Really? 3%?
I dont currently have a mortgage, but if it gets to 3%, I would almost have to think that you could do better with that money (especially with the tax break) anywhere.
3% is basically giving it away.
Ditto-
We've had quite a few short sales in our neighborhood and that just murders your home value when the appraiser looks at recent similar sales.....they have no choice but to include them in their numbers.
Isn't that grand? Getting it up the ass because other morons weren't responsible when they bought a house. 
Yes, and in order to stabilize house prices and keep values up interest rates will continue to get lower. I wouldn't be surprised if we see 2%.
Can I ask a question to all of the economic guys out there at covers?
Why doesnt the Govt offer a one time payoff for anyone who wants it from their 401K to their mortgage balance - tax free.
Seems like a win win for everyone - would get a lot of people out from being underwater, stay in their houses, and the govt loses out on tax revenue but that is delayed anyway.
Thoughts?
van-
Part of the reason the government allows Roth IRA's (ie. ALL earnings are tax free) is because they know how screwed many are when retirement comes so they offer an incentive. I believe 50% of people over the age of 40 do not have more than $25,000 saved for retirement. Beyond frightening.
And most of the people who would take advantage of this would likely have the money anyway. In most cases, the people who are really struggling don't have much in their 401k anyway. Robbing Peter to pay Paul. All it would do is postpone doomsday for many people.
There are 46% of people in the Twin Cities upside down on their house (I was absolutely overwhelmed by this). I am one of them (not by a ton, but I'm still upside down), but I also have plenty of money to pay off the difference if I ever had to sell. My house value went from $415,000 to $285,000 (rough numbers) just to give you an idea.
I personally pay the absolute bare minimum in terms of my house payment. Why pay an extra payment on an asset that has just lost a ton of value and you have no idea if it will ever re-gain it? Over 5 years, I take that extra $12K (approx. 1 house payment per year) and invest it and make 10-20% depending on the year. That will more than offset any interest savings by paying my house off earlier. If the time comes when I sell and I'm upside down, I'll bite the bullet then. Not a second before.
Van - the goverment does allow a tax free/penalty free withdrawal from retirement accounts to avoid foreclosure and for first time home buyers.
Does not apply to pay down mortgages though.
I just sold my house in SC for $150,000 and it took an entire year (I paid $160,000 6 years ago). It took that long for cheap housing to sell, it is going to take longer for the more expensive markets to sell, as there are just not enough qualified buyers. In the more expensive metro areas the salaries do not off-set the increased cost of homes. Somethings gotta give.
The investors have already spent most of their money thinking everything was cheap - I read somewhere that 33% of sales were to investors who are now renting instead of flipping because it has a higher ROI.
I just moved to CA and there are a tonne of foreclosures and bank owned homes - I just don't see enough buyers and demard at current pricing.
Average starter home price is $400,000 and banks want 20% down, so $80,000 down. That cuts out a lot of potential buyers.
look at a college grad making $50K a year out of college, with $25K in college debt and the cost of gas and other living expenses - how is he going to save up 80K? they will be 30 be the time they pay off their student loans and 40 before they can afford the down payment.
It is going to be interesting to see where this goes from here.
mooose
van-
Part of the reason the government allows Roth IRA's (ie. ALL earnings are tax free) is because they know how screwed many are when retirement comes so they offer an incentive. I believe 50% of people over the age of 40 do not have more than $25,000 saved for retirement. Beyond frightening.
And most of the people who would take advantage of this would likely have the money anyway. In most cases, the people who are really struggling don't have much in their 401k anyway. Robbing Peter to pay Paul. All it would do is postpone doomsday for many people.
There are 46% of people in the Twin Cities upside down on their house (I was absolutely overwhelmed by this). I am one of them (not by a ton, but I'm still upside down), but I also have plenty of money to pay off the difference if I ever had to sell. My house value went from $415,000 to $285,000 (rough numbers) just to give you an idea.
I personally pay the absolute bare minimum in terms of my house payment. Why pay an extra payment on an asset that has just lost a ton of value and you have no idea if it will ever re-gain it? Over 5 years, I take that extra $12K (approx. 1 house payment per year) and invest it and make 10-20% depending on the year. That will more than offset any interest savings by paying my house off earlier. If the time comes when I sell and I'm upside down, I'll bite the bullet then. Not a second before.
Agree with all of this except the perception I have that you would be willing to eat the loss on your house.
If the housing market continues to crash, wont there be a point where you decide it is not coming back, you are paying way too much compared to market price for your mortgage, and just make a business decision to walk away? Thats the part that is coming in droves - people just walking because housing values are plummeting and people are realizing "hey, my neighbors house is the same as mine and I can pay 1k a month for his, and I am paying 2k for mine!"
I just dont think you should be "morally" stuck to paying your mortgage, or eating your loss. Fuck it. Everyone else is. Why should you be the only sucker who plays by the rules and pays the cost? In 5 years, you willl be in the minority if you have a credit score above 600. Why be the guy with the 800 who has paid hundreds of thousands of dollars to maintain it for nothing?
Van - the goverment does allow a tax free/penalty free withdrawal from retirement accounts to avoid foreclosure and for first time home buyers.
Does not apply to pay down mortgages though.
I just sold my house in SC for $150,000 and it took an entire year (I paid $160,000 6 years ago). It took that long for cheap housing to sell, it is going to take longer for the more expensive markets to sell, as there are just not enough qualified buyers. In the more expensive metro areas the salaries do not off-set the increased cost of homes. Somethings gotta give.
The investors have already spent most of their money thinking everything was cheap - I read somewhere that 33% of sales were to investors who are now renting instead of flipping because it has a higher ROI.
I just moved to CA and there are a tonne of foreclosures and bank owned homes - I just don't see enough buyers and demard at current pricing.
Average starter home price is $400,000 and banks want 20% down, so $80,000 down. That cuts out a lot of potential buyers.
look at a college grad making $50K a year out of college, with $25K in college debt and the cost of gas and other living expenses - how is he going to save up 80K? they will be 30 be the time they pay off their student loans and 40 before they can afford the down payment.
It is going to be interesting to see where this goes from here.
mooose
A lot less owners, and a lot more renters.
Or, banks are going to have to lower their standards. Banks are in the business of lending money, what is going to happen when they run out of 800 / 20%ers? They are either going to have to find another way to make money other than lending, or they are going to have to reduce their standards and start welciming in the new normal - the 650 / 5% ers.
Otherwise, we are going to return to a nation of wealthy landowners and masses of renters.
It is so FUBAR right now.
A lot less owners, and a lot more renters.
It is so FUBAR right now.
I am an ultra conservative.
I have huge framed portraits of Frank and Dodd on my wall.
These moronic social engineers have provided once in a life time opportunities for anyone with a modicum of ambition and a set of balls.
Government corruption and incompetence is a given. It frustrates most tax payers - It enriches others. 
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