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  • March 3, 2007 at 3:59 PM #8509
    NewOwnerInSD
    Participant

    Have been lurking since I bought. Owned a house and sold it in the mid-1990s. Renter until now. Middle-class salary but bought from a relative who gave me a great deal. I could not pass it up. I can withstand even a 35 percent decrease. Full docs, 30-year fixed rate. How are other people buying right now what with the subprime implosion and such?

    March 3, 2007 at 4:24 PM #46811
    Bugs
    Participant

    First off, congratulations on getting what may well turn out to be a bulletproof price and a great loan. Everyone should be so fortunate.

    Secondly, a large share of the buyers have been using the so-called “Liar Loans”, which apparently are well named.

    With these subprime lenders dropping like flies and the pipelines for these exotic loans being turned off at the tap, I expect we’ll be seeing a lot less of these loans, and most likely a lot fewer of these buyers.

    Who knows, maybe the mini-spike in volume was in anticipation to the news that the lenders were cranking down.

    March 3, 2007 at 4:52 PM #46813
    NewOwnerInSD
    Participant

    Thanks. I am still scared, though. Wake up several times a night, just like I did when I bought my first house for $102K. Sold it for $150K after nine years (divorce). My house is in a great neighborhood but people are still setting their prices too high. Why are they asking for twice what they paid in 2001? I can only think, home equity loan(s). This is gonna be a very hard year for me, but I figure with the taxes/interest, I will only be paying $100 more than I pay in rent.

    March 3, 2007 at 5:07 PM #46815
    Bugs
    Participant

    Bulletproof – you literally can’t lose unless the whole economy unravels and rents drop 30%. A lot of people would say that locking in the interest rate and the right to enjoy future appreciation gains are worth a 20% premium over rents anyway.

    Don’t worry about the purchase or the price and don’t look back or second-guess your decision. Just savor the merits of responsible homeownership.

    March 3, 2007 at 5:44 PM #46816
    NewOwnerInSD
    Participant

    Again, thanks. I locked at 6.25 percent in January. Kind of high, but, though I have a 30-year fixed, I have interest only for 10 years. That’s because I will most likely inherit money and be able to put more to the principle (or is it principal?–I always forget!). Moving in April 1st. Middle-aged, plan to live there for the rest of my life. Quaint, older neighborhood with views to the ocean on a Santa Ana day and it’s 12-15 miles to the ocean. You, and this blog, have been a big help.

    March 3, 2007 at 7:11 PM #46818
    mixxalot
    Participant

    I think that you be fine as long as you think long term.

    The flippers and liar loan people will get burned. Since you scored a good deal you should be alright. Congrats.

    As for me, now that I have a job that allows me to live anywhere near a major airport, after a while, my plan is to build a home on an acre of land up north and have the land and home paid off in a few years and have zero debt or mortage. Then I can wait for prices to come back to reality in San Diego to buy a place.

    March 4, 2007 at 7:57 AM #46848
    23109VC
    Participant

    congrats on the purchase…BUT… if you are paying interest ONLY for 10 years… you arne’t buying anything.

    you are paying to rent the money from the bank.

    how much would it have cost you to RENT a comparable house?

    how much are you paying in INTEREST, TAXES, UPKEEP for this “great deal”?

    with the price being so low – are you paying more or less than what it would cost to rent?

    March 4, 2007 at 9:31 AM #46857
    DaisyDuke
    Participant

    Dear NewOwner,

    The subprime lenders are now just (1) regrouping to prepare for big losses and are no longer writing subprime loans (2) going out of business (3) being monitored by the FDIC, SEC, etc., etc. It takes a bit of time to stop a runaway train. But it will happen, it will stop.

    I just sold my home in January (and thankfully for this site – thank you Lord) decided to rent. Quite frankly I’m loving it. No resonsibilities! Anyway, I do plan to buy again, but not just yet. But my home was purchased by someone who got 100% financing. The buyer just barely squeeked by. It was really touch-n-go as the lender put on some credit conditions on the day the escrow was to close. Finally the lender just let the loan fund. It was really close. Go figure why some Lenders are still giving their money away like that to people who are likely to default. That pot will indeed dry up entirely.

    If you have the home you love, enjoy. Plant a garden, paint the rooms the colors that make you happy! Personalize it to you. That’s one of the best things about owning as opposed to renting. I actually miss trips to Home Depot. Go figure.

    March 4, 2007 at 9:40 AM #46858
    NewOwnerInSD
    Participant

    With the taxes and interest deductions, I’m paying about $100 more for my mortgage than I’m paying in rent (moving in April 1st). I know most of you guys are bearish and this year is gonna be hell for me (read: top ramen) for sure. I just want to hear about how others got into this hellish market in the last month or so.

    March 4, 2007 at 9:53 AM #46860
    NewOwnerInSD
    Participant

    Thanks, Sweetie. No worries, I’m a woman! What really shocked me was that I stupidly signed up on a mortgage locator site that promised me that I would not get more than four lenders calling me. Twenty-nine did. My boss (who has made a fortune in So Cal real estate) looked at a bunch of “Good Faith” estimates and was sometimes so pissed off that he threw them at me. Neg-am etc. Finally went with his mortgage broker who was strict as hell.

    March 4, 2007 at 12:36 PM #46868
    Chris Scoreboard Johnston
    Participant

    Chris Johnston

    I am buying a home right now, that should close in 3 weeks. Everyone’s situation for buying is different, so it is impossible to generalize. However, I am in no false illusion that the property I am buying will not decrease in value in the next couple of years, I am not buying it as an investment. We have horses and 3 large dogs ( 160 lbs each ), so we need some property. I have rented since Sept of 2005, and am buying back in for about 900k less than I sold for. Since this was my goal, and I found something that is more of a unique property, I decided to just buy it. Had I been looking for a tract home, I would have stayed on the sidelines. I just am of the opinion that our needs are unique and that even in a severe drop, there is no guarantee I could find something like this no matter what the price.

    I have more money in cash than the total cost of this place, so it is not a stretch at all. I just thought I would offer this as an example of someone who is buying right now. I am not a traitor, I still think prices are coming down. Renting in our situation with the 3 big guys and the two horses in a separate place just became too much of a fiasco. I have saved enough to have made it worth the exit and re-entry.

    We can even monitor how my value does just to see how much buying early in the down cycle hurts. However, valuing this place was a trick, the comps were hard to find, and all were itleast 200k to as much as 400k above the sale price. As a result, it might be tough to evaluate how much this fluctuates up or down. I am not sure that we really know even now the correct value for this place.

    The sellers are in the midst of a nasty divorce, which has effected the price I think. We got to witness live in prime time a battle between them. I am planning on it being worth what it is now or less in 10 years, and it will be paid off before then. Anything beyond that is a bonus. I have never believed that home buying should be viewed as an investment. There is the opportunity cost argument, which is valid, but for the peace of mind for someone in my position, it was a no-brainer decision that I made within a day of seeing it for the first time.

    BTW – I have used SD Realtor on this transaction and I highly recommend him. Adam is very thorough and intelligent, and is so superior to the listing broker on this, words could not express the difference. Cheers to Adam for being such a great help, and also being a very level headed professional! I will definitely use him again on my next RE transaction.

    March 4, 2007 at 9:55 PM #46900
    sdworker
    Participant

    I know of two people that bought in a very high end development in Del Sur recently. I know for sure in one case and am pretty sure in the other case that it was inherited/family/insurance money (parent died). Another family I know was looking in that same development and they also have family money / trust fund sources (although they decided not to buy there after all). Other that that I have NO clue how people do it. I ceratinly could not afford to buy my house house right now.

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