Our financial system is crumbling this week.

[AWvsCBsteeeerike3]

It kinda annoys me that cheap gas and cheap mortgages have messed up the urban structure of most US cities for years to come.

What do you mean?

In simple terms, both have led to why quality-constructed buildings in the urban core are vacant and crumbling while McMansions are splattered over the countryside.

I'm a big proponent of preserving and using what you have, instead of letting them turn into eyesores.

Agreed.

[jim]

There are plenty of people that had no idea what they were getting into because it wasn't explained truthfully or at all. There are plenty of stories that seem reputable where people honestly thought they had a fixed rate, and only discovered they did not when the mortgage payment skyrocketed. Not all, but enough to where blanket statements about people in trouble aren't fair.

edit - my wife is the financial expert in our house, and she really is an expert so I have a big advantage in these matters. But I can't fault people who don't have that knowledge and were just flat out lied to.

[AWvsCBsteeeerike3]

There are plenty of people that had no idea what they were getting into because it wasn't explained truthfully or at all. There are plenty of stories that seem reputable where people honestly thought they had a fixed rate, and only discovered they did not when the mortgage payment skyrocketed. Not all, but enough to where blanket statements about people in trouble aren't fair.

edit - my wife is the financial expert in our house, and she really is an expert so I have a big advantage in these matters. But I can't fault people who don't have that knowledge and were just flat out lied to.

But, jim, don't you think people should know a little bit about what they're doing before they do it? I mean, if you go get a loan, shouldn't you at least look into it a little bit at least? I mean, we're not talking complicated economics or math here. One simple test will tell you that people are lying/offering a loan that is too good to be true. Even at 5%, a low rate, you're still paying $833.33/month in interest alone on a 200K mortgage. I know banking and the accounting that goes along with these loans can be incredibly complex, but there are a few simple and extremely easy things that people should be able to do themselves to figure out if they are getting a fair shake.....and figuring out your payments aren't even covering the interest should be one of them.....

[TimeForGuinness]

There are plenty of people that had no idea what they were getting into because it wasn't explained truthfully or at all. There are plenty of stories that seem reputable where people honestly thought they had a fixed rate, and only discovered they did not when the mortgage payment skyrocketed. Not all, but enough to where blanket statements about people in trouble aren't fair.

edit - my wife is the financial expert in our house, and she really is an expert so I have a big advantage in these matters. But I can't fault people who don't have that knowledge and were just flat out lied to.

But, jim, don't you think people should know a little bit about what they're doing before they do it? I mean, if you go get a loan, shouldn't you at least look into it a little bit at least? I mean, we're not talking complicated economics or math here. One simple test will tell you that people are lying/offering a loan that is too good to be true. Even at 5%, a low rate, you're still paying $833.33/month in interest alone on a 200K mortgage. I know banking and the accounting that goes along with these loans can be incredibly complex, but there are a few simple and extremely easy things that people should be able to do themselves to figure out if they are getting a fair shake.....and figuring out your payments aren't even covering the interest should be one of them.....

let's not forget taxes, insurance, bills, and furniture.

due diligence is vital

[jim]

There are plenty of people that had no idea what they were getting into because it wasn't explained truthfully or at all. There are plenty of stories that seem reputable where people honestly thought they had a fixed rate, and only discovered they did not when the mortgage payment skyrocketed. Not all, but enough to where blanket statements about people in trouble aren't fair.

edit - my wife is the financial expert in our house, and she really is an expert so I have a big advantage in these matters. But I can't fault people who don't have that knowledge and were just flat out lied to.

But, jim, don't you think people should know a little bit about what they're doing before they do it? I mean, if you go get a loan, shouldn't you at least look into it a little bit at least? I mean, we're not talking complicated economics or math here. One simple test will tell you that people are lying/offering a loan that is too good to be true. Even at 5%, a low rate, you're still paying $833.33/month in interest alone on a 200K mortgage. I know banking and the accounting that goes along with these loans can be incredibly complex, but there are a few simple and extremely easy things that people should be able to do themselves to figure out if they are getting a fair shake.....and figuring out your payments aren't even covering the interest should be one of them.....

It's too complicated. Unless you are a lawyer you aren't going to understand the entire contract. If it were one page where it said you are getting a loan with these terms, then yes absolutely. But they bury so much crap in there and make it impossible for the average person to understand.

Bush addressed this very issue early in the week and he's spot on.

[Popeye_Card]

As much as we don't want to see it, is it best for the long-term health of the economy if we simply allow these banks to fail, and fall into a depression? I don't think we can keep applying these band-aids at the expense of doubling the national debt every 2 years.

[TimeForGuinness]

As much as we don't want to see it, is it best for the long-term health of the economy if we simply allow these banks to fail, and fall into a depression? I don't think we can keep applying these band-aids at the expense of doubling the national debt every 2 years.

how do we get out of the depression?


debt.

[Arthur Dent]

As much as we don't want to see it, is it best for the long-term health of the economy if we simply allow these banks to fail, and fall into a depression? I don't think we can keep applying these band-aids at the expense of doubling the national debt every 2 years.

Maybe, but in the long term, we're all dead. The short term matters. A lot.

[Popeye_Card]

As much as we don't want to see it, is it best for the long-term health of the economy if we simply allow these banks to fail, and fall into a depression? I don't think we can keep applying these band-aids at the expense of doubling the national debt every 2 years.

Maybe, but in the long term, we're all dead. The short term matters. A lot.

Isn't that awfully selfish of us? We're already passing off trillions of dollars worth of debt on to future generations. When do we finally say, "enough!"?

[AWvsCBsteeeerike3]

There are plenty of people that had no idea what they were getting into because it wasn't explained truthfully or at all. There are plenty of stories that seem reputable where people honestly thought they had a fixed rate, and only discovered they did not when the mortgage payment skyrocketed. Not all, but enough to where blanket statements about people in trouble aren't fair.

edit - my wife is the financial expert in our house, and she really is an expert so I have a big advantage in these matters. But I can't fault people who don't have that knowledge and were just flat out lied to.

But, jim, don't you think people should know a little bit about what they're doing before they do it? I mean, if you go get a loan, shouldn't you at least look into it a little bit at least? I mean, we're not talking complicated economics or math here. One simple test will tell you that people are lying/offering a loan that is too good to be true. Even at 5%, a low rate, you're still paying $833.33/month in interest alone on a 200K mortgage. I know banking and the accounting that goes along with these loans can be incredibly complex, but there are a few simple and extremely easy things that people should be able to do themselves to figure out if they are getting a fair shake.....and figuring out your payments aren't even covering the interest should be one of them.....

It's too complicated. Unless you are a lawyer you aren't going to understand the entire contract. If it were one page where it said you are getting a loan with these terms, then yes absolutely. But they bury so much crap in there and make it impossible for the average person to understand.

Bush addressed this very issue early in the week and he's spot on.

You're missing my whole point. Regardless of what they bury in there, everyone applying for a loan should be able to come up with a ballpark figure of how much they 1) are going to be paying and 2) can afford to pay. For instance, if you are paying $800/month in rent and can't afford to go any higher, then you simply can't afford a 200K mortgage with no money down. End of story, don't even bother. There's no way in hell they could afford to pay the interest alone, so even if they spread it out over 500 years, it wouldn't matter b/c the debt would only grow. But, these people didn't even bother to look into that, and that is stupid.