Sub-Prime lenders are worse than I thought [View All]

[Wiregrass Willie]

I was wondering what all the hoopla is about the sub-prime leanders.

I went to this site:

http://cgi.money.cnn.com/tools/houseafford/houseafford.html

Using the median family income for Americans of $45,000 -- I want to see how much of a house mortgage I can afford.

I want a 30 year loan at 6.15%. I will claim to have no debt.

We are going to expect property taxes of about $1500 and insurance of about $500 a year. We will not pay anything down, just to see how ridicules they get.

Here is what we come out with:

Agressive house value $175,768.85
Loan 175,768.85
monthly payment 1,070.83
Taxes and insur 166.67
total monthly paymnent $1,237.50

With a $45,000 annual family income, I would have to pay Social Security of 7.5%. I would pay at least $2,000 in income taxe.

My $45,000 is now down to $39,625. Divided by 12 = $3302 a month. That means my $1237 house payment is 37% of my take home pay.

Why would anybody in their right mind expect a young person to pay that much ? A new car ... and there goes the house.

No wonder the housing market is bad .... and fixing to get worse.

Anybody who would make such a loan as this should be .... in serious trouble. They are setting the borrowers up for disaster.

I hate to hear it when the next shoe hits the floor.