American Dream Rant.....

[MossRoad]

.....Your method of progression seems sound, but would NOT work in my particular area. .....

Move to an area where it works and be debt free.

Life is full of choices that we all have to make... education, carreer, spouse, home, savings, children, retirement, etc...

If anyone lives in an area that is too expensive, and they realize it is too expensive they have choices... stay or leave are two of them.

 

[Podunkadunk]

If you have to ask "how much?", you can't afford it.

 

[BillyP]

If you have to ask "how much?", you can't afford it.

If you don't ask "how much", you're pretty stupid

 

[MossRoad]

If you don't ask "how much", you're pretty stupid

Hahahahahha!!!! THAT should be the quote of the decade! Nice one.

 

[40Kchicks]

A loan is just an advance on future income.

I have a good friend that two years ago was a small scale farmer who decided that he wanted to be big. He took the risks and borrowed a couple million dollars to expand his business. He now makes about 20K NET a month and has employees to do the dirty work for him so he bought two more businesses just like his and when he gets done expanding those businesses his NET monthly will be about 60K a month. He is using about 8 million in loans which he is on schedule to pay off in 10 years.

The ability to borrowing money can be a great tool. Living dept free is great for some but not everyone.

Eric

 

[ultrarunner]

Well said 40Kchicks!

 

[Bob_Skurka]

A loan is just an advance on future income.

I have a good friend that two years ago was a small scale farmer who decided that he wanted to be big. He took the risks and borrowed a couple million dollars to expand his business. He now makes about 20K NET a month and has employees to do the dirty work for him so he bought two more businesses just like his and when he gets done expanding those businesses his NET monthly will be about 60K a month. He is using about 8 million in loans which he is on schedule to pay off in 10 years.

The ability to borrowing money can be a great tool. Living dept free is great for some but not everyone.

Eric

Eric that is a great story, no doubt very true and it is a real American success story. But taking out loans with a sound business idea and the ability to put that idea into action is much different that the idiots who buy their houses with idiotic loans, no savings all the while depending on others for their income and depending on the mortage market not to go up and the housing market not to go down. Your story is far different than what we have been talking about with regards to the sub-prime home loans, but thank you for showing that Americans who work hard can be successful.

 

[ultrarunner]

It seems that we have almost come full circle... 20 years ago congress was investigating lenders for NOT lending and today it looks like lenders will be investigated for lending. (As an aside, anyone remember 17% mortgages in the 70's?)

In the 1980's, most of Oakland was effectively "Red-lined" by Lenders. It was just about impossible to find a bank or savings and loan willing to do business in the "Flatlands" As a consequence, the percentage of Homeowners dropped and the number of Rentals increased. The Government became involved and made "Redlining" illegal.

Fast forward 20 years later... Oakland Home Ownership is at an all time high, young families are buying former rental homes and transforming neighborhoods. This transformation would not have been possible without making sub prime loans more available.

I'm one that believes home ownership is the cornerstone of the American Dream. The Bay Area news is filled with stories of "Investor" homes being foreclosed. Last night the story profiled a Bay Area man that bought 5 homes in 2 years... his business plan consisted of "Flipping" and now he is loosing them, one by one.

Relaxed lending rules have given thousands of families a chance to obtain the American Dream... Home Ownership

For the most part, I believe the government effort to avert a post 911 economic depression is responsible for the unprecedented manner liquidity and credit were made available at record low interest rates.

Only time will tell how many Home Owners actually lost owner-occupied homes through foreclosure.

 

[MossRoad]

A loan is just an advance on future income.

That is where people, businesses and governments get into trouble. There is no guarantee that you will make that future income. It is speculation. Sure, some of it may be 95% a sure thing, but it is still speculation none the less. Our local government bases its next year budget on PROJECTED income from taxes. Guess what? Property tax restructuring killed their projections. Now they have to cut all non-essential services to make ends meet, and they may not make that as it is looking now.

I feel much better having actual cash making money for me than taking out loans and possibly being on the hook for large notes when catastrophy strikes.

The ability to borrowing money can be a great tool.

I agree. And I'll bet if your friend adds up everything he owns and sells it, then pays back all his loans, he will be in the black, won't he.

 

[BillyP]

A loan is just an advance on future income.

I have a good friend that two years ago was a small scale farmer who decided that he wanted to be big. He took the risks and borrowed a couple million dollars to expand his business. He now makes about 20K NET a month and has employees to do the dirty work for him so he bought two more businesses just like his and when he gets done expanding those businesses his NET monthly will be about 60K a month. He is using about 8 million in loans which he is on schedule to pay off in 10 years.

The ability to borrowing money can be a great tool. Living dept free is great for some but not everyone.

Eric

Eric, I live what you're saying every day and I know you do too. It a shame that most people don't understand the situation and how they are fed.

 

[HomeBrew2]

Eric, I live what you're saying every day and I know you do too. It a shame that most people don't understand the situation and how they are fed.

VERY WELL SAID!!! I am NOT in your situation ... mostly because I don't have "what it takes" (honest evaluation), though, I admire, celebrate, and invest in those that take measured risk, "invest" in themselves to live the REAL American dream, ie, enterprise! Some folks simply do not understand capitalism. "Investment" and "speculation" are two different words for a reason. One that lives such a sheltered life, where the two words are equal, simply rides on the coat-tails of those that make this country great.
Nuff said, but, cheers to you and 40kchicks, his farmer friend and all the millions of others that take caculated risk, invest in themselves and actually produce something from nothing.

 

[Kubotasrking]

So, let me see....... Banks and Lenders raise rates, some lenders put people on the edge (stretch to get that dream!). Now a lot of people cannot make it, property taxes, insurance rates, adjustable rates, so foreclosure rates are rocketing.

Are the banks and lenders greedy? They are bringing this in themselves.
Unreal.

-Mike Z.

I'm certain that the buyer of the property isn't responsible at all.

 

[Kubotasrking]

Actually that was the savings and loan crisis not a bank crisis, S&L followed a different set of regulations and the oversight was much looser.


By the way, this new so-called crisis, is due to people who take out loans with ZERO % downpayments on homes they can't afford. Or those who are addicted to credit cards like a crack ***** is addicted to drugs. Individual responsibility is a forgotton concept in this nation.

The press is reporting this as the "sub-prime" lending problem. Sub-Prime means, in simple English, that these loans suck because they are risky. People are taking too much risk. They choose to do it to themselves.

I think I agree w/ Bob. First time for everything.

 

[Kubotasrking]

Mike, this is irrelevant. It matters not what you buy, it matters what you can afford to buy. If you overextend, you will likely end up in trouble of your own making.

Amen Bob. I feel like I've been struck by lightning. 2x in one day...

 

[riptides]

I'm certain that the buyer of the property isn't responsible at all.

Bah.hhh... Of COURSE the buyer is somewhat responsible. In all these comments responsibility, accountability, knowledge come to mind.

But then there is the dark side of lending practices, and of course "market" trends.

I repeat my curiosity of lenders and bankers raising rates in a slow economy knowing that foreclosures are on the upswing. But I guess that is one way to get housing affordable again.

-Mike Z.

 

[riptides]

People are taking too much risk. They choose to do it to themselves.

Yes, but it is really all parites involved in the process.

With great risk comes great reward.

.......hides as he knows the other side of this saying.....

-Mike Z.

 

[Bob_Skurka]

I repeat my curiosity of lenders and bankers raising rates in a slow economy knowing that foreclosures are on the upswing.
-Mike Z.

Do you not realize that the lenders and banks are not the ones responsible for raising the rates? The Federal Reserve sets the rates and has been raising them for the past couple of years because of fears of inflation. It is only now that they are slowing down the raising of the rates. The Fed raises the rates and the lenders must follow or they lose money.

Yes, but it is really all parites involved in the process.

No. Just because people are willing to take a risk to lend you money does not mean that the people borrowing the money SHOULD borrow beyond their means. Remember, the lender is taking a calculated risk.

With great risk comes great reward

No question, and that is how businesses are founded and grow. So if the borrower is taking a calculated risk then it is based on a large pool of loans it makes and it is betting that only a certain small % of those will default. If the lender is correct and the defaults stay within their tolerances, then the lender took his risk, and the lender gets his reward.

But this thread is all about houses and being able to afford one. Living in a house doesn't generate income, it consumes income. You better be able to afford ALL the costs of the house when you sign the mortgage, if you can't do that then you are buying too much house.

 

[scott_vt]

The Federal Reserve sets the rates and has been raising them for the past couple of years because of fears of inflation.

Mornin Bob,
And just when I think that we havent heard from Alan Greenspan for awhile, he comes out of retirement , and sends the markets into a dither ! I think Bernanke needs to put a gag order on him !

 

[BobRip]

Mornin Bob,
And just when I think that we havent heard from Alan Greenspan for awhile, he comes out of retirement , and sends the markets into a dither ! I think Bernanke needs to put a gag order on him !

I agree. Greenspan is the most powerful man on the planet. His statements have always been carefully worded and he used his power well. But now, after retirement, I don't think he realizes that people still hang on his every word. He really needs to shut up.

 

[Bob_Skurka]

Well Greenspan retired and Bernanke took his place.

By the way the Federal Reserve meets next week, at that time they may choose to continue along with the interest rate increases that they have been following for the past couple of years.

Their concern has been that the economy is humming along at a good clip and they are keeping inflation down by raising the rates, or so that is their claim.