Money Matters
MommyLiberty5013
member
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
The Big Short movie
Did any of you see this???? I've watched it twice and I am just dumbfounded. Furthermore, I have been very curious to find out what Dr. Michael Burry is now investing in....answer...water. He's the guy who predicted and invested against (shorted) the securities that made up the housing bubble. He saw it happening about two years before it all crashed in 2008 with Lehman Brothers, Behr Stearns, etc.. Such an impressive movie! This movie gives a brilliant insight into what happened and why. It lays it all out in common terms for teaching the watcher what it all meant, terms and everything. Plus, the cast is awesome.
I haven't been in stocks in awhile anyways, but this further solidified my stance. Especially reading up on Dr. Burry and others who are like-minded with him (Stanley Drunkenmiller).
I haven't been in stocks in awhile anyways, but this further solidified my stance. Especially reading up on Dr. Burry and others who are like-minded with him (Stanley Drunkenmiller).
Re: The Big Short movie
Thanks for sharing the bolded...interesting.
Never mentioned John Paulson who also bet against subprime mortgages. He timed it such that it's arguably the single best trade in the history of the US market. He made about $15 billion for his hedge fund, and it made his hedge fund one of the largest in the world basically overnight. It was so good that he was investigated by the SEC for securities fraud (I don't think they ever formally charged him though).
I also think the movie implies that basically everybody on Wall Street was trying to cover up this huge scam. I don't know about that. It wouldn't surprise me if certain key people knew what was going on, but your rank-and-file bankers at Goldman and Deutsche? No way. From the movie you would think that they were all in on it and spending their huge bonuses on strippers. I think it's more likely that most of them had no idea and were spending their huge bonuses on equally huge NYC rent.
The stripper that owned 5 houses killed me and pointed out that, while the bankers were definitely to blame, a lot of people didn't think for themselves and put way too much trust in the bankers. Even in 2013 when I bought my house I was approved for a much larger mortgage than I would have been able to comfortably afford on my own - the bank didn't know I had a boyfriend (now husband) who would be helping with expenses! As far as they were concerned I was going to be house poor and they still let me do it.
I think it should be mandatory to take a home buying class before you can be approved for your first mortgage.
Not sure if the actual loan would have gone through, but I wasn't going to find out.
That's interesting! I've actually had the opposite experience. When I bought my first home, I sat down with my lender after I was under contract and he explained approximately how much my mortgage payment would be. He included the amount for just the loan and then had an estimated line item for EACH of my escrows (property tax, hazard insurance, flood insurance).
This was a good 5 years after the housing bubble burst, so maybe some banks are more careful now to include all costs within the mortgage? Or maybe my loan officer was just extra good and thorough? He certainly had those characteristics for everything else with my mortgage, thankfully.
Between having a very low mortgage payment because my house wasn't very much (good), but extremely high insurance rates (bad), the escrow portion of my payment has always been about half (sometimes more than half) of my mortgage payment. Right now it is about $390 (loan), $360 (escrow).
Totally agree with the first bolded! If I'd been cruising in expecting my mortgage to be about $400...only for the actual amount to be DOUBLE...that would have been a huge shocker.
Believe you me, I was shocked enough, even already knowing about escrow payments, lol.
As an aside, I actually did take a first time homebuyer's class. Long story short, I was originally going to buy a house under a special program (but ultimately didn't)...and a class like that was one of the requirements. I initially thought it was going to be way too basic and a huge waste of my time, but I could not have been more wrong. Even with all the home buying research I had done, I learned so much more. It was fantastic and super informative!
Doubt it. I think there's a lot of people out there who have rented all their lives or are just moving out on their own and have no real idea about taxes and insurance. They then get one hell of a surprise when the mortgage payment comes.
People just don't know what they don't know.
I'm not really sure how you fix the problem either. The bankers and the real estate agents are more concerned with closing the next property so they can get their commission checks. And like I said, a lot of people just don't know they should be looking for this stuff.
I don't remember with my first house if the HUD-1 form even existed back then. I do know with this house the banker I had when I initially bought the house went over the form and verified all the numbers, but in my opinion for a first time buyer that's kinda late in the process.
When I did the refinance, I'm glad I knew what was going on or I think I would have been screwed otherwise. Not sure if they were new or what, but you could definitely tell they were reading from a script and if I hadn't been aware of escrows, I would have been in for a shock.
In some ways I agree with you. Yes, you'd be paying the taxes/insurance without the loan or whenever you pay it off.
But, the impression I get from dealing with the mortgage bankers I've dealt with, the amount of people who have a loan with no escrow are probably in the minority. Especially as far as first time buyers are concerned.
I also think there will be a lot of people who get a "surprise" if they ever manage to pay off their mortgages when all the sudden those tax/insurance bills start showing up in the mailbox.
I guess to me the distinction is that they're billing you for it. They're not billing for the water/electric. It wouldn't hurt for them while they're saying "Your principal payment is $___ and the interest is $___ making your total payment $_____ and with the $___ escrow that will be $____."
Keep in mind. I'm looking at this from the standpoint of the housing/mortgage crisis. I think most of us here are experienced enough to know what we need to look for and/or ask questions about.
ETA- I get that the relationship builders and the ones doing the right thing for clients aren't the ones that cause movies to be made. But they're out there in real life.
Oh I don't deny there are good real estate professionals out there nor do I deny that there are good bankers out there. But like you said, those don't get movies made nor are they the cause of the housing crisis....:)
For me, an online course wasn't an option. My class was in person, 3 hours/night for a whole week! It was quite a time commitment, but ended up being well worth it.
The general structure was they would have a guest speaker(s) each night, real people from the trenches, who would explain what their part of the home buying process was and give tips/tricks. They had a real estate agent, loan officer, property insurance agent, home inspector, real estate attorney...and even someone from the city assessor's office. It was really thorough.
I still use today some of the info I got from the home inspector, in regards to spotting a bad foundation and/or other signs of major repairs needed. I completely avoid homes with asbestos roofs and knob/tube wiring, thanks to the property insurance presenter.
Your second bolded is TERRIBLE!!! Argh! That is quite a disservice to first time home buyers. No information is 100% better than bad information.
Here's an example of what it looks like: http://files.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdf
So I backed off and they ended up buying a house that was about $60,000 more than their original price point. Then, about a month before closing (it was a new build with a long wait), she contacted me and asked if I could give them $5,000 of my commission because they needed a higher downpayment than before because they didn't make enough money to qualify. I felt like saying "I told you so", but I gave them the money. I also listed their house they were selling at a deep discount because they were "friends". After moving in, she became sick with some GI issue and couldn't work anymore, and then ended up pregnant with twins, so now they have 4 kids to support as well.
Now we barely talk to them, because it pissed H off that they asked for all that. But, I would have done the same thing even if they weren't friends. So no, agents aren't always out there for the commission check, and the negative attitudes about agents are one of the (many) reasons I'm not one anymore.
Don't get me wrong, like I said, I'm sure there are some very good bankers and/or agents. But I guess my point is more that banks and real estate companies as a company are not looking out for your interest. Now, you may have a very awesome agent/banker and yes, I have had those.
Wasn't aware they were calling it something else now, but I did see a similar form when I closed on the refi back in January.
Predatory lending definitely occurred and it did contribute to the problems we had years back with the housing bubble and burst. But, having been a loan officer myself, people/customers of loans often fail/failed to take their own responsibility for understanding what they are doing. Either there's blind trust in "the system," or a refusal to get into and understand the details. Honestly, I had so many WOMEN say to me, "Oh I don't care to know that stuff." Or, "I'll let my husband deal with it." Shocking. But what can a professional do if the customer REFUSES to take responsibility???
The movie definitely reveals the predatory lending aspect. It was real.
But, I don't buy that everybody who had mortgage trouble and bought more house than they could afford was a victim of predatory lending. I have seen so MANY loan and CC customers just flat out refuse to take responsibility.
I've heard negative remarks about agents, but that has never been my experience. I think of REAs as being a necessary member of my "team".
@julieanne912, what you did for your friends is a perfect example of the kind of agent who will go to bat for their client. Not that you should have had to do that! But you did what you needed to, to save the deal. Unfortunately, it sounds like your "friends" didn't understand that you essentially gave them $5K so they could buy their nicer, more expensive house.