Monday, October 24, 2005

So, what makes somebody a FB?!?!?!?

For a lot of people out there, this housing bubble, froth, bubbelette, or whatever you want to call it, is NOT hard to spot. For the mathematically challenged, the financially illiterate, and those loan officers and real estate agents that are blinded by the past 5 years success, this might come as a BIG surpise...but housing does NOT always go UP!!

Not only does housing not always go up...but rates do not always go down. That is where many borrowers are starting to run into trouble. There are a couple of scenarios I am seeing on a regular basis now days:

1. "I need payment relief" Well isn't that nice. If you can't afford your interst only loan that you got months ago when rates were in the 5's, how do you expect anybody to help you when rates are in the 6's and 7's?!?!? Ok, a neg-am might help you in the very short term, or you could sell. BUT WAIT!! I can't sell!! I have pre-pay penalties, and my house didn't appreciate as much as I thought....

As Carlos Mencia would say....Dee Dee Dee!!!

You are officially a FB!

2. I want to refi and pull some cash out. Ahhh, the ole house of ATM. I need to pay bills, buy an Escalade, do my kitchen, take a vacation, insert whatever reason you "need" money here __________. Well, lets run a comp check to see how much equity you have......

wow! You're house is worth 600K! That's great! How much is your mortgage?

"I have a 1st and 2nd...totaling $585,000."

Well, after you pay for the refi, you will have NO money left to cash out. are another type of FB!!

I could go on and on....but the basics of an FB is somebody that is financially strapped with the payments they have and/or is dealing with a property they have little/no/or negative equity. Being upside down is the fair, not on your house.

Feel free to post ideas, questions, or anything else you would like to talk about.