Quote:
Originally Posted by irishgrl
by the way: your inference that people will save (bank) that extra money that they benefitted from with the ARM is GOOFY! people will always find a way to spend "found" money! oh yeah, Ive always wanted a big screen tv, or I've always wanted to travel, or say, wouldnt it be cool to have a nice backyard patio/bbq set? Nope, sorry, people just dont really look ahead and/or save for a rainy day any more...I mean why should they? they think they can still file bankruptcy  what fools... |
That has nothing to do with their qualification for a mortgage. You implied it was all the evil mtg companies fault. I responded to that. In the instant example, I know lots of people who chose the lower mtg rate and pay extra on that as a way to avoid paying more interest and as a safe haven in case something goes wrong and they could not make the higher fixed rate payment. On edit - but even if they blow the money, it would still take seven or so years for the ARM payment to reach the fixed rate payment.
As for bankruptcy, they can still file it. If they make more than $35,000 or so a year, they ordinarily cannot 100% discharge their unsecured debt in a 7 and will be put into a five year 13 plan, in which they will pay pennies on the dollar in their unsecured debt. Under either scenario, they ordinarily can keep their house (and their car for that matter) if they can show they can pay for it. If they give their house back in a 7 or a 13, FHA will allow them to buy another in about a year if they have income and have been the remaining debt (car, rent, etc. ) on time. So, bankruptcy is a viable option to this day. The govt. just made the 100% discharge in Ch. 7 less available to those making more money.