Ting: Larry you's a straight fool talkin' mess 'bout "Goldilocs'

Larry: But Ting, we believe in keeping America strong!

Ting: Gimme dis mic out your hand. You is what cause Bear Stearns and Countrywide to sell all dem crappy CDO's wit your fool talk"


Ting licks Larry wit a Kalik bottle and the mic- takes over the show.

Ting: We are for telling America and the Bahamas the truth and keeping them from pissing their money away on house flipping or asues!


While you laughing I dream about doing this everytime I see the show. I spend half the time screaming at the TV. This man has been in the business for 40 years and still aint learned nothing. He keeps talking about Art Laffer being a genius...ugh...you done get me started first thing in the morning.

Say you want to buy a house in Nassau. In imaginary land the house costs $50,000. You go to the bank for a mortgage and they offer you a loan were you pay ONLY the interest (Let say 6.5%). NONE of your payments go toward the prinicipal. NONE.

Of course the interest only period last only a year or two. The bank can also adjust the interest (from that teaser 6.5% up to 11% if you did not get a lock in) as the LIBOR rate goes up.

In times past these loans were hard to get. They only went to people with EXCELLENT credit/income and could prove that at the end of the introductory period their income would go sky high.

These loan are the favorite of house flippers as they only have to pay the small (interest only) house payment while they are renovating and selling the house.


These loans (along with ARM's) are resetting like crazy with interest going sky high. I've seen folks paying 5% staring at a 12% rates! Some going from paying $500 to $1500 mortgages payments!


The housing market is many states/citties is so bad its scary.

Detroit, Miami, Orlando, Arizona, S. California.... DEAD!


The flippers can't GIVE away those overpriced condo's and homes (especially since the price people are willing to pay is often 30% less than what they paid).

He is crazy.
First off, he probably didn't want to own the home. If you get an interest only loan you're trying to keep your expenses as low as possible in order to sell the home and make a big profit. You only get a regular fixed rate loan if you're planning on keeping the home a long time. The problem is when millions of people get into the business of flipping houses, that means you have millions of houses on the market. The only way to get rid of them is if you have millions of people willing to buy them. But you don't. So now the only way to get rid of the house is to lower the price to try to convince buyers that you are offering a better deal. However, the loan you took out is not for a lower price. Its for a higher price. So even if you manage to sell the house you won't be able to cover the loan. Also, with interest rates rising it means that your house will be worth less (prices and interest rates have an inverse relationship - as one increases the other one goes down and vice versa, ignoring convexity and duration). The thing is for years most speculators were on the good side of this gamble.
Its like reaching into a barrel that has 50 gold bars and 50 rattlesnakes. The first 30 times you could pull out a gold bar. But your chances of pulling a rattlesnake has increased. And now you're too afraid to reach into the barrel. Which is what has happened to the US economy. Too many bad loans, too many risking investments, and too many people trying to get rich quick. And if more people join in and start pulling gold bars too. Then your chance of pulling a rattlesnake suddenly increases even more.



GADAM........you mean to tell me, in a nutshell, Tim pulled out a RATTLESNAKE:what:

You explained that very well by the way. And yes he brought the house to flip it. They have a home as well as rental property. He is a sort of weekend warrior and figured he could do most of the work, or supervise the workers by himself. After spending $$$$ to upgrade, he is now desperately trying to sell at a loss.

Also, with an increase only loan, because none of your payments go towards the principal, the interest payment will always be high. At least higher than the interest payment for a fixed rate loan.

With a fixed rate loan, as Sunny suggested, part is interest and part is principal. Over time as you pay on the principal the interest decreases and your equity in the house increases. With an interest only loan, you interest stays high and your ownership never increases until you pay of the interest which could be anywhere from 8 to 12 years depending on your loan. With a fixed rate loan you start building equity from day one.

Say you want to buy a house in Nassau. In imaginary land the house costs $50,000. You go to the bank for a mortgage and they offer you a loan were you pay ONLY the interest (Let say 6.5%). NONE of your payments go toward the prinicipal. NONE.
Of course the interest only period last only a year or two. The bank can also adjust the interest (from that teaser 6.5% up to 11% if you did not get a lock in) as the LIBOR rate goes up.
In times past these loans were hard to get. They only went to people with EXCELLENT credit/income and could prove that at the end of the introductory period their income would go sky high.
These loan are the favorite of house flippers as they only have to pay the small (interest only) house payment while they are renovating and selling the house.
These loans (along with ARM's) are resetting like crazy with interest going sky high. I've seen folks paying 5% staring at a 12% rates! Some going from paying $500 to $1500 mortgages payments!
The housing market is many states/citties is so bad its scary.
Detroit, Miami, Orlando, Arizona, S. California.... DEAD!
The flippers can't GIVE away those overpriced condo's and homes (especially since the price people are willing to pay is often 30% less than what they paid).


Hmmmmmmmm, do thats how the rich either stayed rich or got richer!!:shhh:

Both.

I am kinda hoping all the Americans who speculated in Bahamian land get foreclosed on when those jumbo loans reset.

Maybe that will free up land in NAssau.