *ALL* you can  
qualify for is some crazy 80/20 ARM... you're not ready to own a  
house, and your finances are NOT in order.  Even younger buyers with  
good credit histories still can get the boring old FHA loan that got  
our nest started, and only have to save up a 5% down-payment... but  
saving up that 5% (or better, 10%) shows that you have the character  
and willpower to be a property owner with a very large lifetime loan  
over your head.

I've probably lost a few bucks not having chased the ARM in my life,  
but I also sleep real well at night knowing my mortgage payment isn't  
changing, ever.  (My property taxes on the other hand, while a much  
smaller bill, can and do change... just got that statement in the mail  
for 2008... and it was 1% of the value of the house right now, so I  
guess I'll survive.  Heh.)

And let's not even get started talking about "Interest Only" loans...  
wow what a nightmare those are, when used for your primary residence.   
For investments for those who have a clue... maybe.

Nate