Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Really? Noone is talking about the possibility of the mortgage interest deduction being reduced or possibly eliminated?

This will never happen.

Just like Sequestration "will never happen" (remember when Obama said that in the debate, that was a riot!)...the Ways and Means Committee heard testimonies yesterday on the subject, which would've been considered insane just a few years ago.

Remember, we had all interest deductions from 1913 until 1986, people thought it was crazy to get rid of them then...but good ol' Uncle Sam needed the money.

Sequestration won't happen. Oh, sure, the bill passed, but just as I predicted the aspects of sequestration which the GOP disagrees with will end up being rolled back. We've already seen this with the Democratic capitulation on FAA. Next will be the bill to restore full funding to DOD. Meanwhile no new taxes, and we'll see the severe cuts to social services stay intact. I thought this was pretty obvious.

Meanwhile, as far as the mortgage interest deduction being reduced or eliminated? Never happen. At least not without a radical change in our country's electoral process.

You do know that the FAA still has the same budget cuts in place, right? They were just able to move funding from one area to another, unfortunately, the DOD's problem is much, much larger. Even if it were allowed to, it can't simply shift funds, as of this writing the Defense budget is halfway through the FY and 80% spent YTD. Considering that the FAA's job impact to the DC area is relatively minimal while the Pentagon's is enormous...I'd still be concerned if I were you.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think banks are partially involved in this 'bubble' (if we want to call it this). We are another example of lending at its best - monthly income ~$4000, approved for $450K with 2% down. There is no way we could afford it if we went all the way to $450k. We are looking realistically at $300-$400k and that is a big stretch IMO, but many people don't bother to run the numbers themselves and are quick to spend what the bank tells them they can. Also, the lack of inventory almost requires you to continually look above the budget you initially set and blurs the lines of practicality.

+1

All the bank looks at is whether or not you have the available income to pay back the loan, period. They could care less whether or not you have money left over for food, utilities, or maintenance of the house, which is why they never bring these things up when evaluating your "credit worthiness".

If ONE bank out there asked you to fill out an estimated monthly budget and required you to sit down with a financial advisor prior to approving a mortgage, I'd say we may have turned a corner in our lending market. However, all we've done so far is given a cancer patient a pain reliever and told them "you're better!"

So banks will loan you over 50% Debt To Income? Yeah right

No, you're absolutely right, that's craziness. 50% is ridiculous!

46%, however, is the actual number...

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think banks are partially involved in this 'bubble' (if we want to call it this). We are another example of lending at its best - monthly income ~$4000, approved for $450K with 2% down. There is no way we could afford it if we went all the way to $450k. We are looking realistically at $300-$400k and that is a big stretch IMO, but many people don't bother to run the numbers themselves and are quick to spend what the bank tells them they can. Also, the lack of inventory almost requires you to continually look above the budget you initially set and blurs the lines of practicality.

+1

All the bank looks at is whether or not you have the available income to pay back the loan, period. They could care less whether or not you have money left over for food, utilities, or maintenance of the house, which is why they never bring these things up when evaluating your "credit worthiness".

If ONE bank out there asked you to fill out an estimated monthly budget and required you to sit down with a financial advisor prior to approving a mortgage, I'd say we may have turned a corner in our lending market. However, all we've done so far is given a cancer patient a pain reliever and told them "you're better!"

So banks will loan you over 50% Debt To Income? Yeah right

You'd be amazed. The first problem is that I suspect the PP is referring to monthly income *after* taxes, but I don't think the banks use the after-tax monthly income. That's part of the problem.

But what the PP mentions sounds about right (from my own experience of what the bank was willing to lend me, as well as that of some friends). Of course, I figured out what I could afford a month, and let that be my guide.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Really? Noone is talking about the possibility of the mortgage interest deduction being reduced or possibly eliminated?

This will never happen.

Just like Sequestration "will never happen" (remember when Obama said that in the debate, that was a riot!)...the Ways and Means Committee heard testimonies yesterday on the subject, which would've been considered insane just a few years ago.

Remember, we had all interest deductions from 1913 until 1986, people thought it was crazy to get rid of them then...but good ol' Uncle Sam needed the money.

Sequestration won't happen. Oh, sure, the bill passed, but just as I predicted the aspects of sequestration which the GOP disagrees with will end up being rolled back. We've already seen this with the Democratic capitulation on FAA. Next will be the bill to restore full funding to DOD. Meanwhile no new taxes, and we'll see the severe cuts to social services stay intact. I thought this was pretty obvious.

Meanwhile, as far as the mortgage interest deduction being reduced or eliminated? Never happen. At least not without a radical change in our country's electoral process.

Anonymous wrote:In other words - don't rely on the bank to tell you what you can spend. I'm surprised that people do.

+1

The problem is, people do that all the time.

For instance, it's widely accepted that you should start saving AT LEAST 10-15% of your income for retirement, starting in your 20's.

http://online.wsj.com/article/SB10001424127887323639604578368823406398606.html

"Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute."

Remember, if there's anything this latest recession has proven, it's that doing the right thing isn't enough, you have to find a way to protect your choices against the behavior of people doing the wrong thing.

And when home prices are being evaluated by a population who has yet to learn how to simply keep a dollar in an account, I have a hard time judging them on a 30-year investment in real estate. Especially in an extremely volatile market that's receiving government interference...oops, I meant to say intervention!

Anonymous wrote:

Anonymous wrote:I think banks are partially involved in this 'bubble' (if we want to call it this). We are another example of lending at its best - monthly income ~$4000, approved for $450K with 2% down. There is no way we could afford it if we went all the way to $450k. We are looking realistically at $300-$400k and that is a big stretch IMO, but many people don't bother to run the numbers themselves and are quick to spend what the bank tells them they can. Also, the lack of inventory almost requires you to continually look above the budget you initially set and blurs the lines of practicality.

+1

All the bank looks at is whether or not you have the available income to pay back the loan, period. They could care less whether or not you have money left over for food, utilities, or maintenance of the house, which is why they never bring these things up when evaluating your "credit worthiness".

If ONE bank out there asked you to fill out an estimated monthly budget and required you to sit down with a financial advisor prior to approving a mortgage, I'd say we may have turned a corner in our lending market. However, all we've done so far is given a cancer patient a pain reliever and told them "you're better!"

So banks will loan you over 50% Debt To Income? Yeah right

I'm sure they didn't but it really isn't rocket science. I just don't get...

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think banks are partially involved in this 'bubble' (if we want to call it this). We are another example of lending at its best - monthly income ~$4000, approved for $450K with 2% down. There is no way we could afford it if we went all the way to $450k. We are looking realistically at $300-$400k and that is a big stretch IMO, but many people don't bother to run the numbers themselves and are quick to spend what the bank tells them they can. Also, the lack of inventory almost requires you to continually look above the budget you initially set and blurs the lines of practicality.

+1

All the bank looks at is whether or not you have the available income to pay back the loan, period. They could care less whether or not you have money left over for food, utilities, or maintenance of the house, which is why they never bring these things up when evaluating your "credit worthiness".

If ONE bank out there asked you to fill out an estimated monthly budget and required you to sit down with a financial advisor prior to approving a mortgage, I'd say we may have turned a corner in our lending market. However, all we've done so far is given a cancer patient a pain reliever and told them "you're better!"

Speaking for myself - I don't need a bank to help me do my budget. I took into account all my other expenses and figured out what I wanted my mortgage payment to look like. I never asked how much they would let me borrow in total. I'm sure it was much more than I spent.

Congratulations! If only the economy depended on your actions and not the actions of everyone together. Willing to take the bet that everyone in the area has done the same thing you did?

In other words - don't rely on the bank to tell you what you can spend. I'm surprised that people do.

Anonymous wrote:

Anonymous wrote:I think banks are partially involved in this 'bubble' (if we want to call it this). We are another example of lending at its best - monthly income ~$4000, approved for $450K with 2% down. There is no way we could afford it if we went all the way to $450k. We are looking realistically at $300-$400k and that is a big stretch IMO, but many people don't bother to run the numbers themselves and are quick to spend what the bank tells them they can. Also, the lack of inventory almost requires you to continually look above the budget you initially set and blurs the lines of practicality.

+1

All the bank looks at is whether or not you have the available income to pay back the loan, period. They could care less whether or not you have money left over for food, utilities, or maintenance of the house, which is why they never bring these things up when evaluating your "credit worthiness".

If ONE bank out there asked you to fill out an estimated monthly budget and required you to sit down with a financial advisor prior to approving a mortgage, I'd say we may have turned a corner in our lending market. However, all we've done so far is given a cancer patient a pain reliever and told them "you're better!"

Speaking for myself - I don't need a bank to help me do my budget. I took into account all my other expenses and figured out what I wanted my mortgage payment to look like. I never asked how much they would let me borrow in total. I'm sure it was much more than I spent.

Anonymous wrote:I think banks are partially involved in this 'bubble' (if we want to call it this). We are another example of lending at its best - monthly income ~$4000, approved for $450K with 2% down. There is no way we could afford it if we went all the way to $450k. We are looking realistically at $300-$400k and that is a big stretch IMO, but many people don't bother to run the numbers themselves and are quick to spend what the bank tells them they can. Also, the lack of inventory almost requires you to continually look above the budget you initially set and blurs the lines of practicality.

+1

All the bank looks at is whether or not you have the available income to pay back the loan, period. They could care less whether or not you have money left over for food, utilities, or maintenance of the house, which is why they never bring these things up when evaluating your "credit worthiness".

If ONE bank out there asked you to fill out an estimated monthly budget and required you to sit down with a financial advisor prior to approving a mortgage, I'd say we may have turned a corner in our lending market. However, all we've done so far is given a cancer patient a pain reliever and told them "you're better!"

Anonymous wrote:I think banks are partially involved in this 'bubble' (if we want to call it this). We are another example of lending at its best - monthly income ~$4000, approved for $450K with 2% down. There is no way we could afford it if we went all the way to $450k. We are looking realistically at $300-$400k and that is a big stretch IMO, but many people don't bother to run the numbers themselves and are quick to spend what the bank tells them they can. Also, the lack of inventory almost requires you to continually look above the budget you initially set and blurs the lines of practicality.

+1 It seriously amazes me what banks approve people for.

And it bothers me that this issue hasn't been fixed adequately since the last bubble. People seem to think that now that "subprimes" are not longer an issue, that we're A-OK. But it doesn't matter how good someone's credit is, if their income can realistically support a certain monthly payment, then it's only a matter of time before they dig themselves into a problem.

Most banks don't really care, though, because they sell the loan almost as soon as they originate it. And most of the market is government-backed loans.