The Money Mustache Community

Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: Apocalyptica602 on July 15, 2015, 02:29:36 PM

Title: Check out this pre-2008 wisdom from a old comments section, haha.
Post by: Apocalyptica602 on July 15, 2015, 02:29:36 PM
So I was googling some stuff about buying a home etc. just a little 'personal productive' time as things are winding down today at work.

Found a article from a finance blog with comments from 2007. Obviously these people didn't know the future, but looking at this recommendation on home buying just made me chuckle.

Again, keep in mind the date "January 4, 2007"

Quote
"Two schools of thought:

* The traditional 30-year fixed yada yada…

* Buy the biggest house on the most land you can afford. Use ARMs, Neg-ams, interest-only loans, whatever so that you have zero or little equity in your home. Plan on appreciation and refi in two years – pull out that money. (This theory is from my mortgage lender friend in San Fran. He’s pulled a half million out of his stupid house in five years).

It all depends on the Fed. If they lower rates then go crazy (option 2); if they raise rates then go boring (option 1).

Does it make much sense to have any equity in a home? In the past yes it did (to some degree), but those days are over.

A wreckless Gov’t/Federal Reserve is destroying the world’s currency (the U.S. $). This has nothing to do with republicans/democrats. We (America) are beyond bankrupt and the only way out is inflation. A recession would destroy banks, industry, american jobs.

If the fed lowers rates this year then goodbye dollar. Only assets (real estate) will keep up with the dollar death spiral. This will mean ARM-type mortgages are a good choice – option 2. If the fed bends over to foreign banks (the real financiers of the Federal Gov’t) then expect the biggest foreclosure auction in world history, along with no jobs, no banks, and no future for our college grads…"

Makes me wonder how things ended up with this guy's friend who pulled out $500,000 in equity in his house within the past 5 years. Could've gone any which way. Bought at the top and sold at the bottom, over leveraged on bubbled real estate, saw the market fall and had $500,000 of dry powder to enter with.

Too bad my magic-8 ball stopped working, guess I'll continue index investing and keeping a high savings rate.
Title: Re: Check out this pre-2008 wisdom from a old comments section, haha.
Post by: Chris22 on July 15, 2015, 06:07:34 PM
In San Fran?  He probably did just fine. Even better if he invested it in the market.
Title: Re: Check out this pre-2008 wisdom from a old comments section, haha.
Post by: sisca on July 21, 2015, 03:36:44 AM
To be fair, he did see the financial crisis coming, as one of his two scenarioes. He just chose to focus on the other one....