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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (105976)	12/31/2009 1:23:51 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116555

Good post Mish!!

To: mishedlo who wrote (105976)	12/31/2009 6:49:43 PM
From: Hawkmoon	2 Recommendations Read Replies (3) \| Respond to of 116555

Mish, Thought I might pass this on to the thread as input into mortgage refinancing. It certainly will not apply to most cases, especially the more recent post 2004/2005 mortgage markets. I believe I mentioned that, as part of attempting to seek reasonably secure and conservative yield on behalf of my father's estate, my mother and I decided to buy out my cousin's 10% loan on his house for $50K and offer him a 5% 30-year loan instead (fully collateralized by the value of the home) with payments going through a local title office. It fully halved his mortgage payment to the point he could work a week at McDonald's and make his mortgage payment.. ;0) He also found out, when he investigated the pay-off, that the amount of principle he had actually paid down was miniscule (a couple of grand) due to the terms of his amortization schedule being more focused on interest payments only. He was basically a debt slave for twice the mortgage payment and now he's comfortably able to maintain his mortgage and give my mother about 4x the amount of interest she could receive in a CD. So I wonder how many other folks are doing the same thing in a quest for yield not achievable anywhere else? And how do the statistics account for this bank loan being paid off and then being assumed by a private party? I certainly wouldn't recommend it without making sure the value of the property exceeds the value of the loan, which pretty much rules out recent mortgages that are under water. But there are likely quite a few opportunities out there for those with available capital and lack of opportunities for higher yielding instruments. And yes.. there is a risk if hyper-inflation kicks in, but it's the same risk that will be taken in a lower yielding long-term CD note. Hawk