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Jewish World Review July 12, 2005 / 5 Taamuz, 5765 Real estate gone wild By Brad Dickson
http://www.JewishWorldReview.com |
These are troubling times for homeowners, home buyers, and even people who merely know what a home is. People are confused whether the time is right to buy or sell. Where I live, Los Angeles, the median price of a home increased $7,000 in the time it took to type this sentence.
Real estate in many areas is out of control. Homes are selling within hours of being listed. Brawls among prospective buyers are erupting at open houses. Bidding wars are breaking out for cardboard lemonade stands built by five-year-olds in their driveway.
According to “real estate experts” i.e. “everybody” what may possibly be driving the market are the new super-affordable mortgages available to “qualified buyers” (anyone less than $8 million in debt.) These mortgages literally make it easier to buy a 5-bedroom ranch home than to purchase a Big Gulp at 7-Eleven. It’s now possible to get a mortgage if you have a credit score of 2 or higher. And, in some extreme cases, a credit score of 1.5 will suffice.
If you can walk and chew gum, you now qualify for a home mortgage. You don’t even have to walk and chew gum at the same time. You can walk, stop, then chew gum; that’s good enough.
You don’t even need a stable income to be a first time home buyer. Say, you’re flat broke but earlier today you found a quarter on the street. With the right type of creative financing, that’s enough to get you into a house.
Here’s a brief sampling of some of the new, some say risky, mortgage loans.
The 1000 YEAR MORTGAGE
An improvement over the traditional 15- and 30–year mortgages this makes it possible to spread your payments over a Millennium. Through this type of loan it’s possible to get into, say, a 4,000 square foot house for a monthly payment of around $27.99.
THE CONVERTIBLE MORTGAGE
This controversial loan states the homeowner does not have to pay the first year’s mortgage if his realtor shows up for closing in a convertible. If the realtor arrives via hardtop vehicle, the homeowner’s payments will triple over the agreed upon rate.
THE PENNY-A-DAY-MORTGAGE
This mortgage requires payment of only one cent per day for the first three years, at which point the loan spikes to 11 times the going interest rate. Hypothetical example: say, three years from now the interest rate on a 30-year mortgage is 8%. The buyer who selects this mortgage would have to pay his remaining loan at the rate of 88%.
THE DON’T-WORRY-BE-HAPPY MORTGAGE
In lieu of paying a mortgage, for the first 2 years on the date the mortgage payment is theoretically due, instead the mortgage lender, homeowner, and realtor get together for an off-key sing-a-long of Jamaican folk songs. At the end of the 2-year period, instead of gathering for a sing-a-long on the first of every month, the homeowner must send a check for $9,000..
This somewhat cruel intentioned loan requires low initial payments while the home buyer is alive, until his death when they then quadruple, leaving his heirs to scramble to somehow make the monthly mortgage. It’s also sometimes referred to as the “I-Hate-My-Friggin’-Family-Loan.”
Many believe we’re now in a real estate “bubble.” They also say mortgage lenders are to blame because of their ridiculous, irresponsible loan practices.. I don’t agree or disagree. I merely present the facts.
The real estate fervor is so great some “investors” are now purchasing homes and condos sight unseen over the controversial Internet, a forum best known for bald-faced lying and unimaginable hyperbole, including 60-year-old naked men in chat rooms posing as 21-year-old women. Not a good sign.
Now you’ll have to excuse me. Gotta call the realtor, someone just made an offer on my kid’s lemonade stand.
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© 2005, Brad Dickson |
Arnold Ahlert | |||||||||||
