LDS Freedom Forum

Col. Flagg wrote:http://online.wsj.com/article/BT-CO-201 ... 15461.html

Mortgage Rates Fall Again; 30-Year Fixed At 4.54% - Freddie

U.S. mortgage rates fell again in the past week, with the average rate on 30-year and 15-year fixed-rate mortgages furthering record lows, according to Freddie Mac's (FMCC) weekly survey of mortgage rates.

Rates have remained at or near record lows as the Treasury market has rallied amid stock-market volatility.

4.54%... after falling again? Let's put this into perspective... the average home price right now in the U.S. is about $250,000. The monthly payment on a $250,000 loan would be around $1,600. If your interest rate on that mortgage is 4.54% and you're starting anew, your monthly interest payment starts out at $945.83, meaning only $654.17 of the $1,600 goes to principal. And homeowners are supposed to be excited over a rate like that? You can clearly see the immorality and usury being employed by financial institutions. Worse yet, credit card companies charge anywhere from 9% to 29% and in some cases, more. Here's something to sink your teeth into... a 29% interest rate on a $250,000 mortgage would result in a monthly interest payment of $6,041.67. Even just a 9% interest rate on a $250,000 mortgage would start out at a monthly interest payment of $1,875. Of course, these are unrealistic interest rates for mortgages, but it shows you the fleecing and greed emenating from our financial institutions.

Jason wrote:

Hyrcanus wrote:

Jason wrote:Bring back the 16 to 20% interest rates of the 80's.....

No thanks Jimmy!

LOL....solve the debt problem in a hurry!!!!

Hyrcanus wrote:

Jason wrote:

Hyrcanus wrote: No thanks Jimmy!

LOL....solve the debt problem in a hurry!!!!

It's true, the existing practice of keeping rates unnaturally low to spur the economy only sets us up for more problems anyway. Sadly, the people with the power are more interested in the short term political consequences then in creating long term solutions.

Original_Intent wrote:I am not trying to be a jerk, but for someone with a degree in accounting you sure do not seem to have much of a grasp of the subject.

Original_Intent wrote:Look Col, I enjoy your posts and your are dead on 99% of the time. Your contribution on this thread is the 1%.

I enjoy your posts as well and consider you an ally and friend here on the boards and appreciate the kudos above, but it appears to me that this issue is a matter of opinion and not necessarily being right or wrong. Do you see nothing wrong with someone paying 2-3 times the original purchase price of something simply because they cannot afford to pay for it all at once?

I doubt I am right >90% of the time...but it seems your main complaint is the amount of total interest earned and you are making your point by pointing out that the interest ends up being more than the principal.

Yup. When someone pays $500,000 or more for a $250,000 house, that is usury, plain and simple. The banks know they have the people over a barrell, but they don't care... their main goal is to make as much money as possible, period, with no regard to ethics or morals.

A lot of investments you can double your money in 5 or 10 years - are people that make those investments immoral as well?

There is a difference between investing and borrowing. When you invest, there is no guarantee you're going to make a nice return on your initial investment. Not only that, let's say you earn 4.5% and invested $10,000... you just earned $450.00. If you borrow $10,000 and have a 4.5% interest rate, you are going to pay back a lot more than $450... that's the difference.

There is nothing wrong with how interest is calculated.

Not in my book.

It is calculated the only way that it could be calculated. The rates that you suggest simply make it so punative to lenders that no one would choose to lend.

What's wrong with a lender charging, say, a 39% interest rate on a $250,000 loan... that's $97,500 for the bank in finance charges so the borrower can make monthly payments on the purchase price and a grand total of $347,500 for the house for the borrower instead of $500,000 or more. In all actuality, usury is defined as charging interest to borrow money and it goes clear back to the time of Christ. I totally get the fact that a lender would not want to lend at a 4.5% interest rate if it wasn't an APR because they would be out of business in today's world, but does this fact make it OK to force someone to pay 2-3 times the purchase price of something because they cannot pay for it all at once?

If you think lower rates are the only moral way, I will be more than happy to borrow as much money from you on "moral" terms that you are willing to lend!

If I had the capacity to lend money to people, I would NOT charge an APR... it would be a fixed percentage rate of what they borrowed, so if someone borrowed $10,000 from me, I would probably charge them 10-20% depending upon several factors, meaning I'd make $1,000-$2,000 on the loan and that's it, but in the corporate world, if you borrow $10,000, you're gonna pay back a lot more than $1,000-$2,000.

Col. Flagg wrote:

Original_Intent wrote:Look Col, I enjoy your posts and your are dead on 99% of the time. Your contribution on this thread is the 1%.

I enjoy your posts as well and consider you an ally and friend here on the boards and appreciate the kudos above, but it appears to me that this issue is a matter of opinion and not necessarily being right or wrong. Do you see nothing wrong with someone paying 2-3 times the original purchase price of something simply because they cannot afford to pay for it all at once?

I doubt I am right >90% of the time...but it seems your main complaint is the amount of total interest earned and you are making your point by pointing out that the interest ends up being more than the principal.

Yup.

A lot of investments you can double your money in 5 or 10 years - are people that make those investments immoral as well?

There is a difference between investing and borrowing. When you invest, there is no guarantee you're going to make a nice return on your initial investment. Not only that, let's say you earn 4.5% and invested $10,000... you just earned $450.00. If you borrow $10,000 and have a 4.5% interest rate, you are going to pay back a lot more than $450... that's the difference.Here is the problem. The lender IS investing that money with you. If he can get a 4.5% PER YEAR return on another investment, why would he lend and get an effectively lower rate?No, you will only pay $450 in interest if you pay off the loan within a year. And you will earn a LOT more than $450 on that $10,000 if you leave that $10,000 in a 4.5% return for 30 years.

There is nothing wrong with how interest is calculated.

Not in my book.

It is calculated the only way that it could be calculated. The rates that you suggest simply make it so punative to lenders that no one would choose to lend.

What's wrong with a lender charging, say, a 39% interest rate on a $250,000 loan... that's $97,500 for the bank in finance charges so the borrower can make monthly payments on the purchase price and a grand total of $347,500 for the house for the borrower instead of $500,000 or more. In all actuality, usury is defined as charging interest to borrow money and it goes clear back to the time of Christ. I totally get the fact that a lender would not want to lend at a 4.5% interest rate if it wasn't an APR because they would be out of business in today's world, but does this fact make it OK to force someone to pay 2-3 times the purchase price of something because they cannot pay for it all at once?They are not forced to pay 2-3 times the interest. They can save the money up and pay cash. Or they can pay the loan off early and avoid most of the interest.

If you think lower rates are the only moral way, I will be more than happy to borrow as much money from you on "moral" terms that you are willing to lend!

If I had the capacity to lend money to people, I would NOT charge an APR... it would be a fixed percentage rate of what they borrowed, so if someone borrowed $10,000 from me, I would probably charge them 10-20% depending upon several factors, meaning I'd make $1,000-$2,000 on the loan and that's it, but in the corporate world, if you borrow $10,000, you're gonna pay back a lot more than $1,000-$2,000.

Col. Flagg wrote:Do you see nothing wrong with someone paying 2-3 times the original purchase price of something simply because they cannot afford to pay for it all at once? [/color]

Original_Intent wrote:

Col. Flagg wrote:

Original_Intent wrote:Look Col, I enjoy your posts and your are dead on 99% of the time. Your contribution on this thread is the 1%.

I enjoy your posts as well and consider you an ally and friend here on the boards and appreciate the kudos above, but it appears to me that this issue is a matter of opinion and not necessarily being right or wrong. Do you see nothing wrong with someone paying 2-3 times the original purchase price of something simply because they cannot afford to pay for it all at once?

I doubt I am right >90% of the time...but it seems your main complaint is the amount of total interest earned and you are making your point by pointing out that the interest ends up being more than the principal.

Yup.

A lot of investments you can double your money in 5 or 10 years - are people that make those investments immoral as well?

There is a difference between investing and borrowing. When you invest, there is no guarantee you're going to make a nice return on your initial investment. Not only that, let's say you earn 4.5% and invested $10,000... you just earned $450.00. If you borrow $10,000 and have a 4.5% interest rate, you are going to pay back a lot more than $450... that's the difference.Here is the problem. The lender IS investing that money with you. If he can get a 4.5% PER YEAR return on another investment, why would he lend and get an effectively lower rate?No, you will only pay $450 in interest if you pay off the loan within a year. And you will earn a LOT more than $450 on that $10,000 if you leave that $10,000 in a 4.5% return for 30 years.

There is nothing wrong with how interest is calculated.

Not in my book.

It is calculated the only way that it could be calculated. The rates that you suggest simply make it so punative to lenders that no one would choose to lend.

What's wrong with a lender charging, say, a 39% interest rate on a $250,000 loan... that's $97,500 for the bank in finance charges so the borrower can make monthly payments on the purchase price and a grand total of $347,500 for the house for the borrower instead of $500,000 or more. In all actuality, usury is defined as charging interest to borrow money and it goes clear back to the time of Christ. I totally get the fact that a lender would not want to lend at a 4.5% interest rate if it wasn't an APR because they would be out of business in today's world, but does this fact make it OK to force someone to pay 2-3 times the purchase price of something because they cannot pay for it all at once?They are not forced to pay 2-3 times the interest. They can save the money up and pay cash. Or they can pay the loan off early and avoid most of the interest.

If you think lower rates are the only moral way, I will be more than happy to borrow as much money from you on "moral" terms that you are willing to lend!

If I had the capacity to lend money to people, I would NOT charge an APR... it would be a fixed percentage rate of what they borrowed, so if someone borrowed $10,000 from me, I would probably charge them 10-20% depending upon several factors, meaning I'd make $1,000-$2,000 on the loan and that's it, but in the corporate world, if you borrow $10,000, you're gonna pay back a lot more than $1,000-$2,000.

I have no doubt that you would do it, but it would be charity. There is a time value of money that you are disregarding. http://en.wikipedia.org/wiki/Time_value_of_money

Col. Flagg wrote:There is a difference between investing and borrowing. When you invest, there is no guarantee you're going to make a nice return on your initial investment. Not only that, let's say you earn 4.5% and invested $10,000... you just earned $450.00. If you borrow $10,000 and have a 4.5% interest rate, you are going to pay back a lot more than $450... that's the difference.

Col. Flagg wrote:What's wrong with a lender charging, say, a 39% interest rate on a $250,000 loan... that's $97,500 for the bank in finance charges so the borrower can make monthly payments on the purchase price and a grand total of $347,500 for the house for the borrower instead of $500,000 or more. In all actuality, usury is defined as charging interest to borrow money and it goes clear back to the time of Christ. I totally get the fact that a lender would not want to lend at a 4.5% interest rate if it wasn't an APR because they would be out of business in today's world, but does this fact make it OK to force someone to pay 2-3 times the purchase price of something because they cannot pay for it all at once?

Col. Flagg wrote:If I had the capacity to lend money to people, I would NOT charge an APR... it would be a fixed percentage rate of what they borrowed, so if someone borrowed $10,000 from me, I would probably charge them 10-20% depending upon several factors, meaning I'd make $1,000-$2,000 on the loan and that's it, but in the corporate world, if you borrow $10,000, you're gonna pay back a lot more than $1,000-$2,000.

Original_Intent wrote:I am with you on the payday loan places. A more wretched hive of scum and villainy you will not find this side of Mos Eisley. In all seriousness, yes THAT is a great example of usury and also deceptive "con-artist" loan tactics.

I do think that banks should make it very clear (and I think most do) how much TOTAL interest you will be paying over the life of the loan, any penalties or fees applicable, etc.

Hyrcanus wrote:

Original_Intent wrote:I am with you on the payday loan places. A more wretched hive of scum and villainy you will not find this side of Mos Eisley. In all seriousness, yes THAT is a great example of usury and also deceptive "con-artist" loan tactics.

I do think that banks should make it very clear (and I think most do) how much TOTAL interest you will be paying over the life of the loan, any penalties or fees applicable, etc.

I really dislike Payday loans as well, I find them repugnant morally. From a government perspective though, I don't think anything should be done. The problem is with the consumers who take these Payday loans out, because they've managed their finances so poorly and have so little understanding of the terms of the arrangement. In a free society, there will always be those willing to prey on the weak and stupid, unfortunately that is exactly what Payday lenders do. I still don't want government in any way involved in regulating/banning the practice. It doesn't fix anything, it just kicks the ball down the road to the next problem.

Hyrcanus wrote: The problem is with the consumers who take these Payday loans out, because they've managed their finances so poorly and have so little understanding of the terms of the arrangement. In a free society, there will always be those willing to prey on the weak and stupid, unfortunately that is exactly what Payday lenders do.

shadow wrote:

Hyrcanus wrote: The problem is with the consumers who take these Payday loans out, because they've managed their finances so poorly and have so little understanding of the terms of the arrangement. In a free society, there will always be those willing to prey on the weak and stupid, unfortunately that is exactly what Payday lenders do.

They also prey on those that have lousy credit that can't get a loan at a bank. The payday loan companies came into business because there was a market that the banks and credit unions didn't want. Does anyone know what the default rate is with payday loan customers? There's a place my wife and I eat lunch at every week that's next to a payday loan office. There's always repo'd cars for sale. Why? Because the customer defaulted. It could be because the payment was too high or it could be because some people just don't pay their bills no matter what the payment is (which is why the banks and credit unions don't give loans to everybody).

Jason wrote:

Col. Flagg wrote:Do you see nothing wrong with someone paying 2-3 times the original purchase price of something simply because they cannot afford to pay for it all at once? [/color]

If I understand your logic correctly.....are you stating that the borrower has a "right" to the money?

shadow wrote:

Hyrcanus wrote: The problem is with the consumers who take these Payday loans out, because they've managed their finances so poorly and have so little understanding of the terms of the arrangement. In a free society, there will always be those willing to prey on the weak and stupid, unfortunately that is exactly what Payday lenders do.

They also prey on those that have lousy credit that can't get a loan at a bank. The payday loan companies came into business because there was a market that the banks and credit unions didn't want. Does anyone know what the default rate is with payday loan customers? There's a place my wife and I eat lunch at every week that's next to a payday loan office. There's always repo'd cars for sale. Why? Because the customer defaulted. It could be because the payment was too high or it could be because some people just don't pay their bills no matter what the payment is (which is why the banks and credit unions don't give loans to everybody).

Col. Flagg wrote:

shadow wrote:

Hyrcanus wrote: The problem is with the consumers who take these Payday loans out, because they've managed their finances so poorly and have so little understanding of the terms of the arrangement. In a free society, there will always be those willing to prey on the weak and stupid, unfortunately that is exactly what Payday lenders do.

They also prey on those that have lousy credit that can't get a loan at a bank. The payday loan companies came into business because there was a market that the banks and credit unions didn't want. Does anyone know what the default rate is with payday loan customers? There's a place my wife and I eat lunch at every week that's next to a payday loan office. There's always repo'd cars for sale. Why? Because the customer defaulted. It could be because the payment was too high or it could be because some people just don't pay their bills no matter what the payment is (which is why the banks and credit unions don't give loans to everybody).

Not sure about the default rate, but I was curious one day a few years ago as I was next to a payday loan 'business', so I walked in and asked what the interest rate was on their payday loans. 25% per $100 lent.

Col. Flagg wrote:

Jason wrote:

Col. Flagg wrote:Do you see nothing wrong with someone paying 2-3 times the original purchase price of something simply because they cannot afford to pay for it all at once? [/color]

If I understand your logic correctly.....are you stating that the borrower has a "right" to the money?

Do you mean the money the bank would have amassed through traditional loaning procedure?