I have contended that prudent lending standards would require that those who qualify for adjustable rate mortgages should be even more credit worthy than is normally the case because, obviously, there is more risk involved for the lender should the rate go higher.
But no, our financial whiz boys and girls did exactly the opposite. The idiots lowered lending standards so that the less credit worthy got the adjustable rates.
I was fortunate to have made a bloody killing on my previous abode, a place which was too large for us. Sold right before the crash, two years before Katrina, an event which has decimated the local market, then moved to an equally good neighborhood [better in some respects] but purchased a smaller, less expensive home [well, that's relative, I suppose, since the price per sq. ft. was more than the p.p.s.f. that I got on the sale of my old home]. The new owners of my old home [who were not Southern and therefore not accommodating with respect to details of the sale and have earned my lifelong grudge, which they do not understand] tried to sell it a year after they bought from us for a quick 30% gain; needless to say, they are still in it, much to my delight.
We put down substantially more than the typical 20% down, then began paying additional principal every month. As a result, my mortgage debt is quite manageable.
Although I could have gotten an ARM, I didn't. I thought it would have been imprudent to get such a risky thing. I have a low rate fixed mortgage, but I see in retrospect that I was a damn fool not to have taken out an ARM, then easily refinanced into a fixed rate when the time to reset came. Because my finances are solid, I was a perfect candidate for an ARM. I could have saved a ton of money on payments while building up equity. |
