"If Wall St. does not end its greed, we will end it for them."

S

spandy

Well-Known Member
NLXSK1 said:
There would not be any compounding because the amount of the note is continually decreasing.

Take 100,000 at 10% and you have 300,000 dollars after 30 years if you pay the full interest rate for every year. However, the payments keep decreasing the principal until after the 30 years the entire sum is paid. So I just divide the interest in half for the full time because theoretically by the mid point of the loan you are only paying 1/2 the interest you were in the beginning of the loan.

My math is wrong for some reason. I just went on the internet and quickly located the first free loan calculator available. It appears you would pay about 315,000 for the house over 30 years with 215,000 of that being interest. Anyone stupid enough to do this deserves what they get. Within 5 years of the loan origination almost anyone would be able to refinance with a good payment history, by 7 years nothing should remain of previous credit issues.

You will pay mortgage insurance if you put down less than 20% downpayment on a house but you can get deals that had ridiculous initial payments, sometimes like 2% of the value of the loan and even some without an initial payment.
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There ya go, those numbers are better!

Even at a good interest rate, a 30 year note usually ends up being double the purchase price when interest is factored in. 10% on a home is a suckers game, or a high risk investor looking for a quick flip. 13 payments a year drops a 30 year note something like 6-7 years. But people dont do that, they get 2nd and 3rd mortgages on their homes instead. derp derp derp

The lack of thought that was put into such a huge fork in the road in these peoples lives is baffling to say the least. No one tricked them, those contracts were in plain English. Like a new car and a 7-8 year loan, they just wanted it so bad they didn't give a fuck.

I can't even remember the amount of people I heard getting 105%+ financing. I watched a friend lose it all after his dry walling business tanked after the crash. Was there drinking with him as we watched them cart away all that furniture, pair of jet skis and some other bullshit he should have cash flowed. I literally had to bring camping chairs for us to sit on as the place was cleaned out and he was sleeping in his camper which was taken away later that year as well. He just thought the bubble would last 10 more years and he had plenty of time to pay it all down. That was 6 years ago, and he hasn't bounced back, not even close.
 
Uncle Ben

Uncle Ben

Well-Known Member
Harrekin said:
Some people paying up to a 10% interest rate (on a fucking mortgage)...

"A fool and his money are easily parted"
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10%? Peanuts ~

Mortgage interest rates hit 18% in the early to mid 80's. New finance instruments like "reverse mortgages" got sucker bets into a lot of trouble back then. The 80's real estate market dropped out (along with the oil bust) leaving millions of dummies holding newly purchased houses who had less value than when they bought them, so, they couldn't sell without taking a huge loss. Now.....add insult to injury but these reverse mortgages were a gimmick pushed by realtors whereby it would get you into a house but screwed you royally - each month additional principal was added to the principal's balance so you initially weren't retiring the note. You were paying on interest only.

Most folks realized their only recourse was to let it go back to the bank in the form of a foreclosure, in spite of that action hurting their credit rating and prohibiting them from financing a house for X amount of years. Yes, you could pay cash and still buy your dream home, but who had that much cash back in the late 80's?

I took advantage of those super low prices, bought a spanking "newly rehabbed" foreclosure at pennies on the dollar and then sold 22 years later having an adjustable rate FHA mortgage such that interest rates were falling each year. When we sold we were enjoying ultra low rates (for the times) of 4.5%

That's how you get ahead.......
 
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Harrekin

Harrekin

Well-Known Member
spandy said:
There ya go, those numbers are better!

Even at a good interest rate, a 30 year note usually ends up being double the purchase price when interest is factored in. 10% on a home is a suckers game, or a high risk investor looking for a quick flip. 13 payments a year drops a 30 year note something like 6-7 years. But people dont do that, they get 2nd and 3rd mortgages on their homes instead. derp derp derp

The lack of thought that was put into such a huge fork in the road in these peoples lives is baffling to say the least. No one tricked them, those contracts were in plain English. Like a new car and a 7-8 year loan, they just wanted it so bad they didn't give a fuck.

I can't even remember the amount of people I heard getting 105%+ financing. I watched a friend lose it all after his dry walling business tanked after the crash. Was there drinking with him as we watched them cart away all that furniture, pair of jet skis and some other bullshit he should have cash flowed. I literally had to bring camping chairs for us to sit on as the place was cleaned out and he was sleeping in his camper which was taken away later that year as well. He just thought the bubble would last 10 more years and he had plenty of time to pay it all down. That was 6 years ago, and he hasn't bounced back, not even close.
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He still did it wrong...

You don't even get near the principle until the latter part of the loan, that's why the compounding hits you so hard and why people paying "interest only" mortgages have a shit storm coming.

Only a 200k mortgage at 10% unless you were paying around $1600 a month (did that quickly in my head) you'll never pay back the loan, and will in fact have accrued a balance owed of about 4 million dollars by the end of the term.
 
S

spandy

Well-Known Member
Harrekin said:
He still did it wrong...

You don't even get near the principle until the latter part of the loan, that's why the compounding hits you so hard and why people paying "interest only" mortgages have a shit storm coming.

Only a 200k mortgage at 10% unless you were paying around $1600 a month (did that quickly in my head) you'll never pay back the loan, and will in fact have accrued a balance owed of about 4 million dollars by the end of the term.
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Google mortgage calculator. I own numerous rental homes and I assure you it doesn't add up that way. 200k loan at 10% for 30 years is $1,755 a month and after 360 payments your total investment is $631,800. Its true you pay more interest up front, but the total isn't anywhere near 4 million
 
Harrekin

Harrekin

Well-Known Member
spandy said:
Google mortgage calculator. I own numerous rental homes and I assure you it doesn't add up that way. 200k loan at 10% for 30 years is $1,755 a month and after 360 payments your total investment is $631,800. Its true you pay more interest up front, but the total isn't anywhere near 4 million
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Read again, I said if you pay less than 1600 then you don't have enough to cover even the interest and it's compounded.

The point being in the subprime market you get higher interest rates + people with poor credit + potentially unsustainable high monthly payment is a recipe for disaster.
 
NLXSK1

NLXSK1

Well-Known Member
Harrekin said:
Read again, I said if you pay less than 1600 then you don't have enough to cover even the interest and it's compounded.

The point being in the subprime market you get higher interest rates + people with poor credit + potentially unsustainable high monthly payment is a recipe for disaster.
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Harrekin,

With the standard loans in America you have to pay principal plus interest. The APR (annual percentage rate) is required to be legally stated in the document.

Your first payment sends only pennies to the principal but it does such along with paying all the interest. The next payment sends a few more pennies because the principal is lower. Therefore, there cannot be compounding as the balance of the loan diminishes every month for 30 years.
 
Uncle Ben

Uncle Ben

Well-Known Member
Harrekin said:
He still did it wrong...

You don't even get near the principle until the latter part of the loan, that's why the compounding hits you so hard and why people paying "interest only" mortgages have a shit storm coming.

Only a 200k mortgage at 10% unless you were paying around $1600 a month (did that quickly in my head) you'll never pay back the loan, and will in fact have accrued a balance owed of about 4 million dollars by the end of the term.
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This isn't my first rodeo, I understand. It's laid out when you run an amortization schedule.

Most folks including myself write off the interest.

My previous post gave an example of what a disaster poor planning can do. Having said that, it also probably went right over the heads of the RIU members reading it who weren't even born by then much less understanding what it takes to buy a mortgage and then make money off it later.

Unless you get stupid and end up with a high interest loan, real estate is one of the best investments you can make, period. Uh.....unless you live in Detroit or Baltimore. :mrgreen:
 
Uncle Ben

Uncle Ben

Well-Known Member
Harrekin said:
Only a 200k mortgage at 10% unless you were paying around $1600 a month (did that quickly in my head) you'll never pay back the loan, and will in fact have accrued a balance owed of about 4 million dollars by the end of the term.
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No, you did it wrong and yes you will easily pay back the loan. $200K, 30 year note @ 10% interest is a monthly payment of $1,755. Here's the schedule:
http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx?loanAmount=200000&years=30&terms=360&interestRate=10.000&loanStartDate=07+Jan+2016&show=true&showRt=true&monthlyAdditionalAmount=0&yearlyAdditionalAmount=0&yearlyPaymentMonth=+Jan+&oneTimeAdditionalPayment=0&oneTimeAdditionalPaymentInMY=+Feb+2016&ic_id=mtg_amort_calc_amortization_btn

1st month breakdown: DATE, Payment, Interest, Principal, Balance

Feb. 2016 $1,755.14 $88.48 $1,666.67 $199,911.52

Feb. 2031 $1,755.14 $394.07 $1,361.08 $162,935.06

Total interest paid over 30 years - $431,851.53, which drops off substantially with today's ultra low interest rates.
 
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Harrekin

Harrekin

Well-Known Member
Uncle Ben said:
No, you did it wrong and yes you will easily pay back the loan. $200K, 30 year note @ 10% interest is a monthly payment of $1,755. Here's the schedule:
http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx?loanAmount=200000&years=30&terms=360&interestRate=10.000&loanStartDate=07+Jan+2016&show=true&showRt=true&monthlyAdditionalAmount=0&yearlyAdditionalAmount=0&yearlyPaymentMonth=+Jan+&oneTimeAdditionalPayment=0&oneTimeAdditionalPaymentInMY=+Feb+2016&ic_id=mtg_amort_calc_amortization_btn

1st month breakdown: DATE, Payment, Interest, Principal, Balance

Feb. 2016 $1,755.14 $88.48 $1,666.67 $199,911.52

Feb. 2031 $1,755.14 $394.07 $1,361.08 $162,935.06

Total interest paid over 30 years - $431,851.53, which drops off substantially with today's ultra low interest rates.
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Again missing the point.

It's the subprime market, people have bad credit for a reason.

What happens when they can't meet payments and renegotiate to pay 1200 a month instead for x number of years?
 
MuyLocoNC

MuyLocoNC

Well-Known Member
Poor people and those with bad credit have no business owning homes. The mortgage is but a fraction of the cost of home ownership. There was a very good reason why you used to need 20% down to buy a home, if you can't save that much, you're not ready. House poor is no way to go through life.

progressive fairness drove the entire boondoggle. The banks just ran with it. And before you say it, yes, Bush was a big 'ol progressive.
 
Padawanbater2

Padawanbater2

Well-Known Member
If a person makes commission on selling somebody a loan, regardless of their ability to pay it back, that's a financial conflict of interest. The fact that millions of those loans defaulted and crashed the global economy is why those that sold the loans they knew couldn't be paid back share a significant portion of the blame. I know it's easy to blame poor people, which seems to be a requirement among conservatives these days, but the poor people weren't the ones approving the loans. It's the same thing with any loan, if I go into a bank and ask for a loan with no collateral and no proof I will be able to pay it back and the bank approves it anyway, that's a failure on the banks part to accurately assess the risk of default.
 
OGEvilgenius

OGEvilgenius

Well-Known Member
Padawanbater2 said:
Let me ask it again...

How does ensuring commercial banks don't invest American's savings into speculation collapse the economy?

Do you even understand wtf is going on with people's savings? Why the mortgage crisis occurred?

Sleazy fucks bet that people wouldn't be able to pay their mortgages.. people weren't able to pay, houses were foreclosed, and those that bet they couldn't WON big time!

Those that bet they couldn't were the people that sold them the loans in the first place, and they walked away with millions.

The taxpayers bailed out their shoddy loans that couldn't be paid back (and they knew they couldn't when they sold them) and the American taxpayer - the American middle class - was fucked because of it.

Anyone supporting this shit is either too stupid to know what's fucking them or too stupid to connect the dots. It fucks both left and right constituents.
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This isn't really accurate actually.

Most of them did not bet against these loans failing because they knew in advance they were going to be bailed out (or they never would have done this). Further, they knew in advance they were never going to face criminal charges for the widespread wholesale fraud that occurred (or they never would have done this) that had to be endorsed from top to the very bottom level. That would have been known under Bush. Then executed under Obama. Because you know, they're so different and all.

Some did bet against them failing. Most did not. They used this as leverage to put a gun to the head of the government, not that they had to. But there were open threats of complete meltdown if the Banks did not get what they wanted. And they knew they were going to get what they wanted anyway like I said, otherwise the activity never would have occurred.

It was a massive conspiracy on multiple levels. Easily provable with simple deduction and knowledge that is widely accepted by everyone.

Because the reality is they would not have made those fraudulent loans if they did not know have guarantees of a bail out and immunity from criminal charges - because all of those gains they made would have been completely wiped out and the people running the banks would be in jail.

This is what should have happened. This is what happened in Iceland and they have had by far the best economic recovery. They let the banks fail, like they should have.

Instead in the west (excluding Iceland) we've promised all the deposits (read: the primary investors in a bank who should always receive their money first before any other creditors in a traditional capitalist bankruptcy) to pay for these ILLEGAL risks being taken by wall streeters who know they fucking own the government so they do what they fucking well please.

And Bernie Sanders has voted for tonnes of garbage that wall street loves. But don't worry, the democrats will save you this time... and not sell your entire future up the fucking river which is what happened last go around.
 
OGEvilgenius

OGEvilgenius

Well-Known Member
Padawanbater2 said:
If a person makes commission on selling somebody a loan, regardless of their ability to pay it back, that's a financial conflict of interest. The fact that millions of those loans defaulted and crashed the global economy is why those that sold the loans they knew couldn't be paid back share a significant portion of the blame. I know it's easy to blame poor people, which seems to be a requirement among conservatives these days, but the poor people weren't the ones approving the loans. It's the same thing with any loan, if I go into a bank and ask for a loan with no collateral and no proof I will be able to pay it back and the bank approves it anyway, that's a failure on the banks part to accurately assess the risk of default.
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You have no idea how finance works here apparently. A bank, if they did not know they were going to receive a huge bail out (read: payments those people were never able to make essentially) and not face criminal charges for lying about incomes and such - would NEVER make a loan to someone who couldn't pay it back.
 
Padawanbater2

Padawanbater2

Well-Known Member
OGEvilgenius said:
You have no idea how finance works here apparently. A bank, if they did not know they were going to receive a huge bail out (read: payments those people were never able to make essentially) and not face criminal charges for lying about incomes and such - would NEVER make a loan to someone who couldn't pay it back.
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The banks did not care if the loans defaulted, they knew the taxpayers would bail them out, that's why they hold the majority of the responsibility for the global collapse
 
OGEvilgenius

OGEvilgenius

Well-Known Member
Padawanbater2 said:
The banks did not care if the loans defaulted, they knew the taxpayers would bail them out, that's why they hold the majority of the responsibility for the global collapse
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They should never have assumed this. The only reason they could assume this is if they owned the government. Hence, massive conspiracy. Between parties too. But yeah, vote for a democrat or republican.
 
Padawanbater2

Padawanbater2

Well-Known Member
OGEvilgenius said:
They should never have assumed this. The only reason they could assume this is if they owned the government. Hence, massive conspiracy. Between parties too. But yeah, vote for a democrat or republican.
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Or do what you do and just bitch about it instead?

Great solution
 
OGEvilgenius

OGEvilgenius

Well-Known Member
Padawanbater2 said:
Or do what you do and just bitch about it instead?

Great solution
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Actually I just told you that voting for a Democrat or Republican will only bring more of this kind of criminal behavior because that's all they've fucking well engaged in for a very long time now. Openly and blatantly. Solutions to this problem start with abolishing the central bank which was able to guarantee this behavior with literally nothing behind it but the law and force of government. It was the primary driving force, because if these banks were existing on their own reserves they again would never have engaged in such risky and destructive behavior (which really amounted to the largest theft of wealth in human history, from the bottom to the top, as per usual).
s.
 
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