In attacking "fear-mongering" regarding the financial bailout in his Oct. 2 Newsmax column, Michael Reagan complained of "attempts to panic us into believing that the banks had no money to lend, and credit was dried up and loans were almost impossible to get," adding:
We knew that was untrue because our daughter, Ashley, had just qualified and easily obtained a mortgage on a $360,000 townhouse from a small local bank. The bank had foreclosed on the house and was stuck with a defaulted mortgage of $560,000. Ashley, who is 25 and a schoolteacher, got the townhouse for $200,000 under what the bank held in bad paper.
How can a 25-year-old teacher -- who typically don't make all that much money and is likely paying off student loans to boot -- afford to by a $360,000 townhouse? What is she getting paid? Did dad co-sign and/or put up a sizable down payment? Because we're pretty sure the typical 25-year-old teacher could not get a mortgage by herself, period, let alone one for a $360,000 house (which, by the way, is well above the national median home price).
Let's say that, for the sake of argument, that Reagan's daughter put up a $60,000 down payment, which would give her a $300,000 mortgage. At the time we checked, a $300,000 30-year fixed loan in California (where we presume Reagan's daughter lives) carried an annual interest rate of 6.22%.Plugging those numbers into a payment calculator, that gives us a monthly payment of $1,841. Lenders typically recommend that a mortgage not exceed approximately 28 percent of total income.
25-year-olds are historically not excellent credit risks, and teaching, especially for those just starting out in the profession like Reagan's daughter is, is not a historically well-paying job. The only logical conclusions for the existence of this mortgage:
- It's not as big as the typical mortgage because of an unusually large down payment due to a contribution by Michael Reagan, or perhaps an inheritance from her grandfather;
- the daughter is making an extraordinary amount of money for a teacher just a few years out of college; or
- Michael Reagan, who is presumably better paid and thus a better credit risk, has co-signed the mortgage.
What we're saying is that there are clearly extenuating circumstances surrounding this mortgage that Reagan hasn't told us about. We seriously doubt that a 25-year-old single teacher who is not Michael Reagan's daughter could get that same mortgage.