Not idiots, Martha, but rather con artists and swindlers who deserve the old-time treatment of tar-and-feathers and the ride out of town on a rail. It was their (i.e., the loan officers', underwriters', processors', etc.) responsibility to perform the due diligence to protect both their investments and the clientele, and they blew it off to make a quick buck.

Unfortunately, it seems that many of these folks are recipients of that federal bail-out money. The only thing we can hope for is that the new oversight makes them stick to the straight-and-narrow now. HPH

 

As I think on this, perhaps the most deleterious effect was the housing bubble.
In an era of fixed mortgages, we would be well on our way to recovery now.
The individuals who couldn't make ends meet would be out of the game.
The housing would be in the process of redistribution to new owners through an RTC type mechanism and the market would have reached it's floor.
The ARMs however are like time delayed mines that just keep on giving.
The bubble created a trap individuals couldn't get out off when their ARM mortgages reset and the interest rate upticked.
It would be interesting to see the distribution of 1,2,3 and 5 year ARMs.
Assuming that the majority of bad mortgages was coming to a close in 06.
We're largely out of the woods with the 1 and 2 year resetting and are left with the 3 year coming in the next 18 months.
I just don't think there are that many 5 yr resets coming.

 

I'm sure someone has said this, but you never want to pay off a house if it means you will be cash poor. You want at least six months of living expenses readily available in case of emergency, job loss, etc. I personally still believe you should have the longest term mortgage you can afford and are comfortable with. So I will probably never pay mine off except when I sell. And if I buy another house down the road, I'll probably get a mortgage on that one, too.

 

You may want to rethink that. See attached.

http://lansner.freedomblogging.com/2009/02...tion-cut/15641/

 

^ I'm aware of that plan, but so far I'm not over the $208K taxable earning mark for the interest reduction (in my family of one). However, it is a consideration in whether the +1 and I get married or not. Because if we do, we will probably be in that bracket the Prez is after.

 

This has been some interesting reading. But it was the greatest thing for me to have paid off my 30 year 6.75% morgage in 14 yrs. Now if something happens I can live off my investments interest. I now work because I want to not because I have to.

 

^ That is a good position to be in!

 

I hate reoccuring expenses. My property taxes are due in November. So every November, in addition to paying off the property taxes, I send a check to the gas & electric company, cable company, and water company for I estimate will be my fees for the coming year. Seldom do I have to pay another utility bill until the following November.

 

I think on the one hand you had people who wanted to buy homes and "cash in" on the nearly decade of rising home prices. Who wouldn't. I wouldn't necessarily call them idiots, as their family & friends & neighbors were probably all doing the same thing.

The call for regulations for the past 6 years not being heeded can CLEARLY be placed on the heads of a few people, maybe a "group". I'ts really, really unpopular for republicans to say "we need regulations" on home purchases for lower income families, as they are instantly demonized.

The lending companies clearly wanted in on the action, and are complicit. They levered up the low income programs for people of all income, and so now people of all incomes are losing their homes. It sucks.

But on the other hand, a third of home owners actually own their home outright. And of all the home loans, only about a third of them are through banks. Once the market clears up, homes will continue their upward march through appreciation and inflation. Dirt, for the most part, only goes up.

Back to the topic at hand, it seems that if you can make use of the mortgage deduction, it makes sense to hold a mortgage. If not, be free & clear.

 

with you totally, Ms.P. If we were younger or in a different place/time, we'd feel the same way. However, facing the fact that our earnings years are basically over and what we have is all we'll probably ever have (unless the stock market sees a miraculous turnaround), it was the best decision we could have ever made. Everything we do financially is done by averaging out our ages. Our averages are quite bit higher than yours and Vito's. I'm sure you're making very wise decisions for yourself and for him. For us paying off the house was the best decision. That may not hold true for those in different circumstances. Our cash position is what it is and if that position changed for whatever reasons, we always have the equity credit line alternative.