30-Yr Mortgages Are Root Of All Evil (Intelligent Investing With Steve Forbes)

[iampriteshdesai]

Just saw Capitalism a love story... changing rates are harmful

[Diskatopia]

It is UP adjusting that hammers middleclass people. People with tons of money may have a problem understanding this. Establishing the rate when the money is borrowed makes perfect sense-- the choice is made by the consumer that they can accept that rate, and the bank makes a fair profit at that rate, since they can "borrow" it at that time at a lower rate. I wouldn't get an ARM any more than I would get an adjustable note. Smart loans and mortgages should be fixed rate, with fair credit checks.

[sethhersch]

@Diskatopia

Agreed. Ignorant question, though: what is the practical difference between an ARM and an adjustable note?

I thought they just meant the same thing.

[Diskatopia]

@sethhersch I was using "note" in the general sense, not only mortgages. For example, some years ago I got a 90 day renewable note (although fixed rate), paying it back as I could, the only requirement being I had to pay at least the interest due every 90 days. Of course after about 4 or 5 periods of 90 days the bank stopped renewing it, since interest rates had gone up-- so I got a lower rate cash advance from my credit card (1.99% for life, lol), paid that note off,and switched banks.

[Diskatopia]

@Diskatopia (cont) Some argue that a 5 year ARM is better, like this fellow, but that is true only if rates stay the same or sink. Basically, it is a gamble, and the fixed rate loan is offset by the fact that if one is income-sound (if not, makes no diff. what kind of note one has if payments not made), one can refinance if rates sink- personally am refinancing mine down from 6 to near 4 (and maybe 20 years, maybe not). What these guys miss-- it is about middleclass CASH FLOW,not just equity.

[rickbar123]

How else can you sell a home to a middle class that is being paid nothing.

[CulturalWorldViews]

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