Yesterday on the Dave Ramsey show, a woman called up and declared that she and her husband were thinking about not paying on their mortgage anymore. Dave did a bit of questioning and this is what was discovered. This family has an income of 150K - not super grand by any means. The house cost 650K and is now worth between 450K - 500K. The payment is 4k per month. It seems this family also has some other debt, mostly for toys.
What did Dave tell her? This is paraphrased, but it went something like this; "If you make 150K per year, there's no reason for you to not make your mortgage payment, and you need to clean up the mess you've made with your finances. Quit spending money on big cars, eating out, and generally living large."
I don't think this is what the woman wanted to hear. No matter what any real estate agent tells you, or what chart the bank uses for calculating income to house cost, someone earning 150K should not be buying a house that cost 650K. These are the very people who will benefit from this warmed-over plan Obama has decided is exactly what the economy needs. The fact that people who did not over-extend themselves will get the bill is of no never mind to him. Feel better?
Obama to detail broader housing refinance plan
[...]The program is the latest administration effort to help homeowners in the face of a massive number of foreclosures and plunging home values that have left millions of borrowers owing more than their homes are worth. The administration plan aims to ease the way toward refinancing for borrowers, who despite good credit have been unable to take advantage of lower rates because they are underwater on their loans or because banks fear they will be left taking losses. read the rest
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