Comments on: Bush Administration Proposes Mortgage Bailout Plan

By: Hathor

Hathor — Wed, 19 Dec 2007 00:30:01 +0000

$1200 or so, 80 not 30 years. My,my!

By: TanGeng

TanGeng — Mon, 10 Dec 2007 16:08:36 +0000

$1200/month is $14400/year. That’s less than 5% annualized interest rate. You could get that in 2003/2004, you can’t get interest rate now.

But that’s an interest only loan. To pay off that loan, you need the numbers Brad’s talking about 1500/month.

By: Brad Warbiany

Brad Warbiany — Mon, 10 Dec 2007 06:00:17 +0000

Hathor,

I think that’s a lowball. My old house was purchased for about $240K, and financed 80/20, 30 year on each. With decent credit, my payment on the loan was about $1500/month, and with prop. tax and insurance, was about $1700. I don’t think you can do $300K for $1200/month, no matter how you look at it.

By: Hathor

Hathor — Mon, 10 Dec 2007 05:55:44 +0000

TanGang,
Do it for $300,000. 80 years is doable, since most started with a payment $1200 or so. I don’t think the avg home cost was more. Any way I was just trying to make a point with my first comment not a math lesson. I also didn’t do the actual calculation myself, I let software do it.

By: TanGeng

TanGeng — Mon, 10 Dec 2007 03:19:07 +0000

Actually, you’re missing something.

If a million dollar loan is borrowed at 6% annual interest (.5% per month). The interest on the principal is $5000 per month. If the borrower pays less than that, the loan has negative amortization, and the borrower owes more each successive month.

A borrower has to pay the minimum to cover the interest. The borrower then pays down the principal. Paying more principal allows the borrower to pay off the loan faster. This is where the duration of the loan helps. A longer loan mean paying less principal on your loan per month and that lowers your monthly payments. But you can’t really get away from paying the minimum which is the interest.

By: Hathor

Hathor — Mon, 10 Dec 2007 01:13:30 +0000

Absurd is the right spelling.

By: Hathor

Hathor — Mon, 10 Dec 2007 01:10:51 +0000

TanGeng,
I was using an adsurb number for the mortgage, but if you did amortize for eighty years that would change the year in which the interest would almost be nothing and no matter what the interest rate, you would get a smaller monthly payment for the same principal, the longer you financed.

You know, I use this reasoning when I did calculations to determine how I wanted to finance my house.

Of course I could have been very wrong and not understood any of this, but it kept me in my budget.

By: TanGeng

TanGeng — Sun, 09 Dec 2007 17:49:53 +0000

Hathor,

The benefit of a loan for a long long time is that you’re paying less and less principle per month at the beginning of the loan. At 30 years, principle paid per month is almost nothing. 80 year mortgages do nothing because these people can’t afford the interest rates on the loans.

By: Hathor

Hathor — Sun, 09 Dec 2007 14:53:32 +0000

I can’t see how refinancing will save some people. The house’s value wouldn’t depreciated any. To keep the same payment or close to it, wouldn’t you have to finance for 80 years or something? It is just a lose, lose situation. If you can’t sell, the mortgage company may not be able too either.

By: sandra

sandra — Sat, 08 Dec 2007 00:20:04 +0000

The bank are only negotiating with the individuals that are 30-90 days late and not working with the ones that are current, but do not want to fall into that situation to save their good credit. That is not fare. If they are going to modificate the rates it should be with all borrowers with primary residence or investment properties. Do not pick and choose, because they it fall into discrimination. You do it for all or for none. Or get suid for discrimination. Sandra

By: Dan

Dan — Fri, 07 Dec 2007 20:56:18 +0000

Free markets? If the lenders want to save their paper with new loans (the essence of the Bush plan) rather than initiate foreclose, that’s their business. If they choose to foreclose and absorb any losses, that too is their business. Free markets find balance on their own. Heavy-handed manipulations such as the Bush plan have no place in a society of free people. The fallout of the sub-prime mess will affect everyone until the market re-balances itself. I saw this coming and am prepared. Even so, I will take a loss on my balance sheet. So be it. I prefer taking my losses in the context of liberty rather than social manipulation “for the better good.”

By: TanGeng

TanGeng — Thu, 06 Dec 2007 16:02:36 +0000

Maybe they’d recognize a term that’s going to be beating people over head once all of this is over.

Moral Hazard.

By: Dustin

Dustin — Thu, 06 Dec 2007 14:15:00 +0000

Who says its a major mess??? 35% of people in the country dont even have a mortgage. Of the 65% who do 95% are on time currently!!! This is so blown out of proportion by the media its not even funny. Let the market control itself. The other losers are the smart people who just took out a 30 year fixed at a slightly higher interest rate and now will be losing ground to the people who are now frozen into their amazing rates. This is a travesty of the largest proportions!

By: kafco

kafco — Thu, 06 Dec 2007 04:00:51 +0000

To Tony:
Go to night school and learn how to write in ENGLISH
then go for a better paying job

By: tony (aus. texas)

tony (aus. texas) — Thu, 06 Dec 2007 01:28:25 +0000

me and my wife wrk everyday..we pay our bills and we saved money to put down on the house with..but refinance time comes and my propety value has drop 25-30k and i cant get a loan.. my rate has gone up 5% my wife job is cutting back on raise bouns and (board) (but there getting all these extras party’s extra time off for the holidays for those guys) now making them pay for inssurance 300 a month and shes 3 months preg.. so what should i do now…HELP…american dream!no home and no TAXES