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Originally Posted by MonkeyMama
Certainly a good reminder...
of course, um, this is California, but I have no idea why you would buy a house like that on that income. ???????? Oh my. I mean obviously she could have found something more modest/affordable. Look at that house!
I know plenty of people making those kind of payments with no other choice. But she clearly lives in a more affordable part of the state. Those are some pretty nice digs. (I mean our relatives have $3k mortgage payments for condos, and due to the lack of affordable rents. That is very different from her story).
Just looks like another subprime mortgage mess to me. $2500 month? interest-only? Yikes!! This is the problem here. I am not sure how far an emergency fund would have stretched in this case.
There is no justifying that house payment on that income. Particularly not on an interest-only payment.
I wouldn't assume she bought that house with 2 incomes. It looks like the same-old, same-old. Of course, if she did, then when was it going to occur to her that she can no longer afford it?
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She would not have been accepted for that mortgage payment on her income alone. Just not possible. Her husband's income was included in the purchase of this house.
Altadena, CA is not a "rich" community and there are very very few places where you can get a 3 bedroom house with less than a 600k mortgage. She's in LA County, not Orange County... or any of the costal communities which are much more expensive. Look at the cars on the street in that video -- the cargo van and the other are both older models.
Foreclosures are the worst in this state now out of all the states. Layoffs are also becoming more and more common as the economy slows.
Yes, I do not disagree that an interest only mortgage is NEVER a good idea -- it's never something that any financial cognizant person should agree to.
But we do not know their situation.... when they bought the house could have also impacted this decision. If they were expecting the cost to go up (instead of down), then they probably planned to refinance when the higher worth of the house would mean a lower costs.
Yes, her house and this family is part of this housing crisis we have now. And yes, they should have had a lot of money saved for just such a situation.
There's also no denying that she can sell some stuff, jewelry and maybe even get the little puppy sold or under someone elses care for awhile.
You all are going to be hearing a lot more stories like this, especially with Californian's. There are some pretty confusing things going on right now, and people don't seem to be changing many habits here.