Harder to get 100% financing now?

[barnaby33]

Thank you is it chocolate chip!

Not quite at that level of downpayment but getting close. Of course its taken me years of driving used cars and living in shitty apts. Get in the back of the line renterclint. You may want to own a house but your desires do not presage society’s need to provide it.

I realize that a good down payment is necessary because its a huge responsibility (ownership). If you are not responsible or capable of saving a downpayment, how have you demonstrated the necessary financial maturity to own. At that point you are a partner in the ownership process.

Yes I do believe that loosening the requirements for finance have gotten us where we are. I also believe that tightening those requirements is exactly what will bring us back to sanity.

It is you that sounds pompous and entitled, not I.

Josh

[renterclint]

Bob G,

I regret my post that you are referring to. You are obviously neither ignorant nor the other thing. I appreciate your humor and I really apologize. In retrospect, my recent posts have not been the most civilized. I think I’ll keep my trap shut, chill out, & just lurk for while…

[Raybyrnes]

Submitted by 23109VC on March 10, 2007 – 11:02pm.
With all the subprime lenders losing their shirts…. will it be harder in the future to get 100% financing?

2 things come to mind here. First, with responsible management of your credit and a good job, how is it that you are can not save for the down payment. I would think that while your are doing a great job of servicing your current debts you need to do a better job of cutting some of the fat out of your budget to put away for the down payment.

Second: if you can’t come up with the down payment and 100% financing is not available from a lender, consider going direct to the seller and finding out if they have an assumable mortgage or if they will carry the note. It will narrow your options because there will be a narrow field of sellers who are willing to do this but it presents you with a way of accomplishing the no money down situation. Find sellers who will carry the note and pay a slighter higher premium for them doing this. Could be win win for both parties. Good luck.

[23109VC]

is there any benefit to me by getting a seller to carry the note on my house? or part of it?

if a seller carries the note – they are essentially “the bank”. i guess it might not show up on a credit report… but like any home loan, I could write off the interest.

as to not having the down – it’s not that I have a “fat” lifestyle…it’s just that I have a lot of other debts. I have a huge student loan – the price I paid for getting an advanced degree and high paying job – so while I earn a decent wage – I have a large student loan payment every month, and I have a stay at home wife w 2 kids, one on the way…. SO – even with one car payment and one paid off/crappy car..and renting a modest house – making my $100k+ salary…I still don’t have a huge wad of dinero for a down payment.. and for me to sock away enough cash to have a 20% down payment on a $400-500k house would take me a decade…

i’d rather have a larger monthly payment…and get into the house I want – and sit tight in it for the next decade.

my big question is WHEN do I buy. if prices fall but financing standards tighten so much that I can’t get a 100% finance loan..then I could effectively stay priced out of the market.

if i could find a hosue NOW that I love, will stay in forever..an dcould get 100%….maybe I could just weather the price drops. and ride it out.

problem is the house I like…is listed for $500k. the seller will throw in closing costs, and migth drop the price a tad..but not a ton. there is one on the same street, identical – for rent for $2000.

do the math.

buy at 100% for $500k

OR

rent the SAME thing for $2000.

it doesn’t make sense to buy it.. at least I don’t think it does….

[PerryChase]

Don’t worry, 100% financing is here to stay. Based on your situation, you should be able to get a full-doc loan without much problem. Stated-income or liar loans are another story.

[Bob G]

No need to apologize. I used to post on Yahoo stock message boards. It was mostly name calling, and no information of substance. Now I use stock message board as a contrartian indicator if at all.

I think 0% down loans will fade into memory, just like SUNW trading for $85 per share.

The original poster has taken on enough liabilities.
His “big” salery of over 100 K isn’t so big when he’s supporting a deadbeat wife and two kids. That works out to $25 K per capita for his household. The wife is knocked up now, so she’s not planning on bringing in any income for at least 6 years. He’s right out of school and has aleady dug himself a hole.
The good news for him is that money doesn’t buy happyness, but it does buy houses.

PS – I don’t own, and have most of a down saved up. My families combined income is great, much higher than Mr. Advanced Degree. I’m waiting for “blood in the streets” in the housing market. – One to two years.

[Chris Scoreboard Johnston]

Chris Johnston

I feel compelled to chime in on this thread due to my purchase that is due to close on March 23rd. I have debated the financing aspect of this in my head alot. My FICO is 800 and I have more money liquid than the purchase price of the home I am buying. I have decided to put 20% down and do an interest only loan fixed for 7 years on the 80% balance.

I can pay it off at any time, yet I still have the flexibility of having the money left to invest and make gains on. With a good financial profile, which I have, there are still unlimited financing options. I am in complete agreement that if you do not have 20% down you should not be buying in general. Obviously there are exceptions to this.

The biggest concern I always have is paying off a home, and having it sit there as a sitting duck for a lawsuit. I know you can place it in a limited parnership, etc but that is a pain in the ass. It makes we want to basically keep my balance at about what it is worth over time, and leverage the money.

Since I am in the money management business, a lawsuit is always lurking even if it is baseless, and having a limited profile of things for them to come after is a concern.

Hopefully, I have offered a non-standard situation to contemplate. Any input would always be welcome.

[SD Realtor]

Having 2 kids with another on the way is something that is both awesome and an awesome responsibility. If you did find that house that you really really did love, and would be there for many many years, then maybe, perhaps, I would say go for it. Iff you are POSITIVE about your income stream, and iff you ran the numbers to convince yourself that it would save you money over renting… and iff a few other things.

The problem though is that there are to many unknowns in the equation. While my intial post was less optimistic about 100% financing availability being around forever then Perry’s was I do agree with Perry that if your numbers are good, you should be able to find financing. Second, one of the most common events I see with buyers is the “this is the one syndrome”. Unless you have some very special requirements for the home you need, like land or something like that, then I think your patience will reward you in the long run. You may feel that this home you love for 500k is not replaceable but another one will come up… maybe not in a month or a year or two years but sometime one will.

Let me ask you this, how long has this 500k home been on the market? What did the seller pay for it? How much equity does the seller have in it?

Also while it would be nice to save 20% down, like you said that would take a long long time. Don’t try for the whole enchilada. Try to set a realistic goal. What if you made a goal of trying to save say 10-20k in the next 2 years? I know that even that is really tough with a student loan and daycare/preschool.

Anyways, without know much about the house you like, or the neighborhood, I cannot tell you if it is a good deal or not. However if you CAN rent on the same street and it is a comparable house, and that 2k a month is within your budget then I would jump all over it.

Hang in there

[waiting hawk]

“Let me ask you this, how long has this 500k home been on the market? What did the seller pay for it? How much equity does the seller have in it? ”

damn SD, u ask all the right ?’s

[23109VC]

the $500k house is NEW. it is for sale by the builder. it’s done and has been sitting there for 2-3 months. lanscaped front/rear. nice nice view. so there is no “equity” … what you have is the profit margin and how much is the builder willing to give up to sell. i do know it is the LAST phase..they yhave 3-4 hosus left and the project is done..so they may be willing to deal somewhat to get rid of them. it wsa listed at almost $600k six months ago…but that’s too high. there is a resale on the same street for $600k that has a nice pool in the yard…

i figure if it’s a $2000 house to rent…it should sell for more like $400k…assuming that 200x rent guideline…

i totally agree with one of the prior comments that there will be another house that will be as good as this one. if prices come down -t he next house may be even better. 🙂

honestly, the $500k house may be biting off too much at this point – with 100% financing the payment will be huge, and i’d probably want to go interest only to stomach the payment and 2% tax rate – which is basically renting money from the bank (like a renter renting a house) only I ‘d get to pay taxes, HOAs, repairs, etc etc..

as to the earlier person who called my stay at home wife a “deadbeat” – there is nothing “deadbeat” about a woman staying home and raising children. i’ve stayed home some days and tried it – it’s hard. too many kids today grow up with no mom at home, they come home from daycare and mom/dad are so burned out from a long day at work/long ocmmute that they get KFC for dinner and off to bed. no one helps with homework, no one talks, and then they wonder why johnny is smoking weed, why sally is knocked up at 16, and so on. i’ll gladly sacrifice driving a 3 series, or having a euro vacation very year to give my kids a warm nuturing upbringing.

[(former)FormerSanDiegan]

On Downpayments and entitlement.

Whether one has a down-payment when they are ready to buy a house has nothing to do with entitlement. You can make an economic case for less than 10% down under some conditions.

Sometimes, the economic conditions and your stage in life dictate whether you have a downpayment or not.

Consider this…
In 1996, after a decade of college and graduate school, you land a pretty decent government job. Prices in San Diego are at a once-per decade low by any measure. You make enough with one income to support purchasing the median priced house. Your spouse also works. You have good credit.
Should you buy ? with 5% down and pay PMI ? (which seems like it will come back in style)

If Josh ruled the world, you would have to save 20% down. But you know that prices are cheap. Everybody hates real estate, and it’s nearly the same monthly outlay as renting at that point in the cycle. I say that person should buy.

What if someone enters the workforce at the bottom of the cycle. Are they not an idiot for waiting.

What about Johnny P. Frugal. Who determined that housing was too expensive in 2002 for him to buy in ? He decides to save enough for a downpayment. After 5 years, Johnny has done very well. He has socked away 150K. And on March 12, 2007 he hits the point where he has 20% down and will qualify for a 30-year fixed on 20% of his income for a 750K house. Should he buy today ?
Probably not.

My point is that down-payment savings is not the only metric by which to measure whether a person should or should not buy a home. There are plenty of conditions and examples of people who should buy a house based on economic and personal conditions that are independent of whether they have 20% down.

I would not use that single measure to label some as having a sense of entitlement.

[ibjames]

Bob G, your sarcasm is not only unproductive it’s unappropriate. He should be proud that his wife is home taking care of the kids (I wish more people were involved with their kids like this) and he is making more than 100k, which is well above the median salary for San Diego. Don’t knock someone down because of your own personal issues. He is asking a question and the mature people are giving responses that are useful. You sir are a troll.

[barnaby33]

FormerSanDiegan, I sure am glad you filled in the blanks for me.

I never mentioned 20% I am glad you could read between the lines and extrapolate that out of my post. That takes a certainly subtlety I am not usually capable of.

I’ve said this time and again, there are reasons why traditional metrics are well traditional, they worked. They kept the majority of people out of hot water, and lowered the risk of extending credit to the point where it was profitable for banks to do so.

As to my comment about entitlement, that merely comes from the tone and tenor of renterclints response to my post. I stick by what I said, if you don’t have the patience to save a down payment you shouldn’t buy. There are exceptions to every rule and you found a couple, but that doesn’t make renterclints post any less childish or entitlement mentality driven.

Oh and the last thing I have ever wanted, is to rule the world.

Josh

[cr]

Here is the lastest from the Contrarian Chronicles, on MSN this morning.

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/NextTheRealEstateMarketFreeze.aspx

He says the down payment makes a comeback, and it probably won’t be because the Homeowner can’t afford to buy without it, but because the lender will require the cash.

Maybe it won’t be 20%, but there’s likely going to be some kind of requirement; 5% minimum?

As a renter I hope they make 20% a requirement. It will only serve to lower prices more and FORCE people to save, and not get in over their heads. Though it’s already too $100 billion in loans, according to the article.

[SD Realtor]

Hi 23109VC –

I think that the hardest question that you asked was when is the right time to buy? This is a question that is really answered on a case by case basis. Based on what I have read from your post right now, I don’t think now is the right time to buy for you. Also per earlier thoughts I have posted, I think the new developments that have been built out over the past few years could be great candidates for good deals in the next few years due to people who overextended themselves.

Also per your statement you think that the 500k may be biting off a bit to much, then absolutely listen to that instinct.

SD Realtor

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