Is is Good News for people buying with a lot of cash?

[jimmyle]

My uncle, who has been wanting to buy a house in OC since last year, is planning to buy a house around $500-$600K. He and his wife almost bought a property last year but I strongly advised him not to and he saved $100K because of it. He is itching to buy again and asking for my advice. He planned to put down around $400K in cash when buying. There are several reasons he has to put in so much cash, non-verifiable income is one of them.

With the latest developments in the banking industry, do you think in the next year or two borrowing will be more difficult due to higher interest rate and more stringent loan standards and house prices will go down quicker as a result? And because he buys with a lot of cash, he should wait until the end of next year at the earliest?

Many thanks for your advice.

[XBoxBoy]

Jimmyle – First and foremost I would say that this situation is in such turmoil right now that I don’t think anyone can give you an answer that is much more than a guess. There are strong arguments to be made for higher rates in the next year or two, and there are strong arguments for why rates will be lower. While many experts might try to convince you to think they know what’s going to happen, trust me, no one knows what’s going to happen.

Having said that, I’ll give you my best guesses. Yes, loans will be harder to get. Have no idea if rates will be higher or lower. Prices will continue to decline regardless. If your uncle is buying in the < $500k price range, we might be getting close to a bottom in that arena. In the $500-1mil range, I think we've still got a ways to go, but if the pace of declines picks up this fall, (as I suspect it will) maybe this fall or even next year might be okay to buy into. (But will have to wait to see) If your uncle is thinking of more than a mil for a place and he's got cash, tell him to get comfortable and relax, cause he's still got a bit of a wait. 'Course this advice is worth exactly what you paid for it. XBoxBoy

[XBoxBoy]

Jimmyle – First and foremost I would say that this situation is in such turmoil right now that I don’t think anyone can give you an answer that is much more than a guess. There are strong arguments to be made for higher rates in the next year or two, and there are strong arguments for why rates will be lower. While many experts might try to convince you to think they know what’s going to happen, trust me, no one knows what’s going to happen.

Having said that, I’ll give you my best guesses. Yes, loans will be harder to get. Have no idea if rates will be higher or lower. Prices will continue to decline regardless. If your uncle is buying in the < $500k price range, we might be getting close to a bottom in that arena. In the $500-1mil range, I think we've still got a ways to go, but if the pace of declines picks up this fall, (as I suspect it will) maybe this fall or even next year might be okay to buy into. (But will have to wait to see) If your uncle is thinking of more than a mil for a place and he's got cash, tell him to get comfortable and relax, cause he's still got a bit of a wait. 'Course this advice is worth exactly what you paid for it. XBoxBoy

[XBoxBoy]

Jimmyle – First and foremost I would say that this situation is in such turmoil right now that I don’t think anyone can give you an answer that is much more than a guess. There are strong arguments to be made for higher rates in the next year or two, and there are strong arguments for why rates will be lower. While many experts might try to convince you to think they know what’s going to happen, trust me, no one knows what’s going to happen.

Having said that, I’ll give you my best guesses. Yes, loans will be harder to get. Have no idea if rates will be higher or lower. Prices will continue to decline regardless. If your uncle is buying in the < $500k price range, we might be getting close to a bottom in that arena. In the $500-1mil range, I think we've still got a ways to go, but if the pace of declines picks up this fall, (as I suspect it will) maybe this fall or even next year might be okay to buy into. (But will have to wait to see) If your uncle is thinking of more than a mil for a place and he's got cash, tell him to get comfortable and relax, cause he's still got a bit of a wait. 'Course this advice is worth exactly what you paid for it. XBoxBoy

[XBoxBoy]

Jimmyle – First and foremost I would say that this situation is in such turmoil right now that I don’t think anyone can give you an answer that is much more than a guess. There are strong arguments to be made for higher rates in the next year or two, and there are strong arguments for why rates will be lower. While many experts might try to convince you to think they know what’s going to happen, trust me, no one knows what’s going to happen.

Having said that, I’ll give you my best guesses. Yes, loans will be harder to get. Have no idea if rates will be higher or lower. Prices will continue to decline regardless. If your uncle is buying in the < $500k price range, we might be getting close to a bottom in that arena. In the $500-1mil range, I think we've still got a ways to go, but if the pace of declines picks up this fall, (as I suspect it will) maybe this fall or even next year might be okay to buy into. (But will have to wait to see) If your uncle is thinking of more than a mil for a place and he's got cash, tell him to get comfortable and relax, cause he's still got a bit of a wait. 'Course this advice is worth exactly what you paid for it. XBoxBoy

[XBoxBoy]

Jimmyle – First and foremost I would say that this situation is in such turmoil right now that I don’t think anyone can give you an answer that is much more than a guess. There are strong arguments to be made for higher rates in the next year or two, and there are strong arguments for why rates will be lower. While many experts might try to convince you to think they know what’s going to happen, trust me, no one knows what’s going to happen.

Having said that, I’ll give you my best guesses. Yes, loans will be harder to get. Have no idea if rates will be higher or lower. Prices will continue to decline regardless. If your uncle is buying in the < $500k price range, we might be getting close to a bottom in that arena. In the $500-1mil range, I think we've still got a ways to go, but if the pace of declines picks up this fall, (as I suspect it will) maybe this fall or even next year might be okay to buy into. (But will have to wait to see) If your uncle is thinking of more than a mil for a place and he's got cash, tell him to get comfortable and relax, cause he's still got a bit of a wait. 'Course this advice is worth exactly what you paid for it. XBoxBoy

[DWCAP]

In this case I kinda would ask why he is getting ichy again. I mean, does he have kids, or tax reasons, or some other reason he wants to buy? Is he independently wealthy and able to survive a downturn in the economy without a job? (Cant verify income!?????) That is a huge downpayment, is there a reason he wants to put so much down? Does he just really hate renting?

I am no expert, but this sounds like a personal decision on his comfort level of risk (increases with ownership) versus pride/quality of life of ownership. Id wait, but that is me. WHo knows, in a year he may not need a loan at all and then who cares what interest rates or underwriting standards are. Prices are not going up, so what is the pressure to buy if he has the cash?

[DWCAP]

In this case I kinda would ask why he is getting ichy again. I mean, does he have kids, or tax reasons, or some other reason he wants to buy? Is he independently wealthy and able to survive a downturn in the economy without a job? (Cant verify income!?????) That is a huge downpayment, is there a reason he wants to put so much down? Does he just really hate renting?

I am no expert, but this sounds like a personal decision on his comfort level of risk (increases with ownership) versus pride/quality of life of ownership. Id wait, but that is me. WHo knows, in a year he may not need a loan at all and then who cares what interest rates or underwriting standards are. Prices are not going up, so what is the pressure to buy if he has the cash?

[DWCAP]

In this case I kinda would ask why he is getting ichy again. I mean, does he have kids, or tax reasons, or some other reason he wants to buy? Is he independently wealthy and able to survive a downturn in the economy without a job? (Cant verify income!?????) That is a huge downpayment, is there a reason he wants to put so much down? Does he just really hate renting?

I am no expert, but this sounds like a personal decision on his comfort level of risk (increases with ownership) versus pride/quality of life of ownership. Id wait, but that is me. WHo knows, in a year he may not need a loan at all and then who cares what interest rates or underwriting standards are. Prices are not going up, so what is the pressure to buy if he has the cash?

[DWCAP]

In this case I kinda would ask why he is getting ichy again. I mean, does he have kids, or tax reasons, or some other reason he wants to buy? Is he independently wealthy and able to survive a downturn in the economy without a job? (Cant verify income!?????) That is a huge downpayment, is there a reason he wants to put so much down? Does he just really hate renting?

I am no expert, but this sounds like a personal decision on his comfort level of risk (increases with ownership) versus pride/quality of life of ownership. Id wait, but that is me. WHo knows, in a year he may not need a loan at all and then who cares what interest rates or underwriting standards are. Prices are not going up, so what is the pressure to buy if he has the cash?

[DWCAP]

In this case I kinda would ask why he is getting ichy again. I mean, does he have kids, or tax reasons, or some other reason he wants to buy? Is he independently wealthy and able to survive a downturn in the economy without a job? (Cant verify income!?????) That is a huge downpayment, is there a reason he wants to put so much down? Does he just really hate renting?

I am no expert, but this sounds like a personal decision on his comfort level of risk (increases with ownership) versus pride/quality of life of ownership. Id wait, but that is me. WHo knows, in a year he may not need a loan at all and then who cares what interest rates or underwriting standards are. Prices are not going up, so what is the pressure to buy if he has the cash?

[nostradamus]

If he has lots of cash,

1. why not wait for interest rates to go up which will bring home prices down. then pay in cash!

2. make sure he’s keeping this cash in a safe place! not Wamu or Wachovia, for example.

[nostradamus]

If he has lots of cash,

1. why not wait for interest rates to go up which will bring home prices down. then pay in cash!

2. make sure he’s keeping this cash in a safe place! not Wamu or Wachovia, for example.

[nostradamus]

If he has lots of cash,

1. why not wait for interest rates to go up which will bring home prices down. then pay in cash!

2. make sure he’s keeping this cash in a safe place! not Wamu or Wachovia, for example.

[nostradamus]

If he has lots of cash,

1. why not wait for interest rates to go up which will bring home prices down. then pay in cash!

2. make sure he’s keeping this cash in a safe place! not Wamu or Wachovia, for example.

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