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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (44822)	11/5/2005 8:10:35 PM
From: mishedlo	Read Replies (4) of 110194

Russ, I am no close to 1/4 point negative perhaps 3/8 point negative on my interest only ARM (vs prior fixed rate). Not exactly happy about that as our minimum payment went from about $500 to well over $800 in that timeframe. Bear in mind that we were nowhwere even remotely close to the bottom in moving to that arrangement. We still have reason to be in it. We are also throwing about $2000 a month at it anyway and will continue to do so. Now the question is: how many people NEED that payment to stay low at $500 (or whatever) and can not afford that whopping 60% rise in minimum payment? Our mortgage is about 160K. Imagine buying a house with 480K mortgage. OOPS! Let's see... that minimum payment went from $1500 to $2400 and rising while home prices on average have stalled. An that is JUST making the minimum interest only payment. The day of reckoning for those folks is further in the future (as in 10 years from the start of the loan). Hmmmmm The final washout in housing will be exactly 8 years from now? Is it worse for some people with a 3 yr arm? I bet it is a hell of a lot worse but I do not know. You or Ramsey got any figures on this? PS - I am riding this out as we can afford to and as I said we have good reasons to do what we are doing. Mish

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