beluga wrote:But I do worry that people will just be content with being mortgage slaves for the long term. Go to work, pay 35% tax, pay 50% on housing, live on 15% and have no savings besides some equity in the home. Could this persist for a whole generation?
patriot1 wrote:It is completely beyond me how anyone could think that exotic mortgages could prolong high prices indefinitely when we have proof of the contrary displayed so bluntly south of the border.
Money101 wrote:Do all borrowers of 40 year mortgages have a poor credit rating? If not, is it the income to debt ratio that's risky?]
AltaRed wrote:1. They are taken out by people stretching to buy as much house as they can, with minimal to zero down payment. No patience to wait to move up. Have a McMansion now.
2. None of this implies a poor credit rating - indeed, the borrowers may have an excellent credit rating.
3. The mortgage becomes underwater if house prices soften (which they have).
4. Mortgage payments may be hard to pay if one or both of the income earners lose his/her job in a recession and there is no buffer left to re-finance the mortgage or work out new arrangements with the lender if the mortgage is underwater.
twa2w wrote:HELOCs require 20% equity - previously they required 25% until the PTB reduced the requirements.
But yes they are essentially unllimmited amortization.
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