Harder to get 100% financing now?

[23109VC]

With all the subprime lenders losing their shirts…. will it be harder in the future to get 100% financing?

If I do buy a home, I am not going to have much cash to put down. Right now, I don’t care, b/c it’s far cheaper to rent than buy. but when/if the market turns around,and it makes sense to buy, will the 100% deals be GONE and I’ll be forced to come up iwth 10-20% down??

in the past, 100% was no big deal. you m ight pay a bit more in interest rates, but you could still get a great deal and the lenders were MORE than willing to do an 80/20. With all the drops int he market and the submprime lenders losing it, I wonder if those types of loans will disappear totally?

what about people like me with 800 FICO scores….solid jobs, high income, but no down payment??

[SD Realtor]

23109VC I never do loans so this is just my opinion ….but yes I do believe it will be harder to get no money down loans in a big way. Yeah these types of loans could very well disappear altogether. My advice, even if these types of loans did not go away would be to save money. I know that really makes breaking into the market difficult but the current high rates of defaults are the direct result of the past ridiculously easy lending standards. The bottom line is that many people who are defaulting had no business buying the homes in the first place. Many of them were duped by shiesters but in the end, they signed those loan docs. So the bottom line will most likely be to restore common sense to the industry. I know that sounds harsh but it really does make sense.

SD Realtor

[PerryChase]

what about people like me with 800 FICO scores….solid jobs, high income, but no down payment??

——–

With a solid job and a high income you WILL HAVE a down-payment in 5 years when it's time to consider buying again.  You should pray that the 100% financing is gone for good — there will then be less competition when you buy at an affordable price.  🙂 

 

[CardiffBaseball]

I’ve obtained 2 homes using VA loans with 100% financing, but I’d be hesitant to do that for the next couple of years.

[barnaby33]

what about people like me with 800 FICO scores….solid jobs, high income, but no down payment??

If you don’t have a down payment, you shouldn’t buy a house. thats the f@$king problem of the last five years. Wow your sense of entitlement is shocking! Home ownership isn’t a right, earn it.

Don’t buy stuff you can’t afford

Josh

[Anonymous]

I heard just the other day that Countrywide had put out a notice internally not to go with any more zero down loans. I wish I could remember what L.A. station it was on so I could reference it.

[little lady]

ph90802

I read it too, infact it’s public information… here’s the link………..

biz.yahoo.com/rb/070309/subprime_countrywide.html?.v=2

[renterclint]

Barnaby33,

“If you don’t have a down payment, you shouldn’t buy a house.”

Why do so many of you tie the notion of affordability and possesion of down payment together? They are not necessarily the same thing.

If my monthly budget allows me to pay $3,100/month on rent/mortgage, that means I can afford a $400k loan (PITI @ 8% int).

Whether I have the good fortune of having $80k sitting in the bank makes no difference as to what I can afford to pay.

What having the $80k for a down pmt DOES mean is I can buy a house for $480k rather than $400k. Down payment or not, I still have a $400k mortgage & I still have the same $3,100 check to pay each month.

Maybe 10 years ago when you could buy a starter home here for $150k, saving $30k was not to unreasonable, but expecting every first-time buyer to come to the table w/ $100k is just absurd.

I guess the point is that if we hadn’t deviated from good sense lending standards like the 20% down pmt deal, we would not be in this mess, and thus would not have to come up a six-figures down. But here we are – and some of us still want to own a home.

“Sense of entitlement” – really? You sound so damn pompous. If you are in a position to save that kind of $$ and have done so, good for you. Here’s your freakin’ cookie.

[chewie83]

I would agree that it is best to have a down payment when purchasing the house. As stated, the REASON home prices will be lower is because a large chunk of the buyer pool, (particularly first time home buyers) are simply unable to qualify, even if they have good credit scores and good income.

However, right now, you can still get 100% financing if you have good credit and can show documentation for your income. However, 100% financing is gone for subprime loans.

I also think people would value their homes much more if they had to work hard saving for years to come up with the down payment. It will give people a sense of acomplishment and they will cherish their homes much more than if they could simply buy it with 100% financing real quick.

Part of the problem we are seeing with the massive foreclosures is that with 100% financing, people don’t have to do anything to prepare for such a large under-taking. They take it for granted, don’t think about wether or not they can actually afford it and assume that appreciation will bail them out if they get into trouble.

Also, if people have to put at least 5% of their own money, they will be less inclined to simply “walk away” if they start to fall behind. They will feel that they have worked too hard to get this far and they don’t want to lose their own money, so they will have a greater incentive to hold on, work 3 jobs in necessary, rent out a room to a friend, whatever it takes. That will ultimately lead to fewer foreclosures and much better credit quality. That will keep home prices stable.

You will see massive fallout this year from ARM resets, people will be unable to re-finance due to the new guidelines, people will be unable to find qualified buyers becuase of the new guidelines, but overall, things will improve once prices become affordable.

[mixxalot]

Americans have the worst saving habits on planet earth

With that said, I have been saving 50% of my income toward a down payment and hopefully in a few years I can score a great deal on a nice condo or home in San Diego.

Cooking meals and eating out less saves a lot of cash!

I see maybe 2-3 movies a year which saves as well.

I do not drink alcohol except rare times. Saves money.

Heck I even am waiting on a plasma big tv to save until plasma tv prices get a lot cheaper. So far they are dropping in prices. I remember when a 60 inch plasma tv cost 20k. Now a top plasma big 60 inch tv sells for 5-10k.

Cars- people overspend this too. Mine is paid off and yes its a BMW but still not bad to maintain every year. I want a new one but thats to wait several years as well. Once loans default people will probably sell their Lexus and BMW at fire sale prices to pay off their home to avoid losses.

[ucodegen]

“Sense of entitlement” – really? You sound so damn pompous. If you are in a position to save that kind of $$ and have done so, good for you. Here’s your freakin’ cookie.

Actually, he is not pompous… he is right. There is more costs to owning a house than just the monthly mortgage payment. How about insurance, repairs, and property taxes. When renting, you have none of these.

If someone does not have the discipline to save up money for the down payment, they will not be able to handle the expected and unexpected expenses that come with owning a house (you have to save up for them before they occur.. getting a loans to pay for the ‘unexpected’ just makes your monthly payment larger – thereby downward spiral and foreclosure).

[23109VC]

i don’t have a sense of entitlement.. if i have to rent then i will. i can rent a darn nice house for less than buying… so i don’t mind.

if a person buys a house with 100% financing, has high fico scores, high income, and isn’t biting off “more” payment than they can afford…. they just lack the down payment..is that considered “sub prime”?

or when I read about “subprime” loans are these the “liar” loans where people took out loans with stated income, no proof of anything, and clearly couldnt’ afford the payment in the first place???

[Bob G]

It’s not about a “sense of entitlement”, its about bussiness, which is about risk management. It makes no sense at all for the buyer of the house to assume no risk ( 0 percent down ), and enjoy the full appreciation of the property. The lender assumes huge risk and default, but “only” gets the interest payments.

If you could assume risk that was comensurate with the loan, such as staking your life on repayment, or your first born male child, then a 0 percent down loan may be prudent.

Bob G.

BTY It has been asserted by other poster that I’m ignorant, and a dipsh_t. I checked and both assertions are true.

[PerryChase]

I think that given the sky-high prices in California, most buyers are in the Alt-A or subprime segments.

I believe that 100% financing is here to stay. Some lenders will take the risk for the right interest rate or up-front closing costs (whether paid by buyer or seller).

The mortgage business will become like the auto and credit card businesses where everyone can get financed. Do you remember when you needed a down-payment to buy a car, and leasing was only for business executives? Now everyone goes for the low payments.

Only the best credit risk customers will bet the best rates. Everyone else will pay more to defray the losses. So long as buyers only focus on monthly payments, then there’ll always be products to serve that segment. I believe that Interest-Only is how most people will buy houses in the future (interest-only and make principal payment whenever you’re in the mood). That’s the best scenario for the REIC so they can move more houses, and also the best scenario for the lenders because they can increase fees and transaction churn thus creating more profits.

[waiting hawk]

“or when I read about “subprime” loans are these the “liar” loans where people took out loans with stated income, no proof of anything, and clearly couldnt’ afford the payment in the first place???”

ALT-A loans (red head step child of prime)

http://www.brokeroutpost.com/loans/brokers/forum/topic.asp?TOPIC_ID=101112

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