The Preacherman says, "My advice to you is to get yourself a gun and learn how to shoot." The Gunman says, "My advice to you is to get yourself a Bible and learn how to pray."

TRIGGER WARNING: Guns have triggers.

REQUISITE DISCLAIMER: Entries at this blog are akin to good old-fashioned campfire chats; I offer no opinion on what you should or should not purchase, or what you should be using or doing. What does or does not work for me could be many country-miles away from your tastes and your needs. Any products, places, and / or whatnots that I review for this blog are purchased at retail price by me. I do not accept payment, gifts, discounts, freebies, products on loan, demon alcohol, drugs, probation, parole, Presidential Pardons, or any flavor of sexual favor for doing any review.

EU TRACKING COOKIE NOTICE: Google bakes those scrumptious cookies and everything Google cooks usually means something related is up for sale. We appreciate our many visitors from inside and outside of the USA and feel obligated to mention that YOUR RESPECTIVE GOVERNMENTS MAY KNOW THAT YOU WERE HERE and they may not approve of you perusing the blog entries regarding GUNS ... KNIVES ... SELF-DEFENSE ... CORRUPT POLITICIANS ... SELF-SERVING ROGUE GOVERNMENT AGENCIES ... GOVERNMENT SPYING ON CITIZENS ... Human Rights ... Freedom of Speech ... Life ... Liberty ... Pursuit of Happiness ... all that kind of stuff.

Monday, July 14, 2008

Dumb Luck Investing Update

Years ago, I thought it unfair that people were required to scrape together 20% of the value of a house as a down payment. The monthly cost of renting was equal to (and sometimes more than) what the monthly payment of principal, interest, and taxes would be for purchasing a home.

There were ways around the 20% rule. If you were credit worthy, mortgage companies could offer third party mortgage guarantee insurance, which upped your monthly payment but spared you from at least part of the 20% rule. Once your equity equaled 20% of the homes value you could often have the insurance dropped, or you could refinance without it.

Somehow, the mortgage industry got away from some fundamental rules and started offering loans without verifying incomes. If mortgage guarantee insurance was still required, I am not sure why we would be having a problem now, unless of course the losses were large enough to bankrupt the insurance companies.

For whatever the many reasons, the system allowed the waiving or bending of too many rules, and too many loans went to people not able to make payments. However unfair the 20% down payment rule seems, it looks like we should return to it as a standard. It would not hurt to go back to the practice of verifying the buyer’s income and existing debts.

No comments: