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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Israel who wrote (21742)	6/20/2004 10:46:08 PM
From: Rutgers	Read Replies (2) \| Respond to of 306849

I still ain't buying it... Minimum payment on a 1 month MTA is $1,866.21 and the interest only payment (at a 2.90% margin..about right for a no point loan) is $1926.87.. so, not only will someone loan this poor guy the money, but since they are only in business to help people who can't afford bigger homes, they won't charge him any points - cool! ... thats a DTI of about 78%, assuming he has no other monthly debt obligations... the guy has a wife and two kids. Suffice to say, he's got other monthly debt obs ... At a reasonable 5% (rather conservative I think) appreciation on the property over the next 7 years.. Conservative? I guess we'll just have to disagree. IMO, after the run we've had, some would be happy if the property was at least worth the same as it is today. At the end of year 7, his home is worth $918,000.00 (almost $400K after year 7 worth of equity.) not so fast, does your little equation include this same guy getting much more than a 5% raise in salary for the next years - you know, in order to somehow magically afford the huge increase in his monthly mortgage? .. But if he wanted to find a lender.. HE EASILY COULD! Hell, I can get him approved in 48 hours. again, we can just disagree, but I still say that no lender, after dutifully cashing his loan application fee, will ever come through and actually loan him $550,000 on a $40,000 salary if he has no other assets.