If housing prices go up, the loan-to-value goes down, and subsequently the mortgage rate goes down. The fixed rate mortgage will still never be at 2% or anything ridiculously low. What McCain says does make sense for subprime borrowers who perhaps have mortgages adjusting to 8,9,12%. In those instances, a refi to a fixed rate mortgage is very plausible, BUT you need to have a good payment history AND ideally you need equity (re: house prices go up).

Typically, a borrower who got a teaser rate ARM, Pay Option ARM, or other more sophisticated mortgage has decent credit. They used the sophisticated mortgage with sophisticated low initial payments to buy more house. What they should have done is buy a more modest home and bank the savings. Those mortgages were once only provided to truly "sophisticated" borrowers (read: ones with a lick of common sense and a good deal of financial savvy, like the Pelican CEO).

What Insane McCain is saying is borrowers relied on the broker's advice,"Borrower, don't worry about this adjustable rate mortgage. When your house goes up by 20%/yr, you can just refi into a cheaper loan." There's enough truth in that statement to argue the loan officer is not technically lying. For perhaps 1 in 10 borrowers, the broker is absolutely right. The other 9 of 10 are about to take a ride down manure hill. The borrowers should have refused the bong. The broker... well, she should burn in hell.

I know that, and you know that, but people who did these nutty things didn't know, or (more likely) didn't care.

It's like when people buy a car. The cost of the car? Doesn't matter. The length of the loan term? Who cares! Just tell me the monthly payment!

Low introductory interest rate loans - what's the payment, THIS month? Next year? Who cares. I could be dead next year.

Plus, it really didn't matter what the interest rate was next year, or whether you could refi to a lower rate. The WORST case scenario, if you couldn't afford the payment in a year, was you had to sell and pocket your 20% gain.

And that's the way it was.

+1.

As a guy who makes his money by investing in real estate, I quit buying anything for a few years when the market was "hot". Too many people that don't truely understand real estate jumped into the market, paying too much money, with too little down.

Time to jump back in. I just picked up a house for about half the neighborhood's typical values. My realtor is swamped- She sells real estate as a hobby, but she is way busier than she wants right now. She is paying off her home this month, after buying a bunch of new furnature and stashing a bunch away for the inevetable income taxes. Another friend is picking up a bunch of commercial properties at bargain prices- It's fun to bid on properties when there are no other bidders.

This is a great opportunity for those who haven't listened to the conventional wisdom on the street, but have been sitting on the sidelines with some cash, waiting for everyone else to get sour on real estate.

This will blow the minds of you So California guys-

A recent front-page newspaper article showed the price differences of homes compared to a year ago- While most local areas had a slight drop (my own neighborhood lost about 3%), the area for the house I just bought gained 7% in the last year.

A friend who is an appraiser is convinced that this area has bottomed out. We did not see the silly gains of Las Vegas or LA, so we shouldn't see the corresponding silly drop.

My new house has a great renter who plans on staying for the long haul. She keeps the place spotless, and I've got a positive cash flow.

This is truely a land of opportunity.

What area?

uh oh. I smell another OFHEO HPI graph coming down the broadband line.

LOL!

Maybe, but this area he describes, great area, great tenants, wasn't affected by the bubble, and you can buy nice houses that cash flow right out of the box, I'm interested in buying! Just need to know where it is.

I would cast a vote for the incarceration for life of any politician that would sign such a bill.

I was almost 40 years old before I could afford to buy a house. I put 20% down. Who's gonna compensate me for the anguish of all those decades of renting?

There has to be a way to sue the government for this activity.

Talk to Wayne. He'll convince you how smart you were to rent;)

Most of his appraisals are in the South Puget Sound area- Basically South of Seattle.

Plenty of homes for sale, but very few that are true bargains. Don't think that you can just grab a house and make money from day one. That's what got us in this mess. I did very well, and am going to look for more.

[enter disclaimer of your choice here]

I see myself following a similar timeline as you have. I'm just behind by about 15 years.
:mad: