Sunday, June 19, 2005

Housing Rant

Housing Rant:
  • ARM (Adjustable Rate Mortgage) aka Adjustable Risk Mortgage
  • Down Payment? What's a down payment? No need for that anymore.
  • IO Loans (Interest Only Loans) i.e. Illinformed Only Loans. Equity? who needs to build equity the old fashioned way. I'll get equity after my home appreciates 20% this year. Maybe not b.c I just took out a home equity loan.
  • Future. Hell no. I only think about the short term. I want it now damn it. What's the lowest monthly payment I can get? Oh please help me mortgage lender.


  1. Mini-rant--all of the bubble-promoters who talk down about interest-only loans.

    I'm very well informed, and an interest-only loan is clearly in my best interest at this point in time.

    Just because lenders are pushing a product on those for whom it is ill-suited (and who can't bother to figure out what is best for them) doesn't mean the product itself is bad.

    Same goes with ARMs (though anyone who is going to be in the same house for more than a few years and doesn't lock in is moderatly foolish, at best, at this point) and, frankly, down payments. Your house will grow (or decline) in value regardless of how much equity you have; the cash can be put to much better use eleswhere, in most cases. Though one should acknowledge that bringing cash to the table is a possibility, and plan accordingly.

    (All that said without passing judgement one way or the other on whether there is a bubble...)

  2. Points well taken. For a very small percentage of people a IO or ARM would make sense. But the masses should not be taking out these types of loans.