I love roller coasters, especially when I'm riding in the back. My favorite part is when you start to go down the first drop. You've just been pulled up the hill by a ratcheting engine, and you have that little moment when you can anticipate the next few terrifying minutes. The twists and turns haven't happened yet, but you know what's about to happen, even if you've never ridden on the coaster before. It's too late to go back and you now realize that you're about to face a terror that you previously only imagined.
Looking at the subprime mortgage mess, I'm getting the same feeling. This time, though, I'm really not looking forward to the ride.
About three years ago, my wife and I contemplated buying a house in Roanoke, Virginia. Our credit wasn't very good, so we considered a subprime mortgage. The theory was that we would get a decent, fixed interest rate for five years. With interest rates incredibly low, we would have been able to buy a nice little duplex at a great price. Our mortgage payment would have been lower than our rent, freeing up some money so we could get our financial house in order. By the time the rate went up, we hoped that our credit would be better, and we would be able to refinance with better terms.
I feel like I dodged a bullet.