Sunday, August 27, 2006


Reading today's local paper I came across several interesting items, I will focus on one of them. What is the real monthly payment? The ads posted above are for a new development in town. The article states "your payment can be as low as $741.03 per month". Does anyone believe this? Are there still a few souls out there who have not received the memo that this boom is going BUST!

Lets look at what the REAL monthly payment will be once you move in and the honeymoon period is over. What have they left out -

  • They have assumed a 10% down payment and made no adjustment for the PMI due for not putting 20% down. This will add approximately $100 to the monthly payment.
  • This loan has a teaser rate of 1% (APR listed is 6.609%), I will assume this 1% is only good for a year (as most are). Once this loan adjusts, $753 will be added to the monthly payment
  • They also don't include the cost of property taxes and homeowners insurance. This will add $341 to the monthly payment

Using the above adjutments what is the real monthly payment - $1,935

I wonder how long these homeowners, errr debt slaves can last with this type of payment adjustment? Also, what would be the cost to rent? I assume much lower than this!


Lou Minatti said...

That would be an $80,000 house in Texas. Let's see... Bakersfield has shitty "Texas-like" summer weather, only it's 2+ hours from the nearest major metro area where the jobs are.

So what's the upside?

Bakersfield Bubble said...

None! I see significant downside. Similar homes were $90k in 2000.

Anonymous said...

Saddest part I thought about was "damn that house is cheap". Comes to show how much bubble homes I have been watching and tracking on my site. I'll ad a link to my site here Crispy.

Bakersfield Bubble said...

Thanks Peter! I read your updates on David Tice's website and appreciate your views and commentary!

Anonymous said...

You mean houses cannot tripple in price when wages stay stagnant!!!