This is a nice little detached home in a very nice and upscale community in the Newport Coast adjacent part of Irvine.

The home is nicely decorated. The yard is manicured and well cared for.

It turns out this charming little detached condo is all but 1,495 sqft big. Price? The price tag is $985,000.

Where do we find young families that can afford this charming little condo at such difficult to swallow price? Our friendly agent offers the following loans to get that deserving family into this cute little home.

–Option #1: 1 month MTA loan at a starting interest rate of 1.25%. At 20% down payment, your mortgage is only $2,000!! (in essence we have a negative amorization ARM loan with a rate that adjusts monthly with no adjustment caps, and if you read the fine print, this is a 40 year loan!) This is your standard Suicide Loan in its ugliest form.

–Option #2: 3 year fixed interest only ARM loan at 5.875%. The mortgage payment now jumps to $3,800/month. Did I mention this is paying interest only?

–Option #3: 10 year fixed interest only ARM loan at 6.375%. The mortgage payment is now at $4,200/month.

The agent didn’t even bother with the option of a 30 year fixed. But assuming a 6.5% rate, our young family will be looking at $5,000/month of mortgage. Adding property tax/Mello-Roos/HOA of $1,300/month, suddenly we are looking at $6,300/month for a cute and charming little detached condo. Will our young family still have milk money for the baby?

Is it any wonder that Orange County inventory now stands at 13,908 and counting? 

Original posted at bubbletracking.blogspot.com