no loan without 20% down

[Ranjan]

Hi,

I hear that Wells Fargo is denying loans to sandiego county folks if the downpayment is not 20% or higher.
They are branding San Diego county as “distressed”.

Is this true? Are other lenders doing this too?
Not sure how many people will be able to put a 20% down now?

HLS, are you able to arrnage loans for 10% down or so?

Thanks

[SD Realtor]

Do you mind if I ask where you heard this information? A client of mine just closed last week with 5% down. Another client just got approved with 10% down with Wamu.

SD Realtor

[robyns_song]

What kind of rate does 5% down get you? Out of curiousity, why did they only put 5% down? Were they planning on doing extensive repairs/upgrades or did they only have 5%?

[Ranjan]

SD R,

I heard it from wells Fargo.

[SD Realtor]

Hi Ranjan –

If that is what they are doing then so be it. The exposure that they have had to the downside may be coming to haunt them and they must strap up hard to move their paper. (which is not a bad thing by the way)

However (and unfortunately) there are still many vehicles out there for low downpayments. The loosening (aka stimulus package) really stinks (at least for me as someone who has been a prudent buyer and do not believe that people should buy a home heavily financed) and allows some serious FHA financing packages that enable heavy financing with little down.

SD Realtor

[raptorduck]

I don’t think this is a bad thing at all. It will help people have some cushion for a further drop in the market and not stretch to get into homes, which contributed to the current crises.

What I have set aside for a maximum contribution for a down payment dictates the max house I can buy. The minimum I am going to put down is 20% and the most likely down based on the prices of homes on my short list is between 25%-30% down.

Of course, I have this thing that I overpay into my mortgage principal for a few years until I have 70% equity.

[Aecetia]

If you know, is the 20% for owner occupied or for all purchases, such as second homes, etc? Thanks.

[Aecetia]

If you know, is the 20% for owner occupied or for all purchases, such as second homes, etc? Thanks.

[Aecetia]

If you know, is the 20% for owner occupied or for all purchases, such as second homes, etc? Thanks.

[Aecetia]

If you know, is the 20% for owner occupied or for all purchases, such as second homes, etc? Thanks.

[Aecetia]

If you know, is the 20% for owner occupied or for all purchases, such as second homes, etc? Thanks.

[Raybyrnes]

raptorduck

I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.

[JustLurking]

Raybyrnes,

Jumbo rates are not that great. Mortgage interest is not deductible over $1,000,000. Why wouldn’t you put a good chunk down on a pricey property? Just curious.

[Raybyrnes]

Jumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.

Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.

I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.

Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.

[JustLurking]

Raybyrnes,

I don’t think your reasoning is flawed. The finance books all agree that you should finance as much as possible, if the rates are reasonable. But personally, I am not comfortable with that. My income is high now, but I am essentially self-employed so I don’t take that for granted. At any given time I can look ahead 5 years and feel confident about my business, but beyond that there is just too much uncertainty. I don’t have a crystal ball to predict the future of my industry, the economy, etc. etc. So I would prefer to keep my monthly expenses low and live well below my means.

Living this way offers peace of mind and flexibility that is hard to put a price on. A few years ago, my spouse was laid off. Since we already lived on one income (and saved the rest), we had options that others in his situation didn’t. He took some time off to spend with the kids and now is doing work that is personally rewarding, but much less lucrative than his old job. We are all happier. We didn’t “need” the money to support our lifestyle. If we had a huge mortgage payment, we would have had to dip into savings every month and I just wouldn’t have felt comfortable doing it. I know that if I had “banked” the downpayment, I could draw on that account. On paper that is the same thing, but it wouldn’t feel that way.

I guess it boils down to what makes you feel the most secure – seeing a larger balance on your monthly financial statements, or having plenty of money left over every month after you pay your bills.

[Raybyrnes]

JustLurking

“The finance books all agree that you should finance as much as possible, if the rates are reasonable”

There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.

Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.

Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.

The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.

I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts

[kewp]

I’ll agree about the wisdom of having cash on hand (or, at least, in highly liquid investments).

I was never much of a debtor or saver in my twenties. I tended to live exactly within my means.

When I got wiped out during the dotcom crash in 2001 I ended up about 20k in debt via credit cards while recovering over the next few years. I’m still paying it off :(.

The point is something will always come up and its cheaper to pay for it in cash vs. financing it. Btw, I have a feeling many of the families buried in debt in the country are exactly in my situation, not tooling around in Hummers and wearing a Rolex.

[kewp]

I’ll agree about the wisdom of having cash on hand (or, at least, in highly liquid investments).

I was never much of a debtor or saver in my twenties. I tended to live exactly within my means.

When I got wiped out during the dotcom crash in 2001 I ended up about 20k in debt via credit cards while recovering over the next few years. I’m still paying it off :(.

The point is something will always come up and its cheaper to pay for it in cash vs. financing it. Btw, I have a feeling many of the families buried in debt in the country are exactly in my situation, not tooling around in Hummers and wearing a Rolex.

[kewp]

I’ll agree about the wisdom of having cash on hand (or, at least, in highly liquid investments).

I was never much of a debtor or saver in my twenties. I tended to live exactly within my means.

When I got wiped out during the dotcom crash in 2001 I ended up about 20k in debt via credit cards while recovering over the next few years. I’m still paying it off :(.

The point is something will always come up and its cheaper to pay for it in cash vs. financing it. Btw, I have a feeling many of the families buried in debt in the country are exactly in my situation, not tooling around in Hummers and wearing a Rolex.

[kewp]

I’ll agree about the wisdom of having cash on hand (or, at least, in highly liquid investments).

I was never much of a debtor or saver in my twenties. I tended to live exactly within my means.

When I got wiped out during the dotcom crash in 2001 I ended up about 20k in debt via credit cards while recovering over the next few years. I’m still paying it off :(.

The point is something will always come up and its cheaper to pay for it in cash vs. financing it. Btw, I have a feeling many of the families buried in debt in the country are exactly in my situation, not tooling around in Hummers and wearing a Rolex.

[kewp]

I’ll agree about the wisdom of having cash on hand (or, at least, in highly liquid investments).

I was never much of a debtor or saver in my twenties. I tended to live exactly within my means.

When I got wiped out during the dotcom crash in 2001 I ended up about 20k in debt via credit cards while recovering over the next few years. I’m still paying it off :(.

The point is something will always come up and its cheaper to pay for it in cash vs. financing it. Btw, I have a feeling many of the families buried in debt in the country are exactly in my situation, not tooling around in Hummers and wearing a Rolex.

[JustLurking]

Ray,

I do understand your point, but I think you may misunderstand my position. The way I really mitigate risk is by buying way less house than I can technically afford. I put down a big downpayment, but it is a small fraction of my overall assets. Using your Katrina example, I am the guy with the lower payment AND the cash. I could pay my mortgage off, but it wouldn’t make sense because I have a great rate from a refi several years ago. I sleep well because I don’t worry about the bills. Like Raptor, I am still a “slave” to a job that I really enjoy, but my goal is real financial independence. I haven’t really defined exactly what that means to me. I’m working on that.

Financially, I am probably way too conservative. But my career choices have been very risky. They have paid off for me, but the path I took is not for the faint of heart. Now that I have some financial success, I tend to play it pretty safe with my money. Right now I am accumulating cash because I plan to buy another property when I find what I want at a price I want to pay.

[raptorduck]

I will respond to many points when I return from my house hunting trip in SD as I am on my way to the Airport. You folks make good points.

Take my “poorest in neighborhood” comment with a grain of salt. It is based on a philisophy I have that I always want to be around folks to push me to improve (whether that be intelligence, wealth, or what have you). I agree about being surrounded by folks without work ethic, for example, is not a good thing. But that is not what I meant.

Another of my mottos to live by.

It is better to be thought an idiot among geniuses, than a genius among idiots.

I will report back on my house hunting trip and the points made on my return.

Interesting dialog

[raptorduck]

I will respond to many points when I return from my house hunting trip in SD as I am on my way to the Airport. You folks make good points.

Take my “poorest in neighborhood” comment with a grain of salt. It is based on a philisophy I have that I always want to be around folks to push me to improve (whether that be intelligence, wealth, or what have you). I agree about being surrounded by folks without work ethic, for example, is not a good thing. But that is not what I meant.

Another of my mottos to live by.

It is better to be thought an idiot among geniuses, than a genius among idiots.

I will report back on my house hunting trip and the points made on my return.

Interesting dialog

[raptorduck]

I will respond to many points when I return from my house hunting trip in SD as I am on my way to the Airport. You folks make good points.

Take my “poorest in neighborhood” comment with a grain of salt. It is based on a philisophy I have that I always want to be around folks to push me to improve (whether that be intelligence, wealth, or what have you). I agree about being surrounded by folks without work ethic, for example, is not a good thing. But that is not what I meant.

Another of my mottos to live by.

It is better to be thought an idiot among geniuses, than a genius among idiots.

I will report back on my house hunting trip and the points made on my return.

Interesting dialog

[raptorduck]

I will respond to many points when I return from my house hunting trip in SD as I am on my way to the Airport. You folks make good points.

Take my “poorest in neighborhood” comment with a grain of salt. It is based on a philisophy I have that I always want to be around folks to push me to improve (whether that be intelligence, wealth, or what have you). I agree about being surrounded by folks without work ethic, for example, is not a good thing. But that is not what I meant.

Another of my mottos to live by.

It is better to be thought an idiot among geniuses, than a genius among idiots.

I will report back on my house hunting trip and the points made on my return.

Interesting dialog

[raptorduck]

I will respond to many points when I return from my house hunting trip in SD as I am on my way to the Airport. You folks make good points.

Take my “poorest in neighborhood” comment with a grain of salt. It is based on a philisophy I have that I always want to be around folks to push me to improve (whether that be intelligence, wealth, or what have you). I agree about being surrounded by folks without work ethic, for example, is not a good thing. But that is not what I meant.

Another of my mottos to live by.

It is better to be thought an idiot among geniuses, than a genius among idiots.

I will report back on my house hunting trip and the points made on my return.

Interesting dialog

[JustLurking]

Ray,

I do understand your point, but I think you may misunderstand my position. The way I really mitigate risk is by buying way less house than I can technically afford. I put down a big downpayment, but it is a small fraction of my overall assets. Using your Katrina example, I am the guy with the lower payment AND the cash. I could pay my mortgage off, but it wouldn’t make sense because I have a great rate from a refi several years ago. I sleep well because I don’t worry about the bills. Like Raptor, I am still a “slave” to a job that I really enjoy, but my goal is real financial independence. I haven’t really defined exactly what that means to me. I’m working on that.

Financially, I am probably way too conservative. But my career choices have been very risky. They have paid off for me, but the path I took is not for the faint of heart. Now that I have some financial success, I tend to play it pretty safe with my money. Right now I am accumulating cash because I plan to buy another property when I find what I want at a price I want to pay.

[JustLurking]

Ray,

I do understand your point, but I think you may misunderstand my position. The way I really mitigate risk is by buying way less house than I can technically afford. I put down a big downpayment, but it is a small fraction of my overall assets. Using your Katrina example, I am the guy with the lower payment AND the cash. I could pay my mortgage off, but it wouldn’t make sense because I have a great rate from a refi several years ago. I sleep well because I don’t worry about the bills. Like Raptor, I am still a “slave” to a job that I really enjoy, but my goal is real financial independence. I haven’t really defined exactly what that means to me. I’m working on that.

Financially, I am probably way too conservative. But my career choices have been very risky. They have paid off for me, but the path I took is not for the faint of heart. Now that I have some financial success, I tend to play it pretty safe with my money. Right now I am accumulating cash because I plan to buy another property when I find what I want at a price I want to pay.

[JustLurking]

Ray,

I do understand your point, but I think you may misunderstand my position. The way I really mitigate risk is by buying way less house than I can technically afford. I put down a big downpayment, but it is a small fraction of my overall assets. Using your Katrina example, I am the guy with the lower payment AND the cash. I could pay my mortgage off, but it wouldn’t make sense because I have a great rate from a refi several years ago. I sleep well because I don’t worry about the bills. Like Raptor, I am still a “slave” to a job that I really enjoy, but my goal is real financial independence. I haven’t really defined exactly what that means to me. I’m working on that.

Financially, I am probably way too conservative. But my career choices have been very risky. They have paid off for me, but the path I took is not for the faint of heart. Now that I have some financial success, I tend to play it pretty safe with my money. Right now I am accumulating cash because I plan to buy another property when I find what I want at a price I want to pay.

[JustLurking]

Ray,

I do understand your point, but I think you may misunderstand my position. The way I really mitigate risk is by buying way less house than I can technically afford. I put down a big downpayment, but it is a small fraction of my overall assets. Using your Katrina example, I am the guy with the lower payment AND the cash. I could pay my mortgage off, but it wouldn’t make sense because I have a great rate from a refi several years ago. I sleep well because I don’t worry about the bills. Like Raptor, I am still a “slave” to a job that I really enjoy, but my goal is real financial independence. I haven’t really defined exactly what that means to me. I’m working on that.

Financially, I am probably way too conservative. But my career choices have been very risky. They have paid off for me, but the path I took is not for the faint of heart. Now that I have some financial success, I tend to play it pretty safe with my money. Right now I am accumulating cash because I plan to buy another property when I find what I want at a price I want to pay.

[Raybyrnes]

JustLurking

“The finance books all agree that you should finance as much as possible, if the rates are reasonable”

There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.

Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.

Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.

The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.

I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts

[Raybyrnes]

JustLurking

“The finance books all agree that you should finance as much as possible, if the rates are reasonable”

There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.

Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.

Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.

The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.

I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts

[Raybyrnes]

JustLurking

“The finance books all agree that you should finance as much as possible, if the rates are reasonable”

There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.

Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.

Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.

The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.

I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts

[Raybyrnes]

JustLurking

“The finance books all agree that you should finance as much as possible, if the rates are reasonable”

There are 2 different points here and I want to be clear where I stand. I am not suggesting somone increase the amount of home they can buy by seeking to take on a larger amount of leverage. What I am suggesting is that if I can afford 1 Million in property rather than putting 350K as a down payment I am only going to put the 200K down.

Why? While I might have a slighly higher payment I have a substantially higher amount of cash. This cash provides far more safety in an unforseen circumstance that my slightly higher payment.

Therefore I would argue that your perception of having less risk with the lower payment is an incorrect assesment.

The reality is that all people have reoccurring expenses. this comes in the form of utilities, food, taxes etc. Cash on hand allows me to make these payments in a worst case scenario while at the saem time providing me with liquidity in the event that the deal of the century presents itself.

I will once again go back to my Katrina example. Who was better off after their homes had been destroyed. The guy with the lower payment and no home and little cash or the guy with the 150K because he elected to put the 20% down instead of the 35%. Seems to me that the guy who put 35% might have thought he was taking less risk when in fact he was taking on more risk. Your thoughts

[JustLurking]

Raybyrnes,

I don’t think your reasoning is flawed. The finance books all agree that you should finance as much as possible, if the rates are reasonable. But personally, I am not comfortable with that. My income is high now, but I am essentially self-employed so I don’t take that for granted. At any given time I can look ahead 5 years and feel confident about my business, but beyond that there is just too much uncertainty. I don’t have a crystal ball to predict the future of my industry, the economy, etc. etc. So I would prefer to keep my monthly expenses low and live well below my means.

Living this way offers peace of mind and flexibility that is hard to put a price on. A few years ago, my spouse was laid off. Since we already lived on one income (and saved the rest), we had options that others in his situation didn’t. He took some time off to spend with the kids and now is doing work that is personally rewarding, but much less lucrative than his old job. We are all happier. We didn’t “need” the money to support our lifestyle. If we had a huge mortgage payment, we would have had to dip into savings every month and I just wouldn’t have felt comfortable doing it. I know that if I had “banked” the downpayment, I could draw on that account. On paper that is the same thing, but it wouldn’t feel that way.

I guess it boils down to what makes you feel the most secure – seeing a larger balance on your monthly financial statements, or having plenty of money left over every month after you pay your bills.

[JustLurking]

Raybyrnes,

I don’t think your reasoning is flawed. The finance books all agree that you should finance as much as possible, if the rates are reasonable. But personally, I am not comfortable with that. My income is high now, but I am essentially self-employed so I don’t take that for granted. At any given time I can look ahead 5 years and feel confident about my business, but beyond that there is just too much uncertainty. I don’t have a crystal ball to predict the future of my industry, the economy, etc. etc. So I would prefer to keep my monthly expenses low and live well below my means.

Living this way offers peace of mind and flexibility that is hard to put a price on. A few years ago, my spouse was laid off. Since we already lived on one income (and saved the rest), we had options that others in his situation didn’t. He took some time off to spend with the kids and now is doing work that is personally rewarding, but much less lucrative than his old job. We are all happier. We didn’t “need” the money to support our lifestyle. If we had a huge mortgage payment, we would have had to dip into savings every month and I just wouldn’t have felt comfortable doing it. I know that if I had “banked” the downpayment, I could draw on that account. On paper that is the same thing, but it wouldn’t feel that way.

I guess it boils down to what makes you feel the most secure – seeing a larger balance on your monthly financial statements, or having plenty of money left over every month after you pay your bills.

[JustLurking]

Raybyrnes,

I don’t think your reasoning is flawed. The finance books all agree that you should finance as much as possible, if the rates are reasonable. But personally, I am not comfortable with that. My income is high now, but I am essentially self-employed so I don’t take that for granted. At any given time I can look ahead 5 years and feel confident about my business, but beyond that there is just too much uncertainty. I don’t have a crystal ball to predict the future of my industry, the economy, etc. etc. So I would prefer to keep my monthly expenses low and live well below my means.

Living this way offers peace of mind and flexibility that is hard to put a price on. A few years ago, my spouse was laid off. Since we already lived on one income (and saved the rest), we had options that others in his situation didn’t. He took some time off to spend with the kids and now is doing work that is personally rewarding, but much less lucrative than his old job. We are all happier. We didn’t “need” the money to support our lifestyle. If we had a huge mortgage payment, we would have had to dip into savings every month and I just wouldn’t have felt comfortable doing it. I know that if I had “banked” the downpayment, I could draw on that account. On paper that is the same thing, but it wouldn’t feel that way.

I guess it boils down to what makes you feel the most secure – seeing a larger balance on your monthly financial statements, or having plenty of money left over every month after you pay your bills.

[JustLurking]

Raybyrnes,

I don’t think your reasoning is flawed. The finance books all agree that you should finance as much as possible, if the rates are reasonable. But personally, I am not comfortable with that. My income is high now, but I am essentially self-employed so I don’t take that for granted. At any given time I can look ahead 5 years and feel confident about my business, but beyond that there is just too much uncertainty. I don’t have a crystal ball to predict the future of my industry, the economy, etc. etc. So I would prefer to keep my monthly expenses low and live well below my means.

Living this way offers peace of mind and flexibility that is hard to put a price on. A few years ago, my spouse was laid off. Since we already lived on one income (and saved the rest), we had options that others in his situation didn’t. He took some time off to spend with the kids and now is doing work that is personally rewarding, but much less lucrative than his old job. We are all happier. We didn’t “need” the money to support our lifestyle. If we had a huge mortgage payment, we would have had to dip into savings every month and I just wouldn’t have felt comfortable doing it. I know that if I had “banked” the downpayment, I could draw on that account. On paper that is the same thing, but it wouldn’t feel that way.

I guess it boils down to what makes you feel the most secure – seeing a larger balance on your monthly financial statements, or having plenty of money left over every month after you pay your bills.

[Raybyrnes]

Jumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.

Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.

I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.

Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.

[Raybyrnes]

Jumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.

Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.

I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.

Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.

[Raybyrnes]

Jumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.

Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.

I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.

Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.

[Raybyrnes]

Jumbo rates might not be great for someone with average credit but with good credit rates are still in the high 5 low 6 range.

Morgage Interest is not deductible over 1 Million. Would need to simply run a weighted average calculation to adjust for cost of capital relative to potential rates of return. May find that this is a reason to put down or not put down additional capital.

I would not personally elect to put more down than absolutely necessary because as long as I possess the capital or ahve acces to it I have security knowing that in a worst case scenario I ahve bought myself additional time to make payments whereas if I plunk money down than the bank has my capital and I ahve to trust in my ability to get Equity lines and other products if I need to unlock the equity.

Sort of like this. Hurrican Katrina hits. Would I rather have a low monthly payment and little capital in the bank or would I rather have a higher monthly payment but lots of money in the bank. I would rather opt for scenario 2 provided I was not getting hit with some absurd premium. IE a 9% loan as opposed to 6%. That is my reasoning. Is there some flaw that you would point out to me.

[JustLurking]

Raybyrnes,

Jumbo rates are not that great. Mortgage interest is not deductible over $1,000,000. Why wouldn’t you put a good chunk down on a pricey property? Just curious.

[JustLurking]

Raybyrnes,

Jumbo rates are not that great. Mortgage interest is not deductible over $1,000,000. Why wouldn’t you put a good chunk down on a pricey property? Just curious.

[JustLurking]

Raybyrnes,

Jumbo rates are not that great. Mortgage interest is not deductible over $1,000,000. Why wouldn’t you put a good chunk down on a pricey property? Just curious.

[JustLurking]

Raybyrnes,

Jumbo rates are not that great. Mortgage interest is not deductible over $1,000,000. Why wouldn’t you put a good chunk down on a pricey property? Just curious.

[raptorduck]

Raybyrnes. I have great financial advisors, but at the end of the day I take advice from me. Frankly, now that I am where I am, I am much more conservative. I don’t need to leverage my money/income. I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything. And, eventually, I intend to carry no more than the maximum mortgage I can get a tax benifit from ($1M).

It is just how I like to live. Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. There are so many wealthy people in the world, but only a minority of them are finacially independent. I still consider myself a slave to my job, but I am getting there. I could “look” richer I suppose, but I would be less financially independent to get there. That is not where I want to go.

I am not rich, but rich enough for my taste. My wealth is growing despite my contrarian non-leveraged stance. That is good enough for me.

If I find an arbitrage opportunity, I do take it, but I don’t look for one.

I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

Before long, you have become quite successful at being a poor ignoramus.

[WaitingToExhale]

I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything….

….Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. …

…I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

I find the comments in your last paragraph interesting. I agree with most of your philosophy whole-heartedly, and certainly hope someday to be in a position similar to the one you have created for yourself, but I disagree on surrounding oneself with richer folks and being the poorest person in the neighborhood. Work-wise, I agree to a large extent, but it seems to me (and some recent studies seem to bear this out) that people determine their “success” based on their environment (neighbors). I want a decent, safe hard-working type neighborhood where most folks don’t drive hummers or bmw’s and spend 100K renovating their backyard, since the extra expense is a luxury. And humans have a way or setting a baseline to what they see around them.

[WaitingToExhale]

I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything….

….Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. …

…I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

I find the comments in your last paragraph interesting. I agree with most of your philosophy whole-heartedly, and certainly hope someday to be in a position similar to the one you have created for yourself, but I disagree on surrounding oneself with richer folks and being the poorest person in the neighborhood. Work-wise, I agree to a large extent, but it seems to me (and some recent studies seem to bear this out) that people determine their “success” based on their environment (neighbors). I want a decent, safe hard-working type neighborhood where most folks don’t drive hummers or bmw’s and spend 100K renovating their backyard, since the extra expense is a luxury. And humans have a way or setting a baseline to what they see around them.

[WaitingToExhale]

I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything….

….Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. …

…I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

I find the comments in your last paragraph interesting. I agree with most of your philosophy whole-heartedly, and certainly hope someday to be in a position similar to the one you have created for yourself, but I disagree on surrounding oneself with richer folks and being the poorest person in the neighborhood. Work-wise, I agree to a large extent, but it seems to me (and some recent studies seem to bear this out) that people determine their “success” based on their environment (neighbors). I want a decent, safe hard-working type neighborhood where most folks don’t drive hummers or bmw’s and spend 100K renovating their backyard, since the extra expense is a luxury. And humans have a way or setting a baseline to what they see around them.

[WaitingToExhale]

I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything….

….Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. …

…I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

I find the comments in your last paragraph interesting. I agree with most of your philosophy whole-heartedly, and certainly hope someday to be in a position similar to the one you have created for yourself, but I disagree on surrounding oneself with richer folks and being the poorest person in the neighborhood. Work-wise, I agree to a large extent, but it seems to me (and some recent studies seem to bear this out) that people determine their “success” based on their environment (neighbors). I want a decent, safe hard-working type neighborhood where most folks don’t drive hummers or bmw’s and spend 100K renovating their backyard, since the extra expense is a luxury. And humans have a way or setting a baseline to what they see around them.

[WaitingToExhale]

I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything….

….Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. …

…I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

I find the comments in your last paragraph interesting. I agree with most of your philosophy whole-heartedly, and certainly hope someday to be in a position similar to the one you have created for yourself, but I disagree on surrounding oneself with richer folks and being the poorest person in the neighborhood. Work-wise, I agree to a large extent, but it seems to me (and some recent studies seem to bear this out) that people determine their “success” based on their environment (neighbors). I want a decent, safe hard-working type neighborhood where most folks don’t drive hummers or bmw’s and spend 100K renovating their backyard, since the extra expense is a luxury. And humans have a way or setting a baseline to what they see around them.

[Raybyrnes]

raptorduck

Hopefully you did not take my psot to poke fun at your strategy but by all accoutns i would think most financial advisors would suggest it to be somewhat of a inopportunistic way of investing your capital.

I say this because while some may look at the interest rate adn deduction with respect to a loan I look at this relative to the loads on Great Mutual fund families. I will use the exmple of The American Funds. Most of their funds carry a front end load of 5.75%. But as you use your Rights of Accumulation (Breakpoint for dollar amounts invested) thes costs go down dramatically.

So when i look at a million dollar purchase (or more in your instance) and consider the difference between putting 20% down vs 35% that difference could be substantial with respect to potential break points that could be earned with a minimal amount of money management.

My question for you is whether or not you advisors are sort of in the same camp as me with respect to utilizing your cash or are they the ones suggestig to put the money down on the home?

[SD Realtor]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there. The other method beyond leverage has been to get other investors. Mind you, this is not I have a million dollar home and work as an engineer money. This is more like, I don’t really need to work anymore sort of money. I would not argue your facts in a minute Ray because they make perfect sense.

Alternately I am kind of a shmuck… I make good money but work a 9 to 5 job and have a brokerage AND my wife works her business as well. Any person of wealth looks at me and laughs because to work that hard is pretty stupid considering what I make. At the end of the day when I do buy my home, every grain of financial sense would say not to use the pile of coin I have saved up for that. It would make much more sense to use maybe half of it and then use the rest for other investments etc… Yet I am a and will always be one of those types who just sleeps better at night with as little leverage as possible. I think it is buried within our personalities.

Those who are willing to take more risk will always always always be more successful then those of us who are not. In all paths of life. Yet that comet of risky people also has a tail of flotsam of those that didn’t make it. Still, deep down I do agree with your premise.

I will say that with that risky behavior and chutzpah, intelligence is needed. Therein lies the problem. By far, by very very far, that intelligence just is not present in the vast majority of the population. Basically they are idiots and leverage to the hilt simply to spend more, not to make more.

SD Realtor

[Raybyrnes]

SD Realtor

I am still trying to figure out why one tries to say there is less risk in your method as opposed to mine. I am actually arguing to reduce risk.

For instance if I were to take your sitauation, I would say that if you wnated to take on less risk use the mimimum amount of money for a down payment so that you have a maximum amount of cash available .

Then if you want to reduce the amount of debt that you have take the difference between what you would have put down and the minimum required and divde that into additionally voluntary payments that you make over the next 60 months.

Now in the interem of making those 60 months of additonal payment, if something unforeseen comes up you have cash on hand. therefore you are not guessing as to what the potential interest rate environment will be. Seems like I am an advocate of less risk. That doesn’t always mean less debt.

[SD Realtor]

Ray I think I see where our disconnect is. Whereas I am using the word risk, I should probably use the words personal peace of mind. Never would I advocate putting your entire savings into a downpayment. Of course one should always have cash reserves for emergencies. Let’s say I have 400k stashed in the house fund… Assume I have other monies stashed for emergencies, 401ks etc… So I see a home I want to buy for 800k. By your model you would say put down 10% maybe 20% rather then the 400k correct? As you said, reduce the debt by making an extra payment or whatever correct? With all the leftover invest that money or something of that nature. Putting the minimum amount of money down indeed reduces your risk because if something goes wrong, you walk away from the home with minimal loss.

I assume this is your point about minimizing risk.

*******

I understand that and agree to it. Per my first sentence here, it is about personal peace of mind. We are all wired different. Personally I don’t ever see myself walking away from a home. No matter what I do I will buy but it will be within my means. I have gauranteed it will be within my means because of the downpayment I will put down on it. Thus market up or market down I will always be able to afford my payment because I don’t want to ever move out until the kids are out of school OR I move because of personal choice not because of financial problems I BROUGHT UPON MYSELF buy purchasing something I cannot afford. The bottom line in my opinion is if home ownership were harder to obtain, and more personal responsibility was mandated, then we would not have the problems we have.

Your method of risk reduction indeed works because lenders are stupid enough to have ridiculous non recourse loans of which I have gone on record many a time should be banished.

What you say does make alot of sense and I agree with you in that respect. As I said, many of the wealthy people I know, indeed the majority of them think I am crazy for having as much of a downpayment as I will put down. They have made alot of money with alot less then what I will put down… I guess I play it to close to the vest. We are all wired differently.

SD Realtor

[Raybyrnes]

SD Realtor

Part of my thought process is the fact that you ca walk away but the real risk reduction I see is the fact that you currently know what the interest rate environment is. How do you know what the cost of money is going to be in 3, 5 or 10 years.

I know for a fact that if they go lower I can refinance form the 5 or 6 % I can get today. I also know that I can prepay down the mortgage. But if I park a big chunk of cash as a down payment and the interest rate environment were to shift at a period of time that I need to borrow then I would be pissed that I had not purchaed my money when it was cheap. By buying things at discounts we do a better job of reducing our exposure to risk.

My timeline for planning is further out than the normal person. And I will admit that I oten times get the urge to just pay all of my bills off and be debt free. But every time I log in to do it I am reminded that every thousand of debt I pay off costs me roughly 40 to 50 dollars in pretax risk free return. So I can fully relate to those who like the thought of being debt free. Unfortunately jsut as it would aggravate me to come to my car and see a ticket on the windshield , it would equally bother me to pay off debts that are allowing me to earn risk free money.

[Raybyrnes]

SD Realtor

Part of my thought process is the fact that you ca walk away but the real risk reduction I see is the fact that you currently know what the interest rate environment is. How do you know what the cost of money is going to be in 3, 5 or 10 years.

I know for a fact that if they go lower I can refinance form the 5 or 6 % I can get today. I also know that I can prepay down the mortgage. But if I park a big chunk of cash as a down payment and the interest rate environment were to shift at a period of time that I need to borrow then I would be pissed that I had not purchaed my money when it was cheap. By buying things at discounts we do a better job of reducing our exposure to risk.

My timeline for planning is further out than the normal person. And I will admit that I oten times get the urge to just pay all of my bills off and be debt free. But every time I log in to do it I am reminded that every thousand of debt I pay off costs me roughly 40 to 50 dollars in pretax risk free return. So I can fully relate to those who like the thought of being debt free. Unfortunately jsut as it would aggravate me to come to my car and see a ticket on the windshield , it would equally bother me to pay off debts that are allowing me to earn risk free money.

[Raybyrnes]

SD Realtor

Part of my thought process is the fact that you ca walk away but the real risk reduction I see is the fact that you currently know what the interest rate environment is. How do you know what the cost of money is going to be in 3, 5 or 10 years.

I know for a fact that if they go lower I can refinance form the 5 or 6 % I can get today. I also know that I can prepay down the mortgage. But if I park a big chunk of cash as a down payment and the interest rate environment were to shift at a period of time that I need to borrow then I would be pissed that I had not purchaed my money when it was cheap. By buying things at discounts we do a better job of reducing our exposure to risk.

My timeline for planning is further out than the normal person. And I will admit that I oten times get the urge to just pay all of my bills off and be debt free. But every time I log in to do it I am reminded that every thousand of debt I pay off costs me roughly 40 to 50 dollars in pretax risk free return. So I can fully relate to those who like the thought of being debt free. Unfortunately jsut as it would aggravate me to come to my car and see a ticket on the windshield , it would equally bother me to pay off debts that are allowing me to earn risk free money.

[Raybyrnes]

SD Realtor

Part of my thought process is the fact that you ca walk away but the real risk reduction I see is the fact that you currently know what the interest rate environment is. How do you know what the cost of money is going to be in 3, 5 or 10 years.

I know for a fact that if they go lower I can refinance form the 5 or 6 % I can get today. I also know that I can prepay down the mortgage. But if I park a big chunk of cash as a down payment and the interest rate environment were to shift at a period of time that I need to borrow then I would be pissed that I had not purchaed my money when it was cheap. By buying things at discounts we do a better job of reducing our exposure to risk.

My timeline for planning is further out than the normal person. And I will admit that I oten times get the urge to just pay all of my bills off and be debt free. But every time I log in to do it I am reminded that every thousand of debt I pay off costs me roughly 40 to 50 dollars in pretax risk free return. So I can fully relate to those who like the thought of being debt free. Unfortunately jsut as it would aggravate me to come to my car and see a ticket on the windshield , it would equally bother me to pay off debts that are allowing me to earn risk free money.

[Raybyrnes]

SD Realtor

Part of my thought process is the fact that you ca walk away but the real risk reduction I see is the fact that you currently know what the interest rate environment is. How do you know what the cost of money is going to be in 3, 5 or 10 years.

I know for a fact that if they go lower I can refinance form the 5 or 6 % I can get today. I also know that I can prepay down the mortgage. But if I park a big chunk of cash as a down payment and the interest rate environment were to shift at a period of time that I need to borrow then I would be pissed that I had not purchaed my money when it was cheap. By buying things at discounts we do a better job of reducing our exposure to risk.

My timeline for planning is further out than the normal person. And I will admit that I oten times get the urge to just pay all of my bills off and be debt free. But every time I log in to do it I am reminded that every thousand of debt I pay off costs me roughly 40 to 50 dollars in pretax risk free return. So I can fully relate to those who like the thought of being debt free. Unfortunately jsut as it would aggravate me to come to my car and see a ticket on the windshield , it would equally bother me to pay off debts that are allowing me to earn risk free money.

[SD Realtor]

Ray I think I see where our disconnect is. Whereas I am using the word risk, I should probably use the words personal peace of mind. Never would I advocate putting your entire savings into a downpayment. Of course one should always have cash reserves for emergencies. Let’s say I have 400k stashed in the house fund… Assume I have other monies stashed for emergencies, 401ks etc… So I see a home I want to buy for 800k. By your model you would say put down 10% maybe 20% rather then the 400k correct? As you said, reduce the debt by making an extra payment or whatever correct? With all the leftover invest that money or something of that nature. Putting the minimum amount of money down indeed reduces your risk because if something goes wrong, you walk away from the home with minimal loss.

I assume this is your point about minimizing risk.

*******

I understand that and agree to it. Per my first sentence here, it is about personal peace of mind. We are all wired different. Personally I don’t ever see myself walking away from a home. No matter what I do I will buy but it will be within my means. I have gauranteed it will be within my means because of the downpayment I will put down on it. Thus market up or market down I will always be able to afford my payment because I don’t want to ever move out until the kids are out of school OR I move because of personal choice not because of financial problems I BROUGHT UPON MYSELF buy purchasing something I cannot afford. The bottom line in my opinion is if home ownership were harder to obtain, and more personal responsibility was mandated, then we would not have the problems we have.

Your method of risk reduction indeed works because lenders are stupid enough to have ridiculous non recourse loans of which I have gone on record many a time should be banished.

What you say does make alot of sense and I agree with you in that respect. As I said, many of the wealthy people I know, indeed the majority of them think I am crazy for having as much of a downpayment as I will put down. They have made alot of money with alot less then what I will put down… I guess I play it to close to the vest. We are all wired differently.

SD Realtor

[SD Realtor]

Ray I think I see where our disconnect is. Whereas I am using the word risk, I should probably use the words personal peace of mind. Never would I advocate putting your entire savings into a downpayment. Of course one should always have cash reserves for emergencies. Let’s say I have 400k stashed in the house fund… Assume I have other monies stashed for emergencies, 401ks etc… So I see a home I want to buy for 800k. By your model you would say put down 10% maybe 20% rather then the 400k correct? As you said, reduce the debt by making an extra payment or whatever correct? With all the leftover invest that money or something of that nature. Putting the minimum amount of money down indeed reduces your risk because if something goes wrong, you walk away from the home with minimal loss.

I assume this is your point about minimizing risk.

*******

I understand that and agree to it. Per my first sentence here, it is about personal peace of mind. We are all wired different. Personally I don’t ever see myself walking away from a home. No matter what I do I will buy but it will be within my means. I have gauranteed it will be within my means because of the downpayment I will put down on it. Thus market up or market down I will always be able to afford my payment because I don’t want to ever move out until the kids are out of school OR I move because of personal choice not because of financial problems I BROUGHT UPON MYSELF buy purchasing something I cannot afford. The bottom line in my opinion is if home ownership were harder to obtain, and more personal responsibility was mandated, then we would not have the problems we have.

Your method of risk reduction indeed works because lenders are stupid enough to have ridiculous non recourse loans of which I have gone on record many a time should be banished.

What you say does make alot of sense and I agree with you in that respect. As I said, many of the wealthy people I know, indeed the majority of them think I am crazy for having as much of a downpayment as I will put down. They have made alot of money with alot less then what I will put down… I guess I play it to close to the vest. We are all wired differently.

SD Realtor

[SD Realtor]

Ray I think I see where our disconnect is. Whereas I am using the word risk, I should probably use the words personal peace of mind. Never would I advocate putting your entire savings into a downpayment. Of course one should always have cash reserves for emergencies. Let’s say I have 400k stashed in the house fund… Assume I have other monies stashed for emergencies, 401ks etc… So I see a home I want to buy for 800k. By your model you would say put down 10% maybe 20% rather then the 400k correct? As you said, reduce the debt by making an extra payment or whatever correct? With all the leftover invest that money or something of that nature. Putting the minimum amount of money down indeed reduces your risk because if something goes wrong, you walk away from the home with minimal loss.

I assume this is your point about minimizing risk.

*******

I understand that and agree to it. Per my first sentence here, it is about personal peace of mind. We are all wired different. Personally I don’t ever see myself walking away from a home. No matter what I do I will buy but it will be within my means. I have gauranteed it will be within my means because of the downpayment I will put down on it. Thus market up or market down I will always be able to afford my payment because I don’t want to ever move out until the kids are out of school OR I move because of personal choice not because of financial problems I BROUGHT UPON MYSELF buy purchasing something I cannot afford. The bottom line in my opinion is if home ownership were harder to obtain, and more personal responsibility was mandated, then we would not have the problems we have.

Your method of risk reduction indeed works because lenders are stupid enough to have ridiculous non recourse loans of which I have gone on record many a time should be banished.

What you say does make alot of sense and I agree with you in that respect. As I said, many of the wealthy people I know, indeed the majority of them think I am crazy for having as much of a downpayment as I will put down. They have made alot of money with alot less then what I will put down… I guess I play it to close to the vest. We are all wired differently.

SD Realtor

[SD Realtor]

Ray I think I see where our disconnect is. Whereas I am using the word risk, I should probably use the words personal peace of mind. Never would I advocate putting your entire savings into a downpayment. Of course one should always have cash reserves for emergencies. Let’s say I have 400k stashed in the house fund… Assume I have other monies stashed for emergencies, 401ks etc… So I see a home I want to buy for 800k. By your model you would say put down 10% maybe 20% rather then the 400k correct? As you said, reduce the debt by making an extra payment or whatever correct? With all the leftover invest that money or something of that nature. Putting the minimum amount of money down indeed reduces your risk because if something goes wrong, you walk away from the home with minimal loss.

I assume this is your point about minimizing risk.

*******

I understand that and agree to it. Per my first sentence here, it is about personal peace of mind. We are all wired different. Personally I don’t ever see myself walking away from a home. No matter what I do I will buy but it will be within my means. I have gauranteed it will be within my means because of the downpayment I will put down on it. Thus market up or market down I will always be able to afford my payment because I don’t want to ever move out until the kids are out of school OR I move because of personal choice not because of financial problems I BROUGHT UPON MYSELF buy purchasing something I cannot afford. The bottom line in my opinion is if home ownership were harder to obtain, and more personal responsibility was mandated, then we would not have the problems we have.

Your method of risk reduction indeed works because lenders are stupid enough to have ridiculous non recourse loans of which I have gone on record many a time should be banished.

What you say does make alot of sense and I agree with you in that respect. As I said, many of the wealthy people I know, indeed the majority of them think I am crazy for having as much of a downpayment as I will put down. They have made alot of money with alot less then what I will put down… I guess I play it to close to the vest. We are all wired differently.

SD Realtor

[Raybyrnes]

SD Realtor

I am still trying to figure out why one tries to say there is less risk in your method as opposed to mine. I am actually arguing to reduce risk.

For instance if I were to take your sitauation, I would say that if you wnated to take on less risk use the mimimum amount of money for a down payment so that you have a maximum amount of cash available .

Then if you want to reduce the amount of debt that you have take the difference between what you would have put down and the minimum required and divde that into additionally voluntary payments that you make over the next 60 months.

Now in the interem of making those 60 months of additonal payment, if something unforeseen comes up you have cash on hand. therefore you are not guessing as to what the potential interest rate environment will be. Seems like I am an advocate of less risk. That doesn’t always mean less debt.

[Raybyrnes]

SD Realtor

I am still trying to figure out why one tries to say there is less risk in your method as opposed to mine. I am actually arguing to reduce risk.

For instance if I were to take your sitauation, I would say that if you wnated to take on less risk use the mimimum amount of money for a down payment so that you have a maximum amount of cash available .

Then if you want to reduce the amount of debt that you have take the difference between what you would have put down and the minimum required and divde that into additionally voluntary payments that you make over the next 60 months.

Now in the interem of making those 60 months of additonal payment, if something unforeseen comes up you have cash on hand. therefore you are not guessing as to what the potential interest rate environment will be. Seems like I am an advocate of less risk. That doesn’t always mean less debt.

[Raybyrnes]

SD Realtor

I am still trying to figure out why one tries to say there is less risk in your method as opposed to mine. I am actually arguing to reduce risk.

For instance if I were to take your sitauation, I would say that if you wnated to take on less risk use the mimimum amount of money for a down payment so that you have a maximum amount of cash available .

Then if you want to reduce the amount of debt that you have take the difference between what you would have put down and the minimum required and divde that into additionally voluntary payments that you make over the next 60 months.

Now in the interem of making those 60 months of additonal payment, if something unforeseen comes up you have cash on hand. therefore you are not guessing as to what the potential interest rate environment will be. Seems like I am an advocate of less risk. That doesn’t always mean less debt.

[Raybyrnes]

SD Realtor

I am still trying to figure out why one tries to say there is less risk in your method as opposed to mine. I am actually arguing to reduce risk.

For instance if I were to take your sitauation, I would say that if you wnated to take on less risk use the mimimum amount of money for a down payment so that you have a maximum amount of cash available .

Then if you want to reduce the amount of debt that you have take the difference between what you would have put down and the minimum required and divde that into additionally voluntary payments that you make over the next 60 months.

Now in the interem of making those 60 months of additonal payment, if something unforeseen comes up you have cash on hand. therefore you are not guessing as to what the potential interest rate environment will be. Seems like I am an advocate of less risk. That doesn’t always mean less debt.

[kewp]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there.

Watch the confirmation bias, SD. Btw, care to tell us how to use leverage to make a fortune in San Diego real-estate. In the current market?

I’m sure for everyone one of them there are a dozen (or more) bankrupt speculators. Or, at the very least, will soon be.

Yes, leverage works great on the upside. It works just as great when running in reverse, as millions of Americans are going to discover to their horror during the coming Great Unwinding.

But yes, you are right. Leverage is good when judiciously applied. I’m leveraged (a wee bit) on the short side of the collapsing housing bubble.

[Raybyrnes]

kewp

I would rather speak to debt as opposed to leverage. Shift risk around. For instance. My parents own their home and are not going to move out or rent. Therefore they can shift the risk of a depreciating investment to the bank by borrowing against it. Let’s say their place is worth 500K. By borrowing against the home they take on a partner (the bank) and simply pay the expense (5 to 6%)in terms of interest. They have effective shifted teh risk of a real estate collapse to the bank.

Now they need to be able to do something with that capital. That is the other side of the equasion.

[kewp]

Now they need to be able to do something with that capital. That is the other side of the equasion.

Haha, how about short the bank stock then default on the loan?

[kewp]

Now they need to be able to do something with that capital. That is the other side of the equasion.

Haha, how about short the bank stock then default on the loan?

[kewp]

Now they need to be able to do something with that capital. That is the other side of the equasion.

Haha, how about short the bank stock then default on the loan?

[kewp]

Now they need to be able to do something with that capital. That is the other side of the equasion.

Haha, how about short the bank stock then default on the loan?

[kewp]

Now they need to be able to do something with that capital. That is the other side of the equasion.

Haha, how about short the bank stock then default on the loan?

[Raybyrnes]

kewp

I would rather speak to debt as opposed to leverage. Shift risk around. For instance. My parents own their home and are not going to move out or rent. Therefore they can shift the risk of a depreciating investment to the bank by borrowing against it. Let’s say their place is worth 500K. By borrowing against the home they take on a partner (the bank) and simply pay the expense (5 to 6%)in terms of interest. They have effective shifted teh risk of a real estate collapse to the bank.

Now they need to be able to do something with that capital. That is the other side of the equasion.

[Raybyrnes]

kewp

I would rather speak to debt as opposed to leverage. Shift risk around. For instance. My parents own their home and are not going to move out or rent. Therefore they can shift the risk of a depreciating investment to the bank by borrowing against it. Let’s say their place is worth 500K. By borrowing against the home they take on a partner (the bank) and simply pay the expense (5 to 6%)in terms of interest. They have effective shifted teh risk of a real estate collapse to the bank.

Now they need to be able to do something with that capital. That is the other side of the equasion.

[Raybyrnes]

kewp

I would rather speak to debt as opposed to leverage. Shift risk around. For instance. My parents own their home and are not going to move out or rent. Therefore they can shift the risk of a depreciating investment to the bank by borrowing against it. Let’s say their place is worth 500K. By borrowing against the home they take on a partner (the bank) and simply pay the expense (5 to 6%)in terms of interest. They have effective shifted teh risk of a real estate collapse to the bank.

Now they need to be able to do something with that capital. That is the other side of the equasion.

[Raybyrnes]

kewp

I would rather speak to debt as opposed to leverage. Shift risk around. For instance. My parents own their home and are not going to move out or rent. Therefore they can shift the risk of a depreciating investment to the bank by borrowing against it. Let’s say their place is worth 500K. By borrowing against the home they take on a partner (the bank) and simply pay the expense (5 to 6%)in terms of interest. They have effective shifted teh risk of a real estate collapse to the bank.

Now they need to be able to do something with that capital. That is the other side of the equasion.

[SD Realtor]

Kewp undortunately you missed my point entirely. Not only did I not have any intent to imply real estate investment, I don’t believe I mentioned it at all in my post. The people I know all made money by varying means from taking risks and opening businesses, forming investment syndicates, purchasing mobile home parks, starting private practices, tax lien investments, selling freeking hot dogs are fairs, all kinds of stuff. Some of these people did it on their own, some did it with investors, some took out equity to do it, most all of them didn’t pump a 30-40% downpayment into the home they live in. All of them took risk. Some failed, many did not. I am quite envious of all of them for taking the risk.

I guess I should have spelled it out more clearly.

Show me where I said anything about real estate. Sorry you didn’t really get what I was trying to say.

SD Realtor

[kewp]

Show me where I said anything about real estate.

Thats where everyone else made bank over the last decade. Your buddies equity didn’t come from a vacuum.

I guess we will see how you all do when that gravy train get derailed.

[Raybyrnes]

There have been a number of area where people have made bank. In San Diego Many ot the qualcomm execs made bank in the early part of the decade. IF you were into selling Cell phones. that blew up in 2000, I now some car sales people who were making 250K giving away ford F-150’s with 0 per cent financing, Student Loan companies made a fortune around 2004, Subprime Loan providers were going strong up until 2006, credit card companies have been going strong over that same period. So I would argue there have bena number of ways you could have been making money.

[kewp]

Raybyrnes,

Thank you for proving my point. All of that was from the free money credit gravy train. The lenders have realized they will never be paid back and shut that spigot off.

Yeah, I’m making a few K a month shorting the idiots that lent your buddies money, but I’ll be damned if I invest the proceeds locally.

The weather is sure nice, tho!

[Raybyrnes]

The people I know all worked extremely hard so they earned their keep. The environment just proved to be extremely opportunististic especailly if you didn’t mind putting in long hours and dealing with the general public.

If your a CPA and making 100 k but you see that the sales people you are doing the accoutning for are earning 4 and 5 times what you are making it only seems smart to make the leep of faith that you can do it too. When the gravy train ends you still are a CPA. You just have a lot more money.

[kewp]

Ray,

All the mortgage brokers worked really hard too. So did the flippers. As did the bonds graders that marked all that junk AAA.

I hope they have been saving up, they are going to need it when they are unemployed.

[kewp]

Ray,

All the mortgage brokers worked really hard too. So did the flippers. As did the bonds graders that marked all that junk AAA.

I hope they have been saving up, they are going to need it when they are unemployed.

[kewp]

Ray,

All the mortgage brokers worked really hard too. So did the flippers. As did the bonds graders that marked all that junk AAA.

I hope they have been saving up, they are going to need it when they are unemployed.

[kewp]

Ray,

All the mortgage brokers worked really hard too. So did the flippers. As did the bonds graders that marked all that junk AAA.

I hope they have been saving up, they are going to need it when they are unemployed.

[kewp]

Ray,

All the mortgage brokers worked really hard too. So did the flippers. As did the bonds graders that marked all that junk AAA.

I hope they have been saving up, they are going to need it when they are unemployed.

[Raybyrnes]

The people I know all worked extremely hard so they earned their keep. The environment just proved to be extremely opportunististic especailly if you didn’t mind putting in long hours and dealing with the general public.

If your a CPA and making 100 k but you see that the sales people you are doing the accoutning for are earning 4 and 5 times what you are making it only seems smart to make the leep of faith that you can do it too. When the gravy train ends you still are a CPA. You just have a lot more money.

[Raybyrnes]

The people I know all worked extremely hard so they earned their keep. The environment just proved to be extremely opportunististic especailly if you didn’t mind putting in long hours and dealing with the general public.

If your a CPA and making 100 k but you see that the sales people you are doing the accoutning for are earning 4 and 5 times what you are making it only seems smart to make the leep of faith that you can do it too. When the gravy train ends you still are a CPA. You just have a lot more money.

[Raybyrnes]

The people I know all worked extremely hard so they earned their keep. The environment just proved to be extremely opportunististic especailly if you didn’t mind putting in long hours and dealing with the general public.

If your a CPA and making 100 k but you see that the sales people you are doing the accoutning for are earning 4 and 5 times what you are making it only seems smart to make the leep of faith that you can do it too. When the gravy train ends you still are a CPA. You just have a lot more money.

[Raybyrnes]

The people I know all worked extremely hard so they earned their keep. The environment just proved to be extremely opportunististic especailly if you didn’t mind putting in long hours and dealing with the general public.

If your a CPA and making 100 k but you see that the sales people you are doing the accoutning for are earning 4 and 5 times what you are making it only seems smart to make the leep of faith that you can do it too. When the gravy train ends you still are a CPA. You just have a lot more money.

[kewp]

Raybyrnes,

Thank you for proving my point. All of that was from the free money credit gravy train. The lenders have realized they will never be paid back and shut that spigot off.

Yeah, I’m making a few K a month shorting the idiots that lent your buddies money, but I’ll be damned if I invest the proceeds locally.

The weather is sure nice, tho!

[kewp]

Raybyrnes,

Thank you for proving my point. All of that was from the free money credit gravy train. The lenders have realized they will never be paid back and shut that spigot off.

Yeah, I’m making a few K a month shorting the idiots that lent your buddies money, but I’ll be damned if I invest the proceeds locally.

The weather is sure nice, tho!

[kewp]

Raybyrnes,

Thank you for proving my point. All of that was from the free money credit gravy train. The lenders have realized they will never be paid back and shut that spigot off.

Yeah, I’m making a few K a month shorting the idiots that lent your buddies money, but I’ll be damned if I invest the proceeds locally.

The weather is sure nice, tho!

[kewp]

Raybyrnes,

Thank you for proving my point. All of that was from the free money credit gravy train. The lenders have realized they will never be paid back and shut that spigot off.

Yeah, I’m making a few K a month shorting the idiots that lent your buddies money, but I’ll be damned if I invest the proceeds locally.

The weather is sure nice, tho!

[Raybyrnes]

There have been a number of area where people have made bank. In San Diego Many ot the qualcomm execs made bank in the early part of the decade. IF you were into selling Cell phones. that blew up in 2000, I now some car sales people who were making 250K giving away ford F-150’s with 0 per cent financing, Student Loan companies made a fortune around 2004, Subprime Loan providers were going strong up until 2006, credit card companies have been going strong over that same period. So I would argue there have bena number of ways you could have been making money.

[Raybyrnes]

There have been a number of area where people have made bank. In San Diego Many ot the qualcomm execs made bank in the early part of the decade. IF you were into selling Cell phones. that blew up in 2000, I now some car sales people who were making 250K giving away ford F-150’s with 0 per cent financing, Student Loan companies made a fortune around 2004, Subprime Loan providers were going strong up until 2006, credit card companies have been going strong over that same period. So I would argue there have bena number of ways you could have been making money.

[Raybyrnes]

There have been a number of area where people have made bank. In San Diego Many ot the qualcomm execs made bank in the early part of the decade. IF you were into selling Cell phones. that blew up in 2000, I now some car sales people who were making 250K giving away ford F-150’s with 0 per cent financing, Student Loan companies made a fortune around 2004, Subprime Loan providers were going strong up until 2006, credit card companies have been going strong over that same period. So I would argue there have bena number of ways you could have been making money.

[Raybyrnes]

There have been a number of area where people have made bank. In San Diego Many ot the qualcomm execs made bank in the early part of the decade. IF you were into selling Cell phones. that blew up in 2000, I now some car sales people who were making 250K giving away ford F-150’s with 0 per cent financing, Student Loan companies made a fortune around 2004, Subprime Loan providers were going strong up until 2006, credit card companies have been going strong over that same period. So I would argue there have bena number of ways you could have been making money.

[SD Realtor]

Kewp you still don’t get it so I will not address you anymore. You are obviously missing the point entirely. There is no gravy train I am referring to. What I am referring to is taking initiative. You have stated many a time about your recession proof position in higher education. That is great. Personally I live a life of little leverage and risk in exchange for lack of debt. However that decision that I have made will ultimately prevent me from achieving more extreme wealth.

If you want to piss on everyone for taking risk and making money and say, “I guess we will see how you all do when that gravy train gets derailed.” You are simply illustrating lack of comprehending the point. My gosh.

Ray, like I said, I think it is all in the wiring of each of us. What you said is correct and the affect of taxes and inflation bolster your argument even further. The fact that our system promotes that sort of methodology is something that more intelligent people take advantage of and excel in. Most of the people I have been referring to do EXACTLY what you are promoting and if anything I am more envious then anything else.

Again though, the majority of the population would not use the money that they didn’t plunk into a down payment to make more money, they use it to spend. The other issue I have a bit of exception with is as follows….

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

SD Realtor

[kewp]

All I’m saying is that given the *record* amount of foreclosures and personal bankruptcies (and getting worse) that people should be more cognizant of the risks involved with excessive leverage.

And really, the gravy train (easy credit/leverage) really is coming to a halt. No more NINJA loans, for example.

It’s perfectly reasonable to get ‘rich’, by anyones definition, with only a minimum of leverage. It just takes hard work and time.

Edit:Warren Buffet, probably the best investor of all time, on leverage:

Avoid leverage
The most dramatic way we protect ourselves is we don’t use leverage. We believe almost anything can happen in financial markets… [so] even smart people can get clobbered with leverage. It’s the one thing that can prevent you from playing out your hand.

[HLS]

The fact is that many people can still get approved with a back end debt ratio of 60% of their GROSS income…

I constantly tell people that just becuase they can get approved, doesn’t mean that they should buy a house…
esp when it’s cheaper to rent.

The spin marketing in America has led people to believe that renting is throwing money away. It’s sickening, propaganda brought to you by the NAR and builders assn.
“it’s always a great time to buy reale estate” (Barf)

There is a time when buying makes sense, but it’s still not that time in most areas of SD.

I have sent millions of dollars in loans away by telling people that I don’t think that they should buy, even when they are approved.

[HLS]

The fact is that many people can still get approved with a back end debt ratio of 60% of their GROSS income…

I constantly tell people that just becuase they can get approved, doesn’t mean that they should buy a house…
esp when it’s cheaper to rent.

The spin marketing in America has led people to believe that renting is throwing money away. It’s sickening, propaganda brought to you by the NAR and builders assn.
“it’s always a great time to buy reale estate” (Barf)

There is a time when buying makes sense, but it’s still not that time in most areas of SD.

I have sent millions of dollars in loans away by telling people that I don’t think that they should buy, even when they are approved.

[HLS]

The fact is that many people can still get approved with a back end debt ratio of 60% of their GROSS income…

I constantly tell people that just becuase they can get approved, doesn’t mean that they should buy a house…
esp when it’s cheaper to rent.

The spin marketing in America has led people to believe that renting is throwing money away. It’s sickening, propaganda brought to you by the NAR and builders assn.
“it’s always a great time to buy reale estate” (Barf)

There is a time when buying makes sense, but it’s still not that time in most areas of SD.

I have sent millions of dollars in loans away by telling people that I don’t think that they should buy, even when they are approved.

[HLS]

The fact is that many people can still get approved with a back end debt ratio of 60% of their GROSS income…

I constantly tell people that just becuase they can get approved, doesn’t mean that they should buy a house…
esp when it’s cheaper to rent.

The spin marketing in America has led people to believe that renting is throwing money away. It’s sickening, propaganda brought to you by the NAR and builders assn.
“it’s always a great time to buy reale estate” (Barf)

There is a time when buying makes sense, but it’s still not that time in most areas of SD.

I have sent millions of dollars in loans away by telling people that I don’t think that they should buy, even when they are approved.

[HLS]

The fact is that many people can still get approved with a back end debt ratio of 60% of their GROSS income…

I constantly tell people that just becuase they can get approved, doesn’t mean that they should buy a house…
esp when it’s cheaper to rent.

The spin marketing in America has led people to believe that renting is throwing money away. It’s sickening, propaganda brought to you by the NAR and builders assn.
“it’s always a great time to buy reale estate” (Barf)

There is a time when buying makes sense, but it’s still not that time in most areas of SD.

I have sent millions of dollars in loans away by telling people that I don’t think that they should buy, even when they are approved.

[kewp]

All I’m saying is that given the *record* amount of foreclosures and personal bankruptcies (and getting worse) that people should be more cognizant of the risks involved with excessive leverage.

And really, the gravy train (easy credit/leverage) really is coming to a halt. No more NINJA loans, for example.

It’s perfectly reasonable to get ‘rich’, by anyones definition, with only a minimum of leverage. It just takes hard work and time.

Edit:Warren Buffet, probably the best investor of all time, on leverage:

Avoid leverage
The most dramatic way we protect ourselves is we don’t use leverage. We believe almost anything can happen in financial markets… [so] even smart people can get clobbered with leverage. It’s the one thing that can prevent you from playing out your hand.

[kewp]

All I’m saying is that given the *record* amount of foreclosures and personal bankruptcies (and getting worse) that people should be more cognizant of the risks involved with excessive leverage.

And really, the gravy train (easy credit/leverage) really is coming to a halt. No more NINJA loans, for example.

It’s perfectly reasonable to get ‘rich’, by anyones definition, with only a minimum of leverage. It just takes hard work and time.

Edit:Warren Buffet, probably the best investor of all time, on leverage:

Avoid leverage
The most dramatic way we protect ourselves is we don’t use leverage. We believe almost anything can happen in financial markets… [so] even smart people can get clobbered with leverage. It’s the one thing that can prevent you from playing out your hand.

[kewp]

All I’m saying is that given the *record* amount of foreclosures and personal bankruptcies (and getting worse) that people should be more cognizant of the risks involved with excessive leverage.

And really, the gravy train (easy credit/leverage) really is coming to a halt. No more NINJA loans, for example.

It’s perfectly reasonable to get ‘rich’, by anyones definition, with only a minimum of leverage. It just takes hard work and time.

Edit:Warren Buffet, probably the best investor of all time, on leverage:

Avoid leverage
The most dramatic way we protect ourselves is we don’t use leverage. We believe almost anything can happen in financial markets… [so] even smart people can get clobbered with leverage. It’s the one thing that can prevent you from playing out your hand.

[kewp]

All I’m saying is that given the *record* amount of foreclosures and personal bankruptcies (and getting worse) that people should be more cognizant of the risks involved with excessive leverage.

And really, the gravy train (easy credit/leverage) really is coming to a halt. No more NINJA loans, for example.

It’s perfectly reasonable to get ‘rich’, by anyones definition, with only a minimum of leverage. It just takes hard work and time.

Edit:Warren Buffet, probably the best investor of all time, on leverage:

Avoid leverage
The most dramatic way we protect ourselves is we don’t use leverage. We believe almost anything can happen in financial markets… [so] even smart people can get clobbered with leverage. It’s the one thing that can prevent you from playing out your hand.

[an]

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

I think if the goal is to maximize the ROI but still minimize risk, purchasing a property to live in is still a good idea. With a fixed interest rate, you’re guarantee that your “rent” will not increase. So, as you keep on paying down your mortgage, you have 2 options, one is to completely pay it off. At that time, you’ll have no more mortgage payment. The other option would be to periodically refinanced to take out money to invest in other things, be it more RE or stock or whatever. If you only take out a small amount that would keep your mortgage payment unchanged, you can use that cheap money to invest and still get the tax benefit. Obviously, this plan is not as lucrative if interest rate is high. But at 5-6%, after tax write off, your basic cost of borrowing this money is 3-4%. That’s relatively cheap compare to other way of leveraging.

[Ranjan]

Thanks for all the inputs.

SD R,

My loan requirements are within confirming limits.

HLS, I just sent an email to you.

Thanks

[Ranjan]

Thanks for all the inputs.

SD R,

My loan requirements are within confirming limits.

HLS, I just sent an email to you.

Thanks

[Ranjan]

Thanks for all the inputs.

SD R,

My loan requirements are within confirming limits.

HLS, I just sent an email to you.

Thanks

[Ranjan]

Thanks for all the inputs.

SD R,

My loan requirements are within confirming limits.

HLS, I just sent an email to you.

Thanks

[Ranjan]

Thanks for all the inputs.

SD R,

My loan requirements are within confirming limits.

HLS, I just sent an email to you.

Thanks

[an]

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

I think if the goal is to maximize the ROI but still minimize risk, purchasing a property to live in is still a good idea. With a fixed interest rate, you’re guarantee that your “rent” will not increase. So, as you keep on paying down your mortgage, you have 2 options, one is to completely pay it off. At that time, you’ll have no more mortgage payment. The other option would be to periodically refinanced to take out money to invest in other things, be it more RE or stock or whatever. If you only take out a small amount that would keep your mortgage payment unchanged, you can use that cheap money to invest and still get the tax benefit. Obviously, this plan is not as lucrative if interest rate is high. But at 5-6%, after tax write off, your basic cost of borrowing this money is 3-4%. That’s relatively cheap compare to other way of leveraging.

[an]

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

I think if the goal is to maximize the ROI but still minimize risk, purchasing a property to live in is still a good idea. With a fixed interest rate, you’re guarantee that your “rent” will not increase. So, as you keep on paying down your mortgage, you have 2 options, one is to completely pay it off. At that time, you’ll have no more mortgage payment. The other option would be to periodically refinanced to take out money to invest in other things, be it more RE or stock or whatever. If you only take out a small amount that would keep your mortgage payment unchanged, you can use that cheap money to invest and still get the tax benefit. Obviously, this plan is not as lucrative if interest rate is high. But at 5-6%, after tax write off, your basic cost of borrowing this money is 3-4%. That’s relatively cheap compare to other way of leveraging.

[an]

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

I think if the goal is to maximize the ROI but still minimize risk, purchasing a property to live in is still a good idea. With a fixed interest rate, you’re guarantee that your “rent” will not increase. So, as you keep on paying down your mortgage, you have 2 options, one is to completely pay it off. At that time, you’ll have no more mortgage payment. The other option would be to periodically refinanced to take out money to invest in other things, be it more RE or stock or whatever. If you only take out a small amount that would keep your mortgage payment unchanged, you can use that cheap money to invest and still get the tax benefit. Obviously, this plan is not as lucrative if interest rate is high. But at 5-6%, after tax write off, your basic cost of borrowing this money is 3-4%. That’s relatively cheap compare to other way of leveraging.

[an]

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

I think if the goal is to maximize the ROI but still minimize risk, purchasing a property to live in is still a good idea. With a fixed interest rate, you’re guarantee that your “rent” will not increase. So, as you keep on paying down your mortgage, you have 2 options, one is to completely pay it off. At that time, you’ll have no more mortgage payment. The other option would be to periodically refinanced to take out money to invest in other things, be it more RE or stock or whatever. If you only take out a small amount that would keep your mortgage payment unchanged, you can use that cheap money to invest and still get the tax benefit. Obviously, this plan is not as lucrative if interest rate is high. But at 5-6%, after tax write off, your basic cost of borrowing this money is 3-4%. That’s relatively cheap compare to other way of leveraging.

[SD Realtor]

Kewp you still don’t get it so I will not address you anymore. You are obviously missing the point entirely. There is no gravy train I am referring to. What I am referring to is taking initiative. You have stated many a time about your recession proof position in higher education. That is great. Personally I live a life of little leverage and risk in exchange for lack of debt. However that decision that I have made will ultimately prevent me from achieving more extreme wealth.

If you want to piss on everyone for taking risk and making money and say, “I guess we will see how you all do when that gravy train gets derailed.” You are simply illustrating lack of comprehending the point. My gosh.

Ray, like I said, I think it is all in the wiring of each of us. What you said is correct and the affect of taxes and inflation bolster your argument even further. The fact that our system promotes that sort of methodology is something that more intelligent people take advantage of and excel in. Most of the people I have been referring to do EXACTLY what you are promoting and if anything I am more envious then anything else.

Again though, the majority of the population would not use the money that they didn’t plunk into a down payment to make more money, they use it to spend. The other issue I have a bit of exception with is as follows….

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

SD Realtor

[SD Realtor]

Kewp you still don’t get it so I will not address you anymore. You are obviously missing the point entirely. There is no gravy train I am referring to. What I am referring to is taking initiative. You have stated many a time about your recession proof position in higher education. That is great. Personally I live a life of little leverage and risk in exchange for lack of debt. However that decision that I have made will ultimately prevent me from achieving more extreme wealth.

If you want to piss on everyone for taking risk and making money and say, “I guess we will see how you all do when that gravy train gets derailed.” You are simply illustrating lack of comprehending the point. My gosh.

Ray, like I said, I think it is all in the wiring of each of us. What you said is correct and the affect of taxes and inflation bolster your argument even further. The fact that our system promotes that sort of methodology is something that more intelligent people take advantage of and excel in. Most of the people I have been referring to do EXACTLY what you are promoting and if anything I am more envious then anything else.

Again though, the majority of the population would not use the money that they didn’t plunk into a down payment to make more money, they use it to spend. The other issue I have a bit of exception with is as follows….

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

SD Realtor

[SD Realtor]

Kewp you still don’t get it so I will not address you anymore. You are obviously missing the point entirely. There is no gravy train I am referring to. What I am referring to is taking initiative. You have stated many a time about your recession proof position in higher education. That is great. Personally I live a life of little leverage and risk in exchange for lack of debt. However that decision that I have made will ultimately prevent me from achieving more extreme wealth.

If you want to piss on everyone for taking risk and making money and say, “I guess we will see how you all do when that gravy train gets derailed.” You are simply illustrating lack of comprehending the point. My gosh.

Ray, like I said, I think it is all in the wiring of each of us. What you said is correct and the affect of taxes and inflation bolster your argument even further. The fact that our system promotes that sort of methodology is something that more intelligent people take advantage of and excel in. Most of the people I have been referring to do EXACTLY what you are promoting and if anything I am more envious then anything else.

Again though, the majority of the population would not use the money that they didn’t plunk into a down payment to make more money, they use it to spend. The other issue I have a bit of exception with is as follows….

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

SD Realtor

[SD Realtor]

Kewp you still don’t get it so I will not address you anymore. You are obviously missing the point entirely. There is no gravy train I am referring to. What I am referring to is taking initiative. You have stated many a time about your recession proof position in higher education. That is great. Personally I live a life of little leverage and risk in exchange for lack of debt. However that decision that I have made will ultimately prevent me from achieving more extreme wealth.

If you want to piss on everyone for taking risk and making money and say, “I guess we will see how you all do when that gravy train gets derailed.” You are simply illustrating lack of comprehending the point. My gosh.

Ray, like I said, I think it is all in the wiring of each of us. What you said is correct and the affect of taxes and inflation bolster your argument even further. The fact that our system promotes that sort of methodology is something that more intelligent people take advantage of and excel in. Most of the people I have been referring to do EXACTLY what you are promoting and if anything I am more envious then anything else.

Again though, the majority of the population would not use the money that they didn’t plunk into a down payment to make more money, they use it to spend. The other issue I have a bit of exception with is as follows….

If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.

SD Realtor

[kewp]

Show me where I said anything about real estate.

Thats where everyone else made bank over the last decade. Your buddies equity didn’t come from a vacuum.

I guess we will see how you all do when that gravy train get derailed.

[kewp]

Show me where I said anything about real estate.

Thats where everyone else made bank over the last decade. Your buddies equity didn’t come from a vacuum.

I guess we will see how you all do when that gravy train get derailed.

[kewp]

Show me where I said anything about real estate.

Thats where everyone else made bank over the last decade. Your buddies equity didn’t come from a vacuum.

I guess we will see how you all do when that gravy train get derailed.

[kewp]

Show me where I said anything about real estate.

Thats where everyone else made bank over the last decade. Your buddies equity didn’t come from a vacuum.

I guess we will see how you all do when that gravy train get derailed.

[SD Realtor]

Kewp undortunately you missed my point entirely. Not only did I not have any intent to imply real estate investment, I don’t believe I mentioned it at all in my post. The people I know all made money by varying means from taking risks and opening businesses, forming investment syndicates, purchasing mobile home parks, starting private practices, tax lien investments, selling freeking hot dogs are fairs, all kinds of stuff. Some of these people did it on their own, some did it with investors, some took out equity to do it, most all of them didn’t pump a 30-40% downpayment into the home they live in. All of them took risk. Some failed, many did not. I am quite envious of all of them for taking the risk.

I guess I should have spelled it out more clearly.

Show me where I said anything about real estate. Sorry you didn’t really get what I was trying to say.

SD Realtor

[SD Realtor]

Kewp undortunately you missed my point entirely. Not only did I not have any intent to imply real estate investment, I don’t believe I mentioned it at all in my post. The people I know all made money by varying means from taking risks and opening businesses, forming investment syndicates, purchasing mobile home parks, starting private practices, tax lien investments, selling freeking hot dogs are fairs, all kinds of stuff. Some of these people did it on their own, some did it with investors, some took out equity to do it, most all of them didn’t pump a 30-40% downpayment into the home they live in. All of them took risk. Some failed, many did not. I am quite envious of all of them for taking the risk.

I guess I should have spelled it out more clearly.

Show me where I said anything about real estate. Sorry you didn’t really get what I was trying to say.

SD Realtor

[SD Realtor]

Kewp undortunately you missed my point entirely. Not only did I not have any intent to imply real estate investment, I don’t believe I mentioned it at all in my post. The people I know all made money by varying means from taking risks and opening businesses, forming investment syndicates, purchasing mobile home parks, starting private practices, tax lien investments, selling freeking hot dogs are fairs, all kinds of stuff. Some of these people did it on their own, some did it with investors, some took out equity to do it, most all of them didn’t pump a 30-40% downpayment into the home they live in. All of them took risk. Some failed, many did not. I am quite envious of all of them for taking the risk.

I guess I should have spelled it out more clearly.

Show me where I said anything about real estate. Sorry you didn’t really get what I was trying to say.

SD Realtor

[SD Realtor]

Kewp undortunately you missed my point entirely. Not only did I not have any intent to imply real estate investment, I don’t believe I mentioned it at all in my post. The people I know all made money by varying means from taking risks and opening businesses, forming investment syndicates, purchasing mobile home parks, starting private practices, tax lien investments, selling freeking hot dogs are fairs, all kinds of stuff. Some of these people did it on their own, some did it with investors, some took out equity to do it, most all of them didn’t pump a 30-40% downpayment into the home they live in. All of them took risk. Some failed, many did not. I am quite envious of all of them for taking the risk.

I guess I should have spelled it out more clearly.

Show me where I said anything about real estate. Sorry you didn’t really get what I was trying to say.

SD Realtor

[kewp]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there.

Watch the confirmation bias, SD. Btw, care to tell us how to use leverage to make a fortune in San Diego real-estate. In the current market?

I’m sure for everyone one of them there are a dozen (or more) bankrupt speculators. Or, at the very least, will soon be.

Yes, leverage works great on the upside. It works just as great when running in reverse, as millions of Americans are going to discover to their horror during the coming Great Unwinding.

But yes, you are right. Leverage is good when judiciously applied. I’m leveraged (a wee bit) on the short side of the collapsing housing bubble.

[kewp]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there.

Watch the confirmation bias, SD. Btw, care to tell us how to use leverage to make a fortune in San Diego real-estate. In the current market?

I’m sure for everyone one of them there are a dozen (or more) bankrupt speculators. Or, at the very least, will soon be.

Yes, leverage works great on the upside. It works just as great when running in reverse, as millions of Americans are going to discover to their horror during the coming Great Unwinding.

But yes, you are right. Leverage is good when judiciously applied. I’m leveraged (a wee bit) on the short side of the collapsing housing bubble.

[kewp]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there.

Watch the confirmation bias, SD. Btw, care to tell us how to use leverage to make a fortune in San Diego real-estate. In the current market?

I’m sure for everyone one of them there are a dozen (or more) bankrupt speculators. Or, at the very least, will soon be.

Yes, leverage works great on the upside. It works just as great when running in reverse, as millions of Americans are going to discover to their horror during the coming Great Unwinding.

But yes, you are right. Leverage is good when judiciously applied. I’m leveraged (a wee bit) on the short side of the collapsing housing bubble.

[kewp]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there.

Watch the confirmation bias, SD. Btw, care to tell us how to use leverage to make a fortune in San Diego real-estate. In the current market?

I’m sure for everyone one of them there are a dozen (or more) bankrupt speculators. Or, at the very least, will soon be.

Yes, leverage works great on the upside. It works just as great when running in reverse, as millions of Americans are going to discover to their horror during the coming Great Unwinding.

But yes, you are right. Leverage is good when judiciously applied. I’m leveraged (a wee bit) on the short side of the collapsing housing bubble.

[SD Realtor]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there. The other method beyond leverage has been to get other investors. Mind you, this is not I have a million dollar home and work as an engineer money. This is more like, I don’t really need to work anymore sort of money. I would not argue your facts in a minute Ray because they make perfect sense.

Alternately I am kind of a shmuck… I make good money but work a 9 to 5 job and have a brokerage AND my wife works her business as well. Any person of wealth looks at me and laughs because to work that hard is pretty stupid considering what I make. At the end of the day when I do buy my home, every grain of financial sense would say not to use the pile of coin I have saved up for that. It would make much more sense to use maybe half of it and then use the rest for other investments etc… Yet I am a and will always be one of those types who just sleeps better at night with as little leverage as possible. I think it is buried within our personalities.

Those who are willing to take more risk will always always always be more successful then those of us who are not. In all paths of life. Yet that comet of risky people also has a tail of flotsam of those that didn’t make it. Still, deep down I do agree with your premise.

I will say that with that risky behavior and chutzpah, intelligence is needed. Therein lies the problem. By far, by very very far, that intelligence just is not present in the vast majority of the population. Basically they are idiots and leverage to the hilt simply to spend more, not to make more.

SD Realtor

[SD Realtor]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there. The other method beyond leverage has been to get other investors. Mind you, this is not I have a million dollar home and work as an engineer money. This is more like, I don’t really need to work anymore sort of money. I would not argue your facts in a minute Ray because they make perfect sense.

Alternately I am kind of a shmuck… I make good money but work a 9 to 5 job and have a brokerage AND my wife works her business as well. Any person of wealth looks at me and laughs because to work that hard is pretty stupid considering what I make. At the end of the day when I do buy my home, every grain of financial sense would say not to use the pile of coin I have saved up for that. It would make much more sense to use maybe half of it and then use the rest for other investments etc… Yet I am a and will always be one of those types who just sleeps better at night with as little leverage as possible. I think it is buried within our personalities.

Those who are willing to take more risk will always always always be more successful then those of us who are not. In all paths of life. Yet that comet of risky people also has a tail of flotsam of those that didn’t make it. Still, deep down I do agree with your premise.

I will say that with that risky behavior and chutzpah, intelligence is needed. Therein lies the problem. By far, by very very far, that intelligence just is not present in the vast majority of the population. Basically they are idiots and leverage to the hilt simply to spend more, not to make more.

SD Realtor

[SD Realtor]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there. The other method beyond leverage has been to get other investors. Mind you, this is not I have a million dollar home and work as an engineer money. This is more like, I don’t really need to work anymore sort of money. I would not argue your facts in a minute Ray because they make perfect sense.

Alternately I am kind of a shmuck… I make good money but work a 9 to 5 job and have a brokerage AND my wife works her business as well. Any person of wealth looks at me and laughs because to work that hard is pretty stupid considering what I make. At the end of the day when I do buy my home, every grain of financial sense would say not to use the pile of coin I have saved up for that. It would make much more sense to use maybe half of it and then use the rest for other investments etc… Yet I am a and will always be one of those types who just sleeps better at night with as little leverage as possible. I think it is buried within our personalities.

Those who are willing to take more risk will always always always be more successful then those of us who are not. In all paths of life. Yet that comet of risky people also has a tail of flotsam of those that didn’t make it. Still, deep down I do agree with your premise.

I will say that with that risky behavior and chutzpah, intelligence is needed. Therein lies the problem. By far, by very very far, that intelligence just is not present in the vast majority of the population. Basically they are idiots and leverage to the hilt simply to spend more, not to make more.

SD Realtor

[SD Realtor]

Pretty much everyone I know who has money, in fact has used leverage in one form or another to get there. The other method beyond leverage has been to get other investors. Mind you, this is not I have a million dollar home and work as an engineer money. This is more like, I don’t really need to work anymore sort of money. I would not argue your facts in a minute Ray because they make perfect sense.

Alternately I am kind of a shmuck… I make good money but work a 9 to 5 job and have a brokerage AND my wife works her business as well. Any person of wealth looks at me and laughs because to work that hard is pretty stupid considering what I make. At the end of the day when I do buy my home, every grain of financial sense would say not to use the pile of coin I have saved up for that. It would make much more sense to use maybe half of it and then use the rest for other investments etc… Yet I am a and will always be one of those types who just sleeps better at night with as little leverage as possible. I think it is buried within our personalities.

Those who are willing to take more risk will always always always be more successful then those of us who are not. In all paths of life. Yet that comet of risky people also has a tail of flotsam of those that didn’t make it. Still, deep down I do agree with your premise.

I will say that with that risky behavior and chutzpah, intelligence is needed. Therein lies the problem. By far, by very very far, that intelligence just is not present in the vast majority of the population. Basically they are idiots and leverage to the hilt simply to spend more, not to make more.

SD Realtor

[Raybyrnes]

raptorduck

Hopefully you did not take my psot to poke fun at your strategy but by all accoutns i would think most financial advisors would suggest it to be somewhat of a inopportunistic way of investing your capital.

I say this because while some may look at the interest rate adn deduction with respect to a loan I look at this relative to the loads on Great Mutual fund families. I will use the exmple of The American Funds. Most of their funds carry a front end load of 5.75%. But as you use your Rights of Accumulation (Breakpoint for dollar amounts invested) thes costs go down dramatically.

So when i look at a million dollar purchase (or more in your instance) and consider the difference between putting 20% down vs 35% that difference could be substantial with respect to potential break points that could be earned with a minimal amount of money management.

My question for you is whether or not you advisors are sort of in the same camp as me with respect to utilizing your cash or are they the ones suggestig to put the money down on the home?

[Raybyrnes]

raptorduck

Hopefully you did not take my psot to poke fun at your strategy but by all accoutns i would think most financial advisors would suggest it to be somewhat of a inopportunistic way of investing your capital.

I say this because while some may look at the interest rate adn deduction with respect to a loan I look at this relative to the loads on Great Mutual fund families. I will use the exmple of The American Funds. Most of their funds carry a front end load of 5.75%. But as you use your Rights of Accumulation (Breakpoint for dollar amounts invested) thes costs go down dramatically.

So when i look at a million dollar purchase (or more in your instance) and consider the difference between putting 20% down vs 35% that difference could be substantial with respect to potential break points that could be earned with a minimal amount of money management.

My question for you is whether or not you advisors are sort of in the same camp as me with respect to utilizing your cash or are they the ones suggestig to put the money down on the home?

[Raybyrnes]

raptorduck

Hopefully you did not take my psot to poke fun at your strategy but by all accoutns i would think most financial advisors would suggest it to be somewhat of a inopportunistic way of investing your capital.

I say this because while some may look at the interest rate adn deduction with respect to a loan I look at this relative to the loads on Great Mutual fund families. I will use the exmple of The American Funds. Most of their funds carry a front end load of 5.75%. But as you use your Rights of Accumulation (Breakpoint for dollar amounts invested) thes costs go down dramatically.

So when i look at a million dollar purchase (or more in your instance) and consider the difference between putting 20% down vs 35% that difference could be substantial with respect to potential break points that could be earned with a minimal amount of money management.

My question for you is whether or not you advisors are sort of in the same camp as me with respect to utilizing your cash or are they the ones suggestig to put the money down on the home?

[Raybyrnes]

raptorduck

Hopefully you did not take my psot to poke fun at your strategy but by all accoutns i would think most financial advisors would suggest it to be somewhat of a inopportunistic way of investing your capital.

I say this because while some may look at the interest rate adn deduction with respect to a loan I look at this relative to the loads on Great Mutual fund families. I will use the exmple of The American Funds. Most of their funds carry a front end load of 5.75%. But as you use your Rights of Accumulation (Breakpoint for dollar amounts invested) thes costs go down dramatically.

So when i look at a million dollar purchase (or more in your instance) and consider the difference between putting 20% down vs 35% that difference could be substantial with respect to potential break points that could be earned with a minimal amount of money management.

My question for you is whether or not you advisors are sort of in the same camp as me with respect to utilizing your cash or are they the ones suggestig to put the money down on the home?

[raptorduck]

Raybyrnes. I have great financial advisors, but at the end of the day I take advice from me. Frankly, now that I am where I am, I am much more conservative. I don’t need to leverage my money/income. I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything. And, eventually, I intend to carry no more than the maximum mortgage I can get a tax benifit from ($1M).

It is just how I like to live. Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. There are so many wealthy people in the world, but only a minority of them are finacially independent. I still consider myself a slave to my job, but I am getting there. I could “look” richer I suppose, but I would be less financially independent to get there. That is not where I want to go.

I am not rich, but rich enough for my taste. My wealth is growing despite my contrarian non-leveraged stance. That is good enough for me.

If I find an arbitrage opportunity, I do take it, but I don’t look for one.

I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

Before long, you have become quite successful at being a poor ignoramus.

[raptorduck]

Raybyrnes. I have great financial advisors, but at the end of the day I take advice from me. Frankly, now that I am where I am, I am much more conservative. I don’t need to leverage my money/income. I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything. And, eventually, I intend to carry no more than the maximum mortgage I can get a tax benifit from ($1M).

It is just how I like to live. Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. There are so many wealthy people in the world, but only a minority of them are finacially independent. I still consider myself a slave to my job, but I am getting there. I could “look” richer I suppose, but I would be less financially independent to get there. That is not where I want to go.

I am not rich, but rich enough for my taste. My wealth is growing despite my contrarian non-leveraged stance. That is good enough for me.

If I find an arbitrage opportunity, I do take it, but I don’t look for one.

I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

Before long, you have become quite successful at being a poor ignoramus.

[raptorduck]

Raybyrnes. I have great financial advisors, but at the end of the day I take advice from me. Frankly, now that I am where I am, I am much more conservative. I don’t need to leverage my money/income. I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything. And, eventually, I intend to carry no more than the maximum mortgage I can get a tax benifit from ($1M).

It is just how I like to live. Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. There are so many wealthy people in the world, but only a minority of them are finacially independent. I still consider myself a slave to my job, but I am getting there. I could “look” richer I suppose, but I would be less financially independent to get there. That is not where I want to go.

I am not rich, but rich enough for my taste. My wealth is growing despite my contrarian non-leveraged stance. That is good enough for me.

If I find an arbitrage opportunity, I do take it, but I don’t look for one.

I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

Before long, you have become quite successful at being a poor ignoramus.

[raptorduck]

Raybyrnes. I have great financial advisors, but at the end of the day I take advice from me. Frankly, now that I am where I am, I am much more conservative. I don’t need to leverage my money/income. I am almost a cash n carry kind of guy now. I carry absolutely no debt other than a mortgage. I pay cash for cars, vacations, furniture, electronics, everything. And, eventually, I intend to carry no more than the maximum mortgage I can get a tax benifit from ($1M).

It is just how I like to live. Without worriying about paying a debt and having enough $$ in the bank to pay off all debt, and have enough left over to be jobless if I needed to be and still maintain my lifestyle. There are so many wealthy people in the world, but only a minority of them are finacially independent. I still consider myself a slave to my job, but I am getting there. I could “look” richer I suppose, but I would be less financially independent to get there. That is not where I want to go.

I am not rich, but rich enough for my taste. My wealth is growing despite my contrarian non-leveraged stance. That is good enough for me.

If I find an arbitrage opportunity, I do take it, but I don’t look for one.

I am the kind of guy who has always strived to be the dumbest person in the room, the poorest in the neighborhood, and the lowest paid in my job. As you get smarter, more successful and richer, you have to try harder to surround yourself with people smarter, more successful, and richer than you.

Before long, you have become quite successful at being a poor ignoramus.

[Raybyrnes]

raptorduck

I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.

[Raybyrnes]

raptorduck

I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.

[Raybyrnes]

raptorduck

I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.

[Raybyrnes]

raptorduck

I am a little confused as to why somone with a good deal of wealth would put any more than the minimum amount down on a home that would qualify him for the best possible rate. WWith substantial amount of wealth I would have to assume that you have a Good financial advisor. What have they suggested about doing this? Just doesn’t seem to make a lot of sense to me.

[raptorduck]

I don’t think this is a bad thing at all. It will help people have some cushion for a further drop in the market and not stretch to get into homes, which contributed to the current crises.

What I have set aside for a maximum contribution for a down payment dictates the max house I can buy. The minimum I am going to put down is 20% and the most likely down based on the prices of homes on my short list is between 25%-30% down.

Of course, I have this thing that I overpay into my mortgage principal for a few years until I have 70% equity.

[raptorduck]

I don’t think this is a bad thing at all. It will help people have some cushion for a further drop in the market and not stretch to get into homes, which contributed to the current crises.

What I have set aside for a maximum contribution for a down payment dictates the max house I can buy. The minimum I am going to put down is 20% and the most likely down based on the prices of homes on my short list is between 25%-30% down.

Of course, I have this thing that I overpay into my mortgage principal for a few years until I have 70% equity.

[raptorduck]

I don’t think this is a bad thing at all. It will help people have some cushion for a further drop in the market and not stretch to get into homes, which contributed to the current crises.

What I have set aside for a maximum contribution for a down payment dictates the max house I can buy. The minimum I am going to put down is 20% and the most likely down based on the prices of homes on my short list is between 25%-30% down.

Of course, I have this thing that I overpay into my mortgage principal for a few years until I have 70% equity.

[raptorduck]

I don’t think this is a bad thing at all. It will help people have some cushion for a further drop in the market and not stretch to get into homes, which contributed to the current crises.

What I have set aside for a maximum contribution for a down payment dictates the max house I can buy. The minimum I am going to put down is 20% and the most likely down based on the prices of homes on my short list is between 25%-30% down.

Of course, I have this thing that I overpay into my mortgage principal for a few years until I have 70% equity.

[SD Realtor]

Hi Ranjan –

If that is what they are doing then so be it. The exposure that they have had to the downside may be coming to haunt them and they must strap up hard to move their paper. (which is not a bad thing by the way)

However (and unfortunately) there are still many vehicles out there for low downpayments. The loosening (aka stimulus package) really stinks (at least for me as someone who has been a prudent buyer and do not believe that people should buy a home heavily financed) and allows some serious FHA financing packages that enable heavy financing with little down.

SD Realtor

[SD Realtor]

Hi Ranjan –

If that is what they are doing then so be it. The exposure that they have had to the downside may be coming to haunt them and they must strap up hard to move their paper. (which is not a bad thing by the way)

However (and unfortunately) there are still many vehicles out there for low downpayments. The loosening (aka stimulus package) really stinks (at least for me as someone who has been a prudent buyer and do not believe that people should buy a home heavily financed) and allows some serious FHA financing packages that enable heavy financing with little down.

SD Realtor

[SD Realtor]

Hi Ranjan –

If that is what they are doing then so be it. The exposure that they have had to the downside may be coming to haunt them and they must strap up hard to move their paper. (which is not a bad thing by the way)

However (and unfortunately) there are still many vehicles out there for low downpayments. The loosening (aka stimulus package) really stinks (at least for me as someone who has been a prudent buyer and do not believe that people should buy a home heavily financed) and allows some serious FHA financing packages that enable heavy financing with little down.

SD Realtor

[SD Realtor]

Hi Ranjan –

If that is what they are doing then so be it. The exposure that they have had to the downside may be coming to haunt them and they must strap up hard to move their paper. (which is not a bad thing by the way)

However (and unfortunately) there are still many vehicles out there for low downpayments. The loosening (aka stimulus package) really stinks (at least for me as someone who has been a prudent buyer and do not believe that people should buy a home heavily financed) and allows some serious FHA financing packages that enable heavy financing with little down.

SD Realtor

[Ranjan]

SD R,

I heard it from wells Fargo.

[Ranjan]

SD R,

I heard it from wells Fargo.

[Ranjan]

SD R,

I heard it from wells Fargo.

[Ranjan]

SD R,

I heard it from wells Fargo.

[murf2222]

I’m having a case of brain constipation…….

The *pre-stimulus pkg* conforming limit of $417,000 means that you don’t need mortgage insurance for a loan under that amount right?

I’m forgetting the ramifications of a dwn payment of less than 20%…..wasn’t it related to the conforming limit? Or was it something else entirely?

[nostradamus]

The $417k is the amount the gov. would guarantee the loan for. Anything above that is a jumbo loan.

Less than 20% down means you pay PMI.

[Ranjan]

why putting 10% down is such a bad thing?
The bank should be looking at documented income, assets and credit standing of the person they are issuing loan to.

They got over-powered by greed, over-looked the basics and paid the price. Why should they vent it out on the disciplined and fiscally responsible citizens?

One could manage to put down 20% but may be willing to put 10% only. He/She can have other 10% in a form that’s easily usable for other purposes.

Does anyone have HLS’s email id?Would appreciate.

Thanks

Thanks

[patientrenter]

Ranjan, requiring 10% down is only a very small protection for the (ultimate) lender in a non-recourse purchase loan state like CA facing major and persistent price declines. Credit scores, and wealth in other assets, mean even less. About all that protects the lenders in a market in major decline is the borrower’s downpayment, and a 10% downpayment is less than the projected one-year decline in home prices in most CA markets. It’s so small it’s a joke.

Consider this situation: Someone buys a $1 million house now with 10% down, so the ultimate lenders put up $900,000. In 3 years time the house is sold for $600,000. How do the lenders get their $900,000 back? They don’t of course, regardless of the credit or other assets of the borrower. No matter who the (non-recourse state) borrower is, the lenders get back just $600,000 less the sale expenses, and take a massive loss.

In my example, which isn’t too outlandish, the lenders would have to have received annual interest of $100,000 in excess of the Treasury rate for 3 years in order to be compensated for their $300,000 loss at the future foreclosure, ignoring their foreclosure and other costs. That’s 11.11% extra interest annually over and above the risk-free rate! Clearly, lenders still are not charging anything even close to the interest rates required to justify 10% downpayments. Before now, the lenders were all pricing in never-ending home price inflation. Now they are all pricing in huge government bailouts.

Patient renter in OC

[SD Realtor]

Patientrenter you bring up very good points.

Ranjan there is nothing “wrong” with only putting 10% down. The point that is being made is that from a market perspective, lax lending standards and risk prone financing ultimately leads to inflation of the security which then leads to bubbles which produces an unhealthy market. While you may be a very responsible person the fact is that most people cannot control themselves. We are a nation of consumers who really know very little about living within our means. It is a behavior that is promoted by pretty much every entity in our society and not only encouraged but essentially rewarded by our government.

Now while pretty much everyone here frowns on people who are looking to buy now, it may be argued that we are approaching a point where low downpayments and low interest rates are going to disappear. When that will happen or if that will happen is up to speculation. It sounds like you are on the cusp of buying. If you look at past posts you should be able to dig up HLS’s email. Also your Realtor should have many broker contacts who can find loan programs that will match your needs.

Good luck!

[raptorduck]

Wow, the house I could buy with only 5% or 10% down. But I don’t think one should buy what a bank will “let” him or her buy. A credit card company will also “let” you run up a huge amount of debt and then watch your little teaser rate dissapper as they lock you into their “standard” high rates.

People should buy what the can buy comfortably, without worrying about appreciation and depreciation. In this market, I consider a 20% down as a break even down from an appreciation standpoint. 30% for me is ideal, which is why I am pushing my wife to buy a home at a price where we can put in 30% down from our downpayment fund. If you put 30% down, you won’t worry about the market continuing to tumble so much, particularly if you are buying a long term home and don’t look at your home as either an investment or a supply of home equity funds to fund your lifestyle.

That is why I am a buyer right now. We need a new house, plain and simple. I am keeping an eye on the market to get the best price. After I buy, well I will keep an eye on the market up here until I sell my current house, or keep it and rent it out. After that, perhaps curiousity will keep my interest, perhaps not.

We could go for 5% or 10% down and buy almost twice as much house. But the payments go up too, and even though we could “technically” afford that as far as the bank is concerned, and even though it is a long term purchase, you never know what life brings and planning for a rainy day is not a bad thing. It gets you peace of mind. There are folks I expect, who bought at the peak, and are not stressing because they put so much down, they still have positive equity.

My current home has lost 10% value in two years, but I bought 8 yrs ago with a big down. So while I wish it were worth more so I could get more $$ out of it, I am not stressed about it.

The great thing about living below your means, is that you don’t stress about money, can help those you care about when they are in financial distress, can give away a larger part of your income to charity, which adds greatly to ones happiness and sense of community, and are prepared for that rainy day or unpleasent surprise. Financial stress is a life shortning thing and interferes its enjoyment. I have been there, I remember. It was self inflicted and I realized I am not a masochist, so I stopped.

[wawawa]

These are some of the affiliates of Wells Fargo and as you can see all loans require 20% down.

http://www.linearfinancial.com/loans/default.asp

http://www.pardeehomeloans.com/dailyrate/default.asp

[vagabondo]

those links appear to be just examples for payment calculations. i am a past wf customer and seem to remember that this is the default used for budgeting. the actual wf site allows you to play with the down payment % for payment calc purposes.

[renterclint]

It seems like the discussion of whether 20% down payment should be mandatory comes up a lot.

I used to be adamantly opposed to requiring 20% down for borrowers with good credit. Mainly because it would take a lot of years to save up 20% of the median home price in SD. That basically means you have to come up with at least $100k, which seems impossible for a first time home-buyer to save up. Instead of young couples looking to buy their first starter home, we would have middle-aged folks entering the market for the first time b/c that’s how long it would take to save that kind of $$$.

After seeing the bank I work for get hammered by 80/20 loan products, I am starting to come around. The banks are just taking on too much risk with no committment from the borrower. It is just too easy for people to walk away. Even piggington folks like 23109VC seriously consider walking away (see his post: “Harveston down the drain”).

It really frustrates me that I have a professional degree w/ decent pay & still can’t come close to buying a house in my own hometown. In the late 70’s, my father-in-law bought a brand new home in a shiney new Mira Mesa for $30k. He was a 2nd year enlisted man in the coast guard, and could buy a home here! The price was 3x his annual salary.

My Dad bought our Poway home in ’86 for $85k & he was a machinist for Ryan Aero making about $40k w/OT at the time. The house was barely more than 2x his annual salary.

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

I like to think tightening lending standards (like 20% down), although making things really ugly in the short-term, would bring the affordability of San Diego back to reality some day.

[SD Realtor]

Just trying to get back to the original posters message. I spoke to a mortgage broker today who said she has a 100% financed loan for her buyers through Wells Fargo. I told her that I heard from someone that Wells was doing only 20% down loans and she said that is not true for conforming loans. She said that for conforming loans Wells still does have a 100% financing option.

Now that the conforming loan limits are going up, that may indeed help people like Ranjan.

Ranjan please comment if you can. Was your post for a loan above the conforming limit?

********

Please do not confuse this post of mine with being bullish or telling people to buy now… yada yada yada…

As always I am just trying to post facts that I dig up. (Except when I say “this is a speculative comment or an opinion”)

SD Realtor

ps – Yes I would much rather have tighter lending standards as well guys.

[blahblahblah]

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

This is happening because people can buy with less than 20% down. What happened is that, through deregulation of the banking industry and securitization of home loans, the barrier to market entry was lowered significantly, drastically increasing the number of participants. Supply held relatively constant, prices have nowhere to go but up. 20% down should be the rule of the land but it’s probably never coming back. Instead we will get this weird socialized debt system, where those willing to go most into debt are subsidized by those who save and live within their means. Like the economy of the old Soviet Union, it is an ideologically-based system — those with the most faith in the glory of the “free” market will borrow the most and overextend themselves because they’re sure everything will work out in the end. When it doesn’t, those of us who are ideologically unfaithful (i.e., save our money and live within our means) get punished with higher taxes for bailouts and deflation of our money through currency debasement . In the end of course, the market is completely rigged and anything but “free”, but those faithful to the prevailing ideology (borrow and spend as much as possible) are rewarded with big fancy custom homes and new BMWs while the rest of us live in apartments and drive 10-year-old Hondas.

Depressing, isn’t it?

[SD Realtor]

Yes very depressing.

[kewp]

CONCHO,

The Soviet Union also went bankrupt and collapsed.

The credit crunch/deflation is already happening and nothing can stop it. I can’t borrow a 800k with no money down if no one will lend it. I can’t even service the debt I have if I lose my job. Thats where we are now and its only getting worse in the future.

House prices are going down, unemployment is going up and those of us that are prepared will ultimately be rewarded.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

[blahblahblah]

The Soviet Union also went bankrupt and collapsed.

Not before the supermarket shelves were empty and people were growing vegetables on their balconies to stay alive. If we’re going down that road (which I’m afraid we are), this thing is just getting started. The endgame of an ideologically-driven economic collapse is very, very ugly. You have starvation, freezing to death, things like that. Things are still quite nice here. We could go downhill on this path for another 50 years.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

Hey, I don’t like it either! I said in my post we should require 20% down! I am after all one of the ideologically unfaithful, renting a place, driving an old car, paying off my credit cards every month and saving my spare American pesos in the bank. I’m just calling it like I see it. I realize that people like me are not the norm and in fact are hated and despised by the society at large. Remember that outside of the public sector, our society manufactures very little. Most people with middle-class jobs outside of the government or defense contracting are involved in the shuffling of money from one place to another, the charging of fees, etc… People like me don’t put any sheckles in their pockets so they will try to minimize our influence. They want everyone borrowing, paying late fees, paying refinancing fees from here to eternity. That’s how they pay their mortgages. It’s a grand con and I am not participating. Unfortunately people like me are in the minority and our numbers are destined to diminish year by year until the inevitable collapse finally comes.

[CMcG]

On the subject of down payments…I was reading Ben’s blog this morning and he quoted from an article about a Bay Area woman who saved up 20 percent for a down payment so she could buy a home in the $1 million range. Lender after lender has been telling her, “Nope. We want 45% down.” Wow!

[blahblahblah]

Lender after lender has been telling her, “Nope. We want 45% down.”

Awesome, that says that they expect that it is at least possible that the property will decline $450K in value. Sounds like they may be planning on carrying this mortgage instead of securitizing it. If we can avoid the government bailouts and put an end to the securitization so that banks have to carry these loans we will see normal prices return. Otherwise it’s just gonna keep on going — until it can’t any more…

[drunkle]

i dont understand how securitization of loans was a socialist experiment. the sale of debts seems to me to be the epitome of capitalism. that unregulated capitalism is the reason we are here today and not vice versa.

[blahblahblah]

i dont understand how securitization of loans was a socialist experiment.

It wasn’t. Like you said, securitization of mortgage debt and the fraudulent rating thereof was unregulated capitalism. The socialism will come in the endgame, when unregulated capitalism produces the predictable disastrous outcome — in this case a massive wave of foreclosures. The government will either print money to deflate the value of these debts as well as their own (stealing the savings from those who have it, a “stealth” tax as it were), or by simply purchasing the bad loans and then renegotiating the terms with the borrowers to allow them to stay in their houses. There are tons of plans floating around now, but all of them will involve a transfer of wealth from those who have it to those who don’t.

A similar thing happened under FDR in the 1930s after another disastrous episode of unregulated capitalism run amok. The answer then was massive public works projects, social security, etc…

Long story short, if you don’t like socialism then make sure your capitalist system is well-regulated. Otherwise, that’s exactly what you’re going to end up with when the wheels come off the ponzi scheme and the unwashed masses demand reparations. In the 1920s it was stocks, this time it was houses.

[drunkle]

ok, i see. you said that we *will* get “a weird socialized system” and not that that’s what we had.

frankly, the term “socialism” has become so distorted and stigmatized that it’s meaningless and should just be avoided. whether or not anyone wants to admit it, america is a socialist country.

[drunkle]

ok, i see. you said that we *will* get “a weird socialized system” and not that that’s what we had.

frankly, the term “socialism” has become so distorted and stigmatized that it’s meaningless and should just be avoided. whether or not anyone wants to admit it, america is a socialist country.

[drunkle]

ok, i see. you said that we *will* get “a weird socialized system” and not that that’s what we had.

frankly, the term “socialism” has become so distorted and stigmatized that it’s meaningless and should just be avoided. whether or not anyone wants to admit it, america is a socialist country.

[drunkle]

ok, i see. you said that we *will* get “a weird socialized system” and not that that’s what we had.

frankly, the term “socialism” has become so distorted and stigmatized that it’s meaningless and should just be avoided. whether or not anyone wants to admit it, america is a socialist country.

[drunkle]

ok, i see. you said that we *will* get “a weird socialized system” and not that that’s what we had.

frankly, the term “socialism” has become so distorted and stigmatized that it’s meaningless and should just be avoided. whether or not anyone wants to admit it, america is a socialist country.

[blahblahblah]

i dont understand how securitization of loans was a socialist experiment.

It wasn’t. Like you said, securitization of mortgage debt and the fraudulent rating thereof was unregulated capitalism. The socialism will come in the endgame, when unregulated capitalism produces the predictable disastrous outcome — in this case a massive wave of foreclosures. The government will either print money to deflate the value of these debts as well as their own (stealing the savings from those who have it, a “stealth” tax as it were), or by simply purchasing the bad loans and then renegotiating the terms with the borrowers to allow them to stay in their houses. There are tons of plans floating around now, but all of them will involve a transfer of wealth from those who have it to those who don’t.

A similar thing happened under FDR in the 1930s after another disastrous episode of unregulated capitalism run amok. The answer then was massive public works projects, social security, etc…

Long story short, if you don’t like socialism then make sure your capitalist system is well-regulated. Otherwise, that’s exactly what you’re going to end up with when the wheels come off the ponzi scheme and the unwashed masses demand reparations. In the 1920s it was stocks, this time it was houses.

[blahblahblah]

i dont understand how securitization of loans was a socialist experiment.

It wasn’t. Like you said, securitization of mortgage debt and the fraudulent rating thereof was unregulated capitalism. The socialism will come in the endgame, when unregulated capitalism produces the predictable disastrous outcome — in this case a massive wave of foreclosures. The government will either print money to deflate the value of these debts as well as their own (stealing the savings from those who have it, a “stealth” tax as it were), or by simply purchasing the bad loans and then renegotiating the terms with the borrowers to allow them to stay in their houses. There are tons of plans floating around now, but all of them will involve a transfer of wealth from those who have it to those who don’t.

A similar thing happened under FDR in the 1930s after another disastrous episode of unregulated capitalism run amok. The answer then was massive public works projects, social security, etc…

Long story short, if you don’t like socialism then make sure your capitalist system is well-regulated. Otherwise, that’s exactly what you’re going to end up with when the wheels come off the ponzi scheme and the unwashed masses demand reparations. In the 1920s it was stocks, this time it was houses.

[blahblahblah]

i dont understand how securitization of loans was a socialist experiment.

It wasn’t. Like you said, securitization of mortgage debt and the fraudulent rating thereof was unregulated capitalism. The socialism will come in the endgame, when unregulated capitalism produces the predictable disastrous outcome — in this case a massive wave of foreclosures. The government will either print money to deflate the value of these debts as well as their own (stealing the savings from those who have it, a “stealth” tax as it were), or by simply purchasing the bad loans and then renegotiating the terms with the borrowers to allow them to stay in their houses. There are tons of plans floating around now, but all of them will involve a transfer of wealth from those who have it to those who don’t.

A similar thing happened under FDR in the 1930s after another disastrous episode of unregulated capitalism run amok. The answer then was massive public works projects, social security, etc…

Long story short, if you don’t like socialism then make sure your capitalist system is well-regulated. Otherwise, that’s exactly what you’re going to end up with when the wheels come off the ponzi scheme and the unwashed masses demand reparations. In the 1920s it was stocks, this time it was houses.

[blahblahblah]

i dont understand how securitization of loans was a socialist experiment.

It wasn’t. Like you said, securitization of mortgage debt and the fraudulent rating thereof was unregulated capitalism. The socialism will come in the endgame, when unregulated capitalism produces the predictable disastrous outcome — in this case a massive wave of foreclosures. The government will either print money to deflate the value of these debts as well as their own (stealing the savings from those who have it, a “stealth” tax as it were), or by simply purchasing the bad loans and then renegotiating the terms with the borrowers to allow them to stay in their houses. There are tons of plans floating around now, but all of them will involve a transfer of wealth from those who have it to those who don’t.

A similar thing happened under FDR in the 1930s after another disastrous episode of unregulated capitalism run amok. The answer then was massive public works projects, social security, etc…

Long story short, if you don’t like socialism then make sure your capitalist system is well-regulated. Otherwise, that’s exactly what you’re going to end up with when the wheels come off the ponzi scheme and the unwashed masses demand reparations. In the 1920s it was stocks, this time it was houses.

[drunkle]

i dont understand how securitization of loans was a socialist experiment. the sale of debts seems to me to be the epitome of capitalism. that unregulated capitalism is the reason we are here today and not vice versa.

[drunkle]

i dont understand how securitization of loans was a socialist experiment. the sale of debts seems to me to be the epitome of capitalism. that unregulated capitalism is the reason we are here today and not vice versa.

[drunkle]

i dont understand how securitization of loans was a socialist experiment. the sale of debts seems to me to be the epitome of capitalism. that unregulated capitalism is the reason we are here today and not vice versa.

[drunkle]

i dont understand how securitization of loans was a socialist experiment. the sale of debts seems to me to be the epitome of capitalism. that unregulated capitalism is the reason we are here today and not vice versa.

[blahblahblah]

Lender after lender has been telling her, “Nope. We want 45% down.”

Awesome, that says that they expect that it is at least possible that the property will decline $450K in value. Sounds like they may be planning on carrying this mortgage instead of securitizing it. If we can avoid the government bailouts and put an end to the securitization so that banks have to carry these loans we will see normal prices return. Otherwise it’s just gonna keep on going — until it can’t any more…

[blahblahblah]

Lender after lender has been telling her, “Nope. We want 45% down.”

Awesome, that says that they expect that it is at least possible that the property will decline $450K in value. Sounds like they may be planning on carrying this mortgage instead of securitizing it. If we can avoid the government bailouts and put an end to the securitization so that banks have to carry these loans we will see normal prices return. Otherwise it’s just gonna keep on going — until it can’t any more…

[blahblahblah]

Lender after lender has been telling her, “Nope. We want 45% down.”

Awesome, that says that they expect that it is at least possible that the property will decline $450K in value. Sounds like they may be planning on carrying this mortgage instead of securitizing it. If we can avoid the government bailouts and put an end to the securitization so that banks have to carry these loans we will see normal prices return. Otherwise it’s just gonna keep on going — until it can’t any more…

[blahblahblah]

Lender after lender has been telling her, “Nope. We want 45% down.”

Awesome, that says that they expect that it is at least possible that the property will decline $450K in value. Sounds like they may be planning on carrying this mortgage instead of securitizing it. If we can avoid the government bailouts and put an end to the securitization so that banks have to carry these loans we will see normal prices return. Otherwise it’s just gonna keep on going — until it can’t any more…

[CMcG]

On the subject of down payments…I was reading Ben’s blog this morning and he quoted from an article about a Bay Area woman who saved up 20 percent for a down payment so she could buy a home in the $1 million range. Lender after lender has been telling her, “Nope. We want 45% down.” Wow!

[CMcG]

On the subject of down payments…I was reading Ben’s blog this morning and he quoted from an article about a Bay Area woman who saved up 20 percent for a down payment so she could buy a home in the $1 million range. Lender after lender has been telling her, “Nope. We want 45% down.” Wow!

[CMcG]

On the subject of down payments…I was reading Ben’s blog this morning and he quoted from an article about a Bay Area woman who saved up 20 percent for a down payment so she could buy a home in the $1 million range. Lender after lender has been telling her, “Nope. We want 45% down.” Wow!

[CMcG]

On the subject of down payments…I was reading Ben’s blog this morning and he quoted from an article about a Bay Area woman who saved up 20 percent for a down payment so she could buy a home in the $1 million range. Lender after lender has been telling her, “Nope. We want 45% down.” Wow!

[kewp]

CONCHO,

This strikes me as a bit of a defeatist attitude.

I’m seeing lots of “I can’t afford to buy a house in SD *pout*”. Yeah no duh, housing is insanely expensive here.

If you want a cheap house, move to Detroit or Cleveland. You can buy one for under 10k; you won’t even need a mortgage.

For the rest of the country there will not be a bailout in any meaningful sense either and prices will come back to reality. How many dotbombs were bailed out after the tech bubble popped? The only bailout I got was 10 months of unemployment insurance after that meltdown.

If you don’t like your savings being eaten away by inflation, buy gold or open a foreign savings account somewhere with harder currency. If you don’t like the housing bubble, rent and short the builders and banks. Build equity while everyone else’s is going down the toilet.

America really is the land of opportunity. But you have to seek it yourself, no one is going to hand it to you.

[kewp]

CONCHO,

This strikes me as a bit of a defeatist attitude.

I’m seeing lots of “I can’t afford to buy a house in SD *pout*”. Yeah no duh, housing is insanely expensive here.

If you want a cheap house, move to Detroit or Cleveland. You can buy one for under 10k; you won’t even need a mortgage.

For the rest of the country there will not be a bailout in any meaningful sense either and prices will come back to reality. How many dotbombs were bailed out after the tech bubble popped? The only bailout I got was 10 months of unemployment insurance after that meltdown.

If you don’t like your savings being eaten away by inflation, buy gold or open a foreign savings account somewhere with harder currency. If you don’t like the housing bubble, rent and short the builders and banks. Build equity while everyone else’s is going down the toilet.

America really is the land of opportunity. But you have to seek it yourself, no one is going to hand it to you.

[kewp]

CONCHO,

This strikes me as a bit of a defeatist attitude.

I’m seeing lots of “I can’t afford to buy a house in SD *pout*”. Yeah no duh, housing is insanely expensive here.

If you want a cheap house, move to Detroit or Cleveland. You can buy one for under 10k; you won’t even need a mortgage.

For the rest of the country there will not be a bailout in any meaningful sense either and prices will come back to reality. How many dotbombs were bailed out after the tech bubble popped? The only bailout I got was 10 months of unemployment insurance after that meltdown.

If you don’t like your savings being eaten away by inflation, buy gold or open a foreign savings account somewhere with harder currency. If you don’t like the housing bubble, rent and short the builders and banks. Build equity while everyone else’s is going down the toilet.

America really is the land of opportunity. But you have to seek it yourself, no one is going to hand it to you.

[kewp]

CONCHO,

This strikes me as a bit of a defeatist attitude.

I’m seeing lots of “I can’t afford to buy a house in SD *pout*”. Yeah no duh, housing is insanely expensive here.

If you want a cheap house, move to Detroit or Cleveland. You can buy one for under 10k; you won’t even need a mortgage.

For the rest of the country there will not be a bailout in any meaningful sense either and prices will come back to reality. How many dotbombs were bailed out after the tech bubble popped? The only bailout I got was 10 months of unemployment insurance after that meltdown.

If you don’t like your savings being eaten away by inflation, buy gold or open a foreign savings account somewhere with harder currency. If you don’t like the housing bubble, rent and short the builders and banks. Build equity while everyone else’s is going down the toilet.

America really is the land of opportunity. But you have to seek it yourself, no one is going to hand it to you.

[kewp]

CONCHO,

This strikes me as a bit of a defeatist attitude.

I’m seeing lots of “I can’t afford to buy a house in SD *pout*”. Yeah no duh, housing is insanely expensive here.

If you want a cheap house, move to Detroit or Cleveland. You can buy one for under 10k; you won’t even need a mortgage.

For the rest of the country there will not be a bailout in any meaningful sense either and prices will come back to reality. How many dotbombs were bailed out after the tech bubble popped? The only bailout I got was 10 months of unemployment insurance after that meltdown.

If you don’t like your savings being eaten away by inflation, buy gold or open a foreign savings account somewhere with harder currency. If you don’t like the housing bubble, rent and short the builders and banks. Build equity while everyone else’s is going down the toilet.

America really is the land of opportunity. But you have to seek it yourself, no one is going to hand it to you.

[blahblahblah]

The Soviet Union also went bankrupt and collapsed.

Not before the supermarket shelves were empty and people were growing vegetables on their balconies to stay alive. If we’re going down that road (which I’m afraid we are), this thing is just getting started. The endgame of an ideologically-driven economic collapse is very, very ugly. You have starvation, freezing to death, things like that. Things are still quite nice here. We could go downhill on this path for another 50 years.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

Hey, I don’t like it either! I said in my post we should require 20% down! I am after all one of the ideologically unfaithful, renting a place, driving an old car, paying off my credit cards every month and saving my spare American pesos in the bank. I’m just calling it like I see it. I realize that people like me are not the norm and in fact are hated and despised by the society at large. Remember that outside of the public sector, our society manufactures very little. Most people with middle-class jobs outside of the government or defense contracting are involved in the shuffling of money from one place to another, the charging of fees, etc… People like me don’t put any sheckles in their pockets so they will try to minimize our influence. They want everyone borrowing, paying late fees, paying refinancing fees from here to eternity. That’s how they pay their mortgages. It’s a grand con and I am not participating. Unfortunately people like me are in the minority and our numbers are destined to diminish year by year until the inevitable collapse finally comes.

[blahblahblah]

The Soviet Union also went bankrupt and collapsed.

Not before the supermarket shelves were empty and people were growing vegetables on their balconies to stay alive. If we’re going down that road (which I’m afraid we are), this thing is just getting started. The endgame of an ideologically-driven economic collapse is very, very ugly. You have starvation, freezing to death, things like that. Things are still quite nice here. We could go downhill on this path for another 50 years.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

Hey, I don’t like it either! I said in my post we should require 20% down! I am after all one of the ideologically unfaithful, renting a place, driving an old car, paying off my credit cards every month and saving my spare American pesos in the bank. I’m just calling it like I see it. I realize that people like me are not the norm and in fact are hated and despised by the society at large. Remember that outside of the public sector, our society manufactures very little. Most people with middle-class jobs outside of the government or defense contracting are involved in the shuffling of money from one place to another, the charging of fees, etc… People like me don’t put any sheckles in their pockets so they will try to minimize our influence. They want everyone borrowing, paying late fees, paying refinancing fees from here to eternity. That’s how they pay their mortgages. It’s a grand con and I am not participating. Unfortunately people like me are in the minority and our numbers are destined to diminish year by year until the inevitable collapse finally comes.

[blahblahblah]

The Soviet Union also went bankrupt and collapsed.

Not before the supermarket shelves were empty and people were growing vegetables on their balconies to stay alive. If we’re going down that road (which I’m afraid we are), this thing is just getting started. The endgame of an ideologically-driven economic collapse is very, very ugly. You have starvation, freezing to death, things like that. Things are still quite nice here. We could go downhill on this path for another 50 years.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

Hey, I don’t like it either! I said in my post we should require 20% down! I am after all one of the ideologically unfaithful, renting a place, driving an old car, paying off my credit cards every month and saving my spare American pesos in the bank. I’m just calling it like I see it. I realize that people like me are not the norm and in fact are hated and despised by the society at large. Remember that outside of the public sector, our society manufactures very little. Most people with middle-class jobs outside of the government or defense contracting are involved in the shuffling of money from one place to another, the charging of fees, etc… People like me don’t put any sheckles in their pockets so they will try to minimize our influence. They want everyone borrowing, paying late fees, paying refinancing fees from here to eternity. That’s how they pay their mortgages. It’s a grand con and I am not participating. Unfortunately people like me are in the minority and our numbers are destined to diminish year by year until the inevitable collapse finally comes.

[blahblahblah]

The Soviet Union also went bankrupt and collapsed.

Not before the supermarket shelves were empty and people were growing vegetables on their balconies to stay alive. If we’re going down that road (which I’m afraid we are), this thing is just getting started. The endgame of an ideologically-driven economic collapse is very, very ugly. You have starvation, freezing to death, things like that. Things are still quite nice here. We could go downhill on this path for another 50 years.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

Hey, I don’t like it either! I said in my post we should require 20% down! I am after all one of the ideologically unfaithful, renting a place, driving an old car, paying off my credit cards every month and saving my spare American pesos in the bank. I’m just calling it like I see it. I realize that people like me are not the norm and in fact are hated and despised by the society at large. Remember that outside of the public sector, our society manufactures very little. Most people with middle-class jobs outside of the government or defense contracting are involved in the shuffling of money from one place to another, the charging of fees, etc… People like me don’t put any sheckles in their pockets so they will try to minimize our influence. They want everyone borrowing, paying late fees, paying refinancing fees from here to eternity. That’s how they pay their mortgages. It’s a grand con and I am not participating. Unfortunately people like me are in the minority and our numbers are destined to diminish year by year until the inevitable collapse finally comes.

[kewp]

CONCHO,

The Soviet Union also went bankrupt and collapsed.

The credit crunch/deflation is already happening and nothing can stop it. I can’t borrow a 800k with no money down if no one will lend it. I can’t even service the debt I have if I lose my job. Thats where we are now and its only getting worse in the future.

House prices are going down, unemployment is going up and those of us that are prepared will ultimately be rewarded.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

[kewp]

CONCHO,

The Soviet Union also went bankrupt and collapsed.

The credit crunch/deflation is already happening and nothing can stop it. I can’t borrow a 800k with no money down if no one will lend it. I can’t even service the debt I have if I lose my job. Thats where we are now and its only getting worse in the future.

House prices are going down, unemployment is going up and those of us that are prepared will ultimately be rewarded.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

[kewp]

CONCHO,

The Soviet Union also went bankrupt and collapsed.

The credit crunch/deflation is already happening and nothing can stop it. I can’t borrow a 800k with no money down if no one will lend it. I can’t even service the debt I have if I lose my job. Thats where we are now and its only getting worse in the future.

House prices are going down, unemployment is going up and those of us that are prepared will ultimately be rewarded.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

[kewp]

CONCHO,

The Soviet Union also went bankrupt and collapsed.

The credit crunch/deflation is already happening and nothing can stop it. I can’t borrow a 800k with no money down if no one will lend it. I can’t even service the debt I have if I lose my job. Thats where we are now and its only getting worse in the future.

House prices are going down, unemployment is going up and those of us that are prepared will ultimately be rewarded.

The sort of backwards-think displayed in your post is exactly what got us in this mess I might add.

[SD Realtor]

Yes very depressing.

[SD Realtor]

Yes very depressing.

[SD Realtor]

Yes very depressing.

[SD Realtor]

Yes very depressing.

[blahblahblah]

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

This is happening because people can buy with less than 20% down. What happened is that, through deregulation of the banking industry and securitization of home loans, the barrier to market entry was lowered significantly, drastically increasing the number of participants. Supply held relatively constant, prices have nowhere to go but up. 20% down should be the rule of the land but it’s probably never coming back. Instead we will get this weird socialized debt system, where those willing to go most into debt are subsidized by those who save and live within their means. Like the economy of the old Soviet Union, it is an ideologically-based system — those with the most faith in the glory of the “free” market will borrow the most and overextend themselves because they’re sure everything will work out in the end. When it doesn’t, those of us who are ideologically unfaithful (i.e., save our money and live within our means) get punished with higher taxes for bailouts and deflation of our money through currency debasement . In the end of course, the market is completely rigged and anything but “free”, but those faithful to the prevailing ideology (borrow and spend as much as possible) are rewarded with big fancy custom homes and new BMWs while the rest of us live in apartments and drive 10-year-old Hondas.

Depressing, isn’t it?

[blahblahblah]

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

This is happening because people can buy with less than 20% down. What happened is that, through deregulation of the banking industry and securitization of home loans, the barrier to market entry was lowered significantly, drastically increasing the number of participants. Supply held relatively constant, prices have nowhere to go but up. 20% down should be the rule of the land but it’s probably never coming back. Instead we will get this weird socialized debt system, where those willing to go most into debt are subsidized by those who save and live within their means. Like the economy of the old Soviet Union, it is an ideologically-based system — those with the most faith in the glory of the “free” market will borrow the most and overextend themselves because they’re sure everything will work out in the end. When it doesn’t, those of us who are ideologically unfaithful (i.e., save our money and live within our means) get punished with higher taxes for bailouts and deflation of our money through currency debasement . In the end of course, the market is completely rigged and anything but “free”, but those faithful to the prevailing ideology (borrow and spend as much as possible) are rewarded with big fancy custom homes and new BMWs while the rest of us live in apartments and drive 10-year-old Hondas.

Depressing, isn’t it?

[blahblahblah]

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

This is happening because people can buy with less than 20% down. What happened is that, through deregulation of the banking industry and securitization of home loans, the barrier to market entry was lowered significantly, drastically increasing the number of participants. Supply held relatively constant, prices have nowhere to go but up. 20% down should be the rule of the land but it’s probably never coming back. Instead we will get this weird socialized debt system, where those willing to go most into debt are subsidized by those who save and live within their means. Like the economy of the old Soviet Union, it is an ideologically-based system — those with the most faith in the glory of the “free” market will borrow the most and overextend themselves because they’re sure everything will work out in the end. When it doesn’t, those of us who are ideologically unfaithful (i.e., save our money and live within our means) get punished with higher taxes for bailouts and deflation of our money through currency debasement . In the end of course, the market is completely rigged and anything but “free”, but those faithful to the prevailing ideology (borrow and spend as much as possible) are rewarded with big fancy custom homes and new BMWs while the rest of us live in apartments and drive 10-year-old Hondas.

Depressing, isn’t it?

[blahblahblah]

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

This is happening because people can buy with less than 20% down. What happened is that, through deregulation of the banking industry and securitization of home loans, the barrier to market entry was lowered significantly, drastically increasing the number of participants. Supply held relatively constant, prices have nowhere to go but up. 20% down should be the rule of the land but it’s probably never coming back. Instead we will get this weird socialized debt system, where those willing to go most into debt are subsidized by those who save and live within their means. Like the economy of the old Soviet Union, it is an ideologically-based system — those with the most faith in the glory of the “free” market will borrow the most and overextend themselves because they’re sure everything will work out in the end. When it doesn’t, those of us who are ideologically unfaithful (i.e., save our money and live within our means) get punished with higher taxes for bailouts and deflation of our money through currency debasement . In the end of course, the market is completely rigged and anything but “free”, but those faithful to the prevailing ideology (borrow and spend as much as possible) are rewarded with big fancy custom homes and new BMWs while the rest of us live in apartments and drive 10-year-old Hondas.

Depressing, isn’t it?

[SD Realtor]

Just trying to get back to the original posters message. I spoke to a mortgage broker today who said she has a 100% financed loan for her buyers through Wells Fargo. I told her that I heard from someone that Wells was doing only 20% down loans and she said that is not true for conforming loans. She said that for conforming loans Wells still does have a 100% financing option.

Now that the conforming loan limits are going up, that may indeed help people like Ranjan.

Ranjan please comment if you can. Was your post for a loan above the conforming limit?

********

Please do not confuse this post of mine with being bullish or telling people to buy now… yada yada yada…

As always I am just trying to post facts that I dig up. (Except when I say “this is a speculative comment or an opinion”)

SD Realtor

ps – Yes I would much rather have tighter lending standards as well guys.

[SD Realtor]

Just trying to get back to the original posters message. I spoke to a mortgage broker today who said she has a 100% financed loan for her buyers through Wells Fargo. I told her that I heard from someone that Wells was doing only 20% down loans and she said that is not true for conforming loans. She said that for conforming loans Wells still does have a 100% financing option.

Now that the conforming loan limits are going up, that may indeed help people like Ranjan.

Ranjan please comment if you can. Was your post for a loan above the conforming limit?

********

Please do not confuse this post of mine with being bullish or telling people to buy now… yada yada yada…

As always I am just trying to post facts that I dig up. (Except when I say “this is a speculative comment or an opinion”)

SD Realtor

ps – Yes I would much rather have tighter lending standards as well guys.

[SD Realtor]

Just trying to get back to the original posters message. I spoke to a mortgage broker today who said she has a 100% financed loan for her buyers through Wells Fargo. I told her that I heard from someone that Wells was doing only 20% down loans and she said that is not true for conforming loans. She said that for conforming loans Wells still does have a 100% financing option.

Now that the conforming loan limits are going up, that may indeed help people like Ranjan.

Ranjan please comment if you can. Was your post for a loan above the conforming limit?

********

Please do not confuse this post of mine with being bullish or telling people to buy now… yada yada yada…

As always I am just trying to post facts that I dig up. (Except when I say “this is a speculative comment or an opinion”)

SD Realtor

ps – Yes I would much rather have tighter lending standards as well guys.

[SD Realtor]

Just trying to get back to the original posters message. I spoke to a mortgage broker today who said she has a 100% financed loan for her buyers through Wells Fargo. I told her that I heard from someone that Wells was doing only 20% down loans and she said that is not true for conforming loans. She said that for conforming loans Wells still does have a 100% financing option.

Now that the conforming loan limits are going up, that may indeed help people like Ranjan.

Ranjan please comment if you can. Was your post for a loan above the conforming limit?

********

Please do not confuse this post of mine with being bullish or telling people to buy now… yada yada yada…

As always I am just trying to post facts that I dig up. (Except when I say “this is a speculative comment or an opinion”)

SD Realtor

ps – Yes I would much rather have tighter lending standards as well guys.

[renterclint]

It seems like the discussion of whether 20% down payment should be mandatory comes up a lot.

I used to be adamantly opposed to requiring 20% down for borrowers with good credit. Mainly because it would take a lot of years to save up 20% of the median home price in SD. That basically means you have to come up with at least $100k, which seems impossible for a first time home-buyer to save up. Instead of young couples looking to buy their first starter home, we would have middle-aged folks entering the market for the first time b/c that’s how long it would take to save that kind of $$$.

After seeing the bank I work for get hammered by 80/20 loan products, I am starting to come around. The banks are just taking on too much risk with no committment from the borrower. It is just too easy for people to walk away. Even piggington folks like 23109VC seriously consider walking away (see his post: “Harveston down the drain”).

It really frustrates me that I have a professional degree w/ decent pay & still can’t come close to buying a house in my own hometown. In the late 70’s, my father-in-law bought a brand new home in a shiney new Mira Mesa for $30k. He was a 2nd year enlisted man in the coast guard, and could buy a home here! The price was 3x his annual salary.

My Dad bought our Poway home in ’86 for $85k & he was a machinist for Ryan Aero making about $40k w/OT at the time. The house was barely more than 2x his annual salary.

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

I like to think tightening lending standards (like 20% down), although making things really ugly in the short-term, would bring the affordability of San Diego back to reality some day.

[renterclint]

It seems like the discussion of whether 20% down payment should be mandatory comes up a lot.

I used to be adamantly opposed to requiring 20% down for borrowers with good credit. Mainly because it would take a lot of years to save up 20% of the median home price in SD. That basically means you have to come up with at least $100k, which seems impossible for a first time home-buyer to save up. Instead of young couples looking to buy their first starter home, we would have middle-aged folks entering the market for the first time b/c that’s how long it would take to save that kind of $$$.

After seeing the bank I work for get hammered by 80/20 loan products, I am starting to come around. The banks are just taking on too much risk with no committment from the borrower. It is just too easy for people to walk away. Even piggington folks like 23109VC seriously consider walking away (see his post: “Harveston down the drain”).

It really frustrates me that I have a professional degree w/ decent pay & still can’t come close to buying a house in my own hometown. In the late 70’s, my father-in-law bought a brand new home in a shiney new Mira Mesa for $30k. He was a 2nd year enlisted man in the coast guard, and could buy a home here! The price was 3x his annual salary.

My Dad bought our Poway home in ’86 for $85k & he was a machinist for Ryan Aero making about $40k w/OT at the time. The house was barely more than 2x his annual salary.

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

I like to think tightening lending standards (like 20% down), although making things really ugly in the short-term, would bring the affordability of San Diego back to reality some day.

[renterclint]

It seems like the discussion of whether 20% down payment should be mandatory comes up a lot.

I used to be adamantly opposed to requiring 20% down for borrowers with good credit. Mainly because it would take a lot of years to save up 20% of the median home price in SD. That basically means you have to come up with at least $100k, which seems impossible for a first time home-buyer to save up. Instead of young couples looking to buy their first starter home, we would have middle-aged folks entering the market for the first time b/c that’s how long it would take to save that kind of $$$.

After seeing the bank I work for get hammered by 80/20 loan products, I am starting to come around. The banks are just taking on too much risk with no committment from the borrower. It is just too easy for people to walk away. Even piggington folks like 23109VC seriously consider walking away (see his post: “Harveston down the drain”).

It really frustrates me that I have a professional degree w/ decent pay & still can’t come close to buying a house in my own hometown. In the late 70’s, my father-in-law bought a brand new home in a shiney new Mira Mesa for $30k. He was a 2nd year enlisted man in the coast guard, and could buy a home here! The price was 3x his annual salary.

My Dad bought our Poway home in ’86 for $85k & he was a machinist for Ryan Aero making about $40k w/OT at the time. The house was barely more than 2x his annual salary.

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

I like to think tightening lending standards (like 20% down), although making things really ugly in the short-term, would bring the affordability of San Diego back to reality some day.

[renterclint]

It seems like the discussion of whether 20% down payment should be mandatory comes up a lot.

I used to be adamantly opposed to requiring 20% down for borrowers with good credit. Mainly because it would take a lot of years to save up 20% of the median home price in SD. That basically means you have to come up with at least $100k, which seems impossible for a first time home-buyer to save up. Instead of young couples looking to buy their first starter home, we would have middle-aged folks entering the market for the first time b/c that’s how long it would take to save that kind of $$$.

After seeing the bank I work for get hammered by 80/20 loan products, I am starting to come around. The banks are just taking on too much risk with no committment from the borrower. It is just too easy for people to walk away. Even piggington folks like 23109VC seriously consider walking away (see his post: “Harveston down the drain”).

It really frustrates me that I have a professional degree w/ decent pay & still can’t come close to buying a house in my own hometown. In the late 70’s, my father-in-law bought a brand new home in a shiney new Mira Mesa for $30k. He was a 2nd year enlisted man in the coast guard, and could buy a home here! The price was 3x his annual salary.

My Dad bought our Poway home in ’86 for $85k & he was a machinist for Ryan Aero making about $40k w/OT at the time. The house was barely more than 2x his annual salary.

I made over $80k when I lived in SD last year, and the middle of the road home in my hood was about $750k. Almost 10x my yearly wage! That just pisses me off.

I like to think tightening lending standards (like 20% down), although making things really ugly in the short-term, would bring the affordability of San Diego back to reality some day.

[vagabondo]

those links appear to be just examples for payment calculations. i am a past wf customer and seem to remember that this is the default used for budgeting. the actual wf site allows you to play with the down payment % for payment calc purposes.

[vagabondo]

those links appear to be just examples for payment calculations. i am a past wf customer and seem to remember that this is the default used for budgeting. the actual wf site allows you to play with the down payment % for payment calc purposes.

[vagabondo]

those links appear to be just examples for payment calculations. i am a past wf customer and seem to remember that this is the default used for budgeting. the actual wf site allows you to play with the down payment % for payment calc purposes.

[vagabondo]

those links appear to be just examples for payment calculations. i am a past wf customer and seem to remember that this is the default used for budgeting. the actual wf site allows you to play with the down payment % for payment calc purposes.

[wawawa]

These are some of the affiliates of Wells Fargo and as you can see all loans require 20% down.

http://www.linearfinancial.com/loans/default.asp

http://www.pardeehomeloans.com/dailyrate/default.asp

[wawawa]

These are some of the affiliates of Wells Fargo and as you can see all loans require 20% down.

http://www.linearfinancial.com/loans/default.asp

http://www.pardeehomeloans.com/dailyrate/default.asp

[wawawa]

These are some of the affiliates of Wells Fargo and as you can see all loans require 20% down.

http://www.linearfinancial.com/loans/default.asp

http://www.pardeehomeloans.com/dailyrate/default.asp

[wawawa]

These are some of the affiliates of Wells Fargo and as you can see all loans require 20% down.

http://www.linearfinancial.com/loans/default.asp

http://www.pardeehomeloans.com/dailyrate/default.asp

[raptorduck]

Wow, the house I could buy with only 5% or 10% down. But I don’t think one should buy what a bank will “let” him or her buy. A credit card company will also “let” you run up a huge amount of debt and then watch your little teaser rate dissapper as they lock you into their “standard” high rates.

People should buy what the can buy comfortably, without worrying about appreciation and depreciation. In this market, I consider a 20% down as a break even down from an appreciation standpoint. 30% for me is ideal, which is why I am pushing my wife to buy a home at a price where we can put in 30% down from our downpayment fund. If you put 30% down, you won’t worry about the market continuing to tumble so much, particularly if you are buying a long term home and don’t look at your home as either an investment or a supply of home equity funds to fund your lifestyle.

That is why I am a buyer right now. We need a new house, plain and simple. I am keeping an eye on the market to get the best price. After I buy, well I will keep an eye on the market up here until I sell my current house, or keep it and rent it out. After that, perhaps curiousity will keep my interest, perhaps not.

We could go for 5% or 10% down and buy almost twice as much house. But the payments go up too, and even though we could “technically” afford that as far as the bank is concerned, and even though it is a long term purchase, you never know what life brings and planning for a rainy day is not a bad thing. It gets you peace of mind. There are folks I expect, who bought at the peak, and are not stressing because they put so much down, they still have positive equity.

My current home has lost 10% value in two years, but I bought 8 yrs ago with a big down. So while I wish it were worth more so I could get more $$ out of it, I am not stressed about it.

The great thing about living below your means, is that you don’t stress about money, can help those you care about when they are in financial distress, can give away a larger part of your income to charity, which adds greatly to ones happiness and sense of community, and are prepared for that rainy day or unpleasent surprise. Financial stress is a life shortning thing and interferes its enjoyment. I have been there, I remember. It was self inflicted and I realized I am not a masochist, so I stopped.

[raptorduck]

Wow, the house I could buy with only 5% or 10% down. But I don’t think one should buy what a bank will “let” him or her buy. A credit card company will also “let” you run up a huge amount of debt and then watch your little teaser rate dissapper as they lock you into their “standard” high rates.

People should buy what the can buy comfortably, without worrying about appreciation and depreciation. In this market, I consider a 20% down as a break even down from an appreciation standpoint. 30% for me is ideal, which is why I am pushing my wife to buy a home at a price where we can put in 30% down from our downpayment fund. If you put 30% down, you won’t worry about the market continuing to tumble so much, particularly if you are buying a long term home and don’t look at your home as either an investment or a supply of home equity funds to fund your lifestyle.

That is why I am a buyer right now. We need a new house, plain and simple. I am keeping an eye on the market to get the best price. After I buy, well I will keep an eye on the market up here until I sell my current house, or keep it and rent it out. After that, perhaps curiousity will keep my interest, perhaps not.

We could go for 5% or 10% down and buy almost twice as much house. But the payments go up too, and even though we could “technically” afford that as far as the bank is concerned, and even though it is a long term purchase, you never know what life brings and planning for a rainy day is not a bad thing. It gets you peace of mind. There are folks I expect, who bought at the peak, and are not stressing because they put so much down, they still have positive equity.

My current home has lost 10% value in two years, but I bought 8 yrs ago with a big down. So while I wish it were worth more so I could get more $$ out of it, I am not stressed about it.

The great thing about living below your means, is that you don’t stress about money, can help those you care about when they are in financial distress, can give away a larger part of your income to charity, which adds greatly to ones happiness and sense of community, and are prepared for that rainy day or unpleasent surprise. Financial stress is a life shortning thing and interferes its enjoyment. I have been there, I remember. It was self inflicted and I realized I am not a masochist, so I stopped.

[raptorduck]

Wow, the house I could buy with only 5% or 10% down. But I don’t think one should buy what a bank will “let” him or her buy. A credit card company will also “let” you run up a huge amount of debt and then watch your little teaser rate dissapper as they lock you into their “standard” high rates.

People should buy what the can buy comfortably, without worrying about appreciation and depreciation. In this market, I consider a 20% down as a break even down from an appreciation standpoint. 30% for me is ideal, which is why I am pushing my wife to buy a home at a price where we can put in 30% down from our downpayment fund. If you put 30% down, you won’t worry about the market continuing to tumble so much, particularly if you are buying a long term home and don’t look at your home as either an investment or a supply of home equity funds to fund your lifestyle.

That is why I am a buyer right now. We need a new house, plain and simple. I am keeping an eye on the market to get the best price. After I buy, well I will keep an eye on the market up here until I sell my current house, or keep it and rent it out. After that, perhaps curiousity will keep my interest, perhaps not.

We could go for 5% or 10% down and buy almost twice as much house. But the payments go up too, and even though we could “technically” afford that as far as the bank is concerned, and even though it is a long term purchase, you never know what life brings and planning for a rainy day is not a bad thing. It gets you peace of mind. There are folks I expect, who bought at the peak, and are not stressing because they put so much down, they still have positive equity.

My current home has lost 10% value in two years, but I bought 8 yrs ago with a big down. So while I wish it were worth more so I could get more $$ out of it, I am not stressed about it.

The great thing about living below your means, is that you don’t stress about money, can help those you care about when they are in financial distress, can give away a larger part of your income to charity, which adds greatly to ones happiness and sense of community, and are prepared for that rainy day or unpleasent surprise. Financial stress is a life shortning thing and interferes its enjoyment. I have been there, I remember. It was self inflicted and I realized I am not a masochist, so I stopped.

[raptorduck]

Wow, the house I could buy with only 5% or 10% down. But I don’t think one should buy what a bank will “let” him or her buy. A credit card company will also “let” you run up a huge amount of debt and then watch your little teaser rate dissapper as they lock you into their “standard” high rates.

People should buy what the can buy comfortably, without worrying about appreciation and depreciation. In this market, I consider a 20% down as a break even down from an appreciation standpoint. 30% for me is ideal, which is why I am pushing my wife to buy a home at a price where we can put in 30% down from our downpayment fund. If you put 30% down, you won’t worry about the market continuing to tumble so much, particularly if you are buying a long term home and don’t look at your home as either an investment or a supply of home equity funds to fund your lifestyle.

That is why I am a buyer right now. We need a new house, plain and simple. I am keeping an eye on the market to get the best price. After I buy, well I will keep an eye on the market up here until I sell my current house, or keep it and rent it out. After that, perhaps curiousity will keep my interest, perhaps not.

We could go for 5% or 10% down and buy almost twice as much house. But the payments go up too, and even though we could “technically” afford that as far as the bank is concerned, and even though it is a long term purchase, you never know what life brings and planning for a rainy day is not a bad thing. It gets you peace of mind. There are folks I expect, who bought at the peak, and are not stressing because they put so much down, they still have positive equity.

My current home has lost 10% value in two years, but I bought 8 yrs ago with a big down. So while I wish it were worth more so I could get more $$ out of it, I am not stressed about it.

The great thing about living below your means, is that you don’t stress about money, can help those you care about when they are in financial distress, can give away a larger part of your income to charity, which adds greatly to ones happiness and sense of community, and are prepared for that rainy day or unpleasent surprise. Financial stress is a life shortning thing and interferes its enjoyment. I have been there, I remember. It was self inflicted and I realized I am not a masochist, so I stopped.

[SD Realtor]

Patientrenter you bring up very good points.

Ranjan there is nothing “wrong” with only putting 10% down. The point that is being made is that from a market perspective, lax lending standards and risk prone financing ultimately leads to inflation of the security which then leads to bubbles which produces an unhealthy market. While you may be a very responsible person the fact is that most people cannot control themselves. We are a nation of consumers who really know very little about living within our means. It is a behavior that is promoted by pretty much every entity in our society and not only encouraged but essentially rewarded by our government.

Now while pretty much everyone here frowns on people who are looking to buy now, it may be argued that we are approaching a point where low downpayments and low interest rates are going to disappear. When that will happen or if that will happen is up to speculation. It sounds like you are on the cusp of buying. If you look at past posts you should be able to dig up HLS’s email. Also your Realtor should have many broker contacts who can find loan programs that will match your needs.

Good luck!

[SD Realtor]

Patientrenter you bring up very good points.

Ranjan there is nothing “wrong” with only putting 10% down. The point that is being made is that from a market perspective, lax lending standards and risk prone financing ultimately leads to inflation of the security which then leads to bubbles which produces an unhealthy market. While you may be a very responsible person the fact is that most people cannot control themselves. We are a nation of consumers who really know very little about living within our means. It is a behavior that is promoted by pretty much every entity in our society and not only encouraged but essentially rewarded by our government.

Now while pretty much everyone here frowns on people who are looking to buy now, it may be argued that we are approaching a point where low downpayments and low interest rates are going to disappear. When that will happen or if that will happen is up to speculation. It sounds like you are on the cusp of buying. If you look at past posts you should be able to dig up HLS’s email. Also your Realtor should have many broker contacts who can find loan programs that will match your needs.

Good luck!

[SD Realtor]

Patientrenter you bring up very good points.

Ranjan there is nothing “wrong” with only putting 10% down. The point that is being made is that from a market perspective, lax lending standards and risk prone financing ultimately leads to inflation of the security which then leads to bubbles which produces an unhealthy market. While you may be a very responsible person the fact is that most people cannot control themselves. We are a nation of consumers who really know very little about living within our means. It is a behavior that is promoted by pretty much every entity in our society and not only encouraged but essentially rewarded by our government.

Now while pretty much everyone here frowns on people who are looking to buy now, it may be argued that we are approaching a point where low downpayments and low interest rates are going to disappear. When that will happen or if that will happen is up to speculation. It sounds like you are on the cusp of buying. If you look at past posts you should be able to dig up HLS’s email. Also your Realtor should have many broker contacts who can find loan programs that will match your needs.

Good luck!

[SD Realtor]

Patientrenter you bring up very good points.

Ranjan there is nothing “wrong” with only putting 10% down. The point that is being made is that from a market perspective, lax lending standards and risk prone financing ultimately leads to inflation of the security which then leads to bubbles which produces an unhealthy market. While you may be a very responsible person the fact is that most people cannot control themselves. We are a nation of consumers who really know very little about living within our means. It is a behavior that is promoted by pretty much every entity in our society and not only encouraged but essentially rewarded by our government.

Now while pretty much everyone here frowns on people who are looking to buy now, it may be argued that we are approaching a point where low downpayments and low interest rates are going to disappear. When that will happen or if that will happen is up to speculation. It sounds like you are on the cusp of buying. If you look at past posts you should be able to dig up HLS’s email. Also your Realtor should have many broker contacts who can find loan programs that will match your needs.

Good luck!

[patientrenter]

Ranjan, requiring 10% down is only a very small protection for the (ultimate) lender in a non-recourse purchase loan state like CA facing major and persistent price declines. Credit scores, and wealth in other assets, mean even less. About all that protects the lenders in a market in major decline is the borrower’s downpayment, and a 10% downpayment is less than the projected one-year decline in home prices in most CA markets. It’s so small it’s a joke.

Consider this situation: Someone buys a $1 million house now with 10% down, so the ultimate lenders put up $900,000. In 3 years time the house is sold for $600,000. How do the lenders get their $900,000 back? They don’t of course, regardless of the credit or other assets of the borrower. No matter who the (non-recourse state) borrower is, the lenders get back just $600,000 less the sale expenses, and take a massive loss.

In my example, which isn’t too outlandish, the lenders would have to have received annual interest of $100,000 in excess of the Treasury rate for 3 years in order to be compensated for their $300,000 loss at the future foreclosure, ignoring their foreclosure and other costs. That’s 11.11% extra interest annually over and above the risk-free rate! Clearly, lenders still are not charging anything even close to the interest rates required to justify 10% downpayments. Before now, the lenders were all pricing in never-ending home price inflation. Now they are all pricing in huge government bailouts.

Patient renter in OC

[patientrenter]

Ranjan, requiring 10% down is only a very small protection for the (ultimate) lender in a non-recourse purchase loan state like CA facing major and persistent price declines. Credit scores, and wealth in other assets, mean even less. About all that protects the lenders in a market in major decline is the borrower’s downpayment, and a 10% downpayment is less than the projected one-year decline in home prices in most CA markets. It’s so small it’s a joke.

Consider this situation: Someone buys a $1 million house now with 10% down, so the ultimate lenders put up $900,000. In 3 years time the house is sold for $600,000. How do the lenders get their $900,000 back? They don’t of course, regardless of the credit or other assets of the borrower. No matter who the (non-recourse state) borrower is, the lenders get back just $600,000 less the sale expenses, and take a massive loss.

In my example, which isn’t too outlandish, the lenders would have to have received annual interest of $100,000 in excess of the Treasury rate for 3 years in order to be compensated for their $300,000 loss at the future foreclosure, ignoring their foreclosure and other costs. That’s 11.11% extra interest annually over and above the risk-free rate! Clearly, lenders still are not charging anything even close to the interest rates required to justify 10% downpayments. Before now, the lenders were all pricing in never-ending home price inflation. Now they are all pricing in huge government bailouts.

Patient renter in OC

[patientrenter]

Ranjan, requiring 10% down is only a very small protection for the (ultimate) lender in a non-recourse purchase loan state like CA facing major and persistent price declines. Credit scores, and wealth in other assets, mean even less. About all that protects the lenders in a market in major decline is the borrower’s downpayment, and a 10% downpayment is less than the projected one-year decline in home prices in most CA markets. It’s so small it’s a joke.

Consider this situation: Someone buys a $1 million house now with 10% down, so the ultimate lenders put up $900,000. In 3 years time the house is sold for $600,000. How do the lenders get their $900,000 back? They don’t of course, regardless of the credit or other assets of the borrower. No matter who the (non-recourse state) borrower is, the lenders get back just $600,000 less the sale expenses, and take a massive loss.

In my example, which isn’t too outlandish, the lenders would have to have received annual interest of $100,000 in excess of the Treasury rate for 3 years in order to be compensated for their $300,000 loss at the future foreclosure, ignoring their foreclosure and other costs. That’s 11.11% extra interest annually over and above the risk-free rate! Clearly, lenders still are not charging anything even close to the interest rates required to justify 10% downpayments. Before now, the lenders were all pricing in never-ending home price inflation. Now they are all pricing in huge government bailouts.

Patient renter in OC

[patientrenter]

Ranjan, requiring 10% down is only a very small protection for the (ultimate) lender in a non-recourse purchase loan state like CA facing major and persistent price declines. Credit scores, and wealth in other assets, mean even less. About all that protects the lenders in a market in major decline is the borrower’s downpayment, and a 10% downpayment is less than the projected one-year decline in home prices in most CA markets. It’s so small it’s a joke.

Consider this situation: Someone buys a $1 million house now with 10% down, so the ultimate lenders put up $900,000. In 3 years time the house is sold for $600,000. How do the lenders get their $900,000 back? They don’t of course, regardless of the credit or other assets of the borrower. No matter who the (non-recourse state) borrower is, the lenders get back just $600,000 less the sale expenses, and take a massive loss.

In my example, which isn’t too outlandish, the lenders would have to have received annual interest of $100,000 in excess of the Treasury rate for 3 years in order to be compensated for their $300,000 loss at the future foreclosure, ignoring their foreclosure and other costs. That’s 11.11% extra interest annually over and above the risk-free rate! Clearly, lenders still are not charging anything even close to the interest rates required to justify 10% downpayments. Before now, the lenders were all pricing in never-ending home price inflation. Now they are all pricing in huge government bailouts.

Patient renter in OC

[Ranjan]

why putting 10% down is such a bad thing?
The bank should be looking at documented income, assets and credit standing of the person they are issuing loan to.

They got over-powered by greed, over-looked the basics and paid the price. Why should they vent it out on the disciplined and fiscally responsible citizens?

One could manage to put down 20% but may be willing to put 10% only. He/She can have other 10% in a form that’s easily usable for other purposes.

Does anyone have HLS’s email id?Would appreciate.

Thanks

Thanks

[Ranjan]

why putting 10% down is such a bad thing?
The bank should be looking at documented income, assets and credit standing of the person they are issuing loan to.

They got over-powered by greed, over-looked the basics and paid the price. Why should they vent it out on the disciplined and fiscally responsible citizens?

One could manage to put down 20% but may be willing to put 10% only. He/She can have other 10% in a form that’s easily usable for other purposes.

Does anyone have HLS’s email id?Would appreciate.

Thanks

Thanks

[Ranjan]

why putting 10% down is such a bad thing?
The bank should be looking at documented income, assets and credit standing of the person they are issuing loan to.

They got over-powered by greed, over-looked the basics and paid the price. Why should they vent it out on the disciplined and fiscally responsible citizens?

One could manage to put down 20% but may be willing to put 10% only. He/She can have other 10% in a form that’s easily usable for other purposes.

Does anyone have HLS’s email id?Would appreciate.

Thanks

Thanks

[Ranjan]

why putting 10% down is such a bad thing?
The bank should be looking at documented income, assets and credit standing of the person they are issuing loan to.

They got over-powered by greed, over-looked the basics and paid the price. Why should they vent it out on the disciplined and fiscally responsible citizens?

One could manage to put down 20% but may be willing to put 10% only. He/She can have other 10% in a form that’s easily usable for other purposes.

Does anyone have HLS’s email id?Would appreciate.

Thanks

Thanks

[nostradamus]

The $417k is the amount the gov. would guarantee the loan for. Anything above that is a jumbo loan.

Less than 20% down means you pay PMI.

[nostradamus]

The $417k is the amount the gov. would guarantee the loan for. Anything above that is a jumbo loan.

Less than 20% down means you pay PMI.

[nostradamus]

The $417k is the amount the gov. would guarantee the loan for. Anything above that is a jumbo loan.

Less than 20% down means you pay PMI.

[nostradamus]

The $417k is the amount the gov. would guarantee the loan for. Anything above that is a jumbo loan.

Less than 20% down means you pay PMI.

[murf2222]

I’m having a case of brain constipation…….

The *pre-stimulus pkg* conforming limit of $417,000 means that you don’t need mortgage insurance for a loan under that amount right?

I’m forgetting the ramifications of a dwn payment of less than 20%…..wasn’t it related to the conforming limit? Or was it something else entirely?

[murf2222]

I’m having a case of brain constipation…….

The *pre-stimulus pkg* conforming limit of $417,000 means that you don’t need mortgage insurance for a loan under that amount right?

I’m forgetting the ramifications of a dwn payment of less than 20%…..wasn’t it related to the conforming limit? Or was it something else entirely?

[murf2222]

I’m having a case of brain constipation…….

The *pre-stimulus pkg* conforming limit of $417,000 means that you don’t need mortgage insurance for a loan under that amount right?

I’m forgetting the ramifications of a dwn payment of less than 20%…..wasn’t it related to the conforming limit? Or was it something else entirely?

[murf2222]

I’m having a case of brain constipation…….

The *pre-stimulus pkg* conforming limit of $417,000 means that you don’t need mortgage insurance for a loan under that amount right?

I’m forgetting the ramifications of a dwn payment of less than 20%…..wasn’t it related to the conforming limit? Or was it something else entirely?

[robyns_song]

What kind of rate does 5% down get you? Out of curiousity, why did they only put 5% down? Were they planning on doing extensive repairs/upgrades or did they only have 5%?

[robyns_song]

What kind of rate does 5% down get you? Out of curiousity, why did they only put 5% down? Were they planning on doing extensive repairs/upgrades or did they only have 5%?

[robyns_song]

What kind of rate does 5% down get you? Out of curiousity, why did they only put 5% down? Were they planning on doing extensive repairs/upgrades or did they only have 5%?

[robyns_song]

What kind of rate does 5% down get you? Out of curiousity, why did they only put 5% down? Were they planning on doing extensive repairs/upgrades or did they only have 5%?

[SD Realtor]

Do you mind if I ask where you heard this information? A client of mine just closed last week with 5% down. Another client just got approved with 10% down with Wamu.

SD Realtor

[SD Realtor]

Do you mind if I ask where you heard this information? A client of mine just closed last week with 5% down. Another client just got approved with 10% down with Wamu.

SD Realtor

[SD Realtor]

Do you mind if I ask where you heard this information? A client of mine just closed last week with 5% down. Another client just got approved with 10% down with Wamu.

SD Realtor

[SD Realtor]

Do you mind if I ask where you heard this information? A client of mine just closed last week with 5% down. Another client just got approved with 10% down with Wamu.

SD Realtor

[DWCAP]

I hope Wells Fargo and the rest of the banks decide to do this. Not becuase itll mean that something like 50% of would be buyers can’t buy now, killing the market, but because it would be the start of actually healing this market. We would have 12-24 Horrible months, a boat load of forclosures, a recession, and revert to the fundamentals that make a solid market. If banks dont do this, we’ll have 60 horrible months, a boat load of forclosures, a revision to fundamentals, a recession and alot of wasted time (plus a bunch of Gov debt). Seems logical to me. But then again there is the whole solvency thing, so….

BTW, How much did the market fall in December? Any bank still lending at a 5% down payment in San Diego should be banned from borrowing from the FED. They are farting away money. ‘Poof’, and all that is left is the stench.

[DWCAP]

I hope Wells Fargo and the rest of the banks decide to do this. Not becuase itll mean that something like 50% of would be buyers can’t buy now, killing the market, but because it would be the start of actually healing this market. We would have 12-24 Horrible months, a boat load of forclosures, a recession, and revert to the fundamentals that make a solid market. If banks dont do this, we’ll have 60 horrible months, a boat load of forclosures, a revision to fundamentals, a recession and alot of wasted time (plus a bunch of Gov debt). Seems logical to me. But then again there is the whole solvency thing, so….

BTW, How much did the market fall in December? Any bank still lending at a 5% down payment in San Diego should be banned from borrowing from the FED. They are farting away money. ‘Poof’, and all that is left is the stench.

[DWCAP]

I hope Wells Fargo and the rest of the banks decide to do this. Not becuase itll mean that something like 50% of would be buyers can’t buy now, killing the market, but because it would be the start of actually healing this market. We would have 12-24 Horrible months, a boat load of forclosures, a recession, and revert to the fundamentals that make a solid market. If banks dont do this, we’ll have 60 horrible months, a boat load of forclosures, a revision to fundamentals, a recession and alot of wasted time (plus a bunch of Gov debt). Seems logical to me. But then again there is the whole solvency thing, so….

BTW, How much did the market fall in December? Any bank still lending at a 5% down payment in San Diego should be banned from borrowing from the FED. They are farting away money. ‘Poof’, and all that is left is the stench.

[DWCAP]

I hope Wells Fargo and the rest of the banks decide to do this. Not becuase itll mean that something like 50% of would be buyers can’t buy now, killing the market, but because it would be the start of actually healing this market. We would have 12-24 Horrible months, a boat load of forclosures, a recession, and revert to the fundamentals that make a solid market. If banks dont do this, we’ll have 60 horrible months, a boat load of forclosures, a revision to fundamentals, a recession and alot of wasted time (plus a bunch of Gov debt). Seems logical to me. But then again there is the whole solvency thing, so….

BTW, How much did the market fall in December? Any bank still lending at a 5% down payment in San Diego should be banned from borrowing from the FED. They are farting away money. ‘Poof’, and all that is left is the stench.

[DWCAP]

I hope Wells Fargo and the rest of the banks decide to do this. Not becuase itll mean that something like 50% of would be buyers can’t buy now, killing the market, but because it would be the start of actually healing this market. We would have 12-24 Horrible months, a boat load of forclosures, a recession, and revert to the fundamentals that make a solid market. If banks dont do this, we’ll have 60 horrible months, a boat load of forclosures, a revision to fundamentals, a recession and alot of wasted time (plus a bunch of Gov debt). Seems logical to me. But then again there is the whole solvency thing, so….

BTW, How much did the market fall in December? Any bank still lending at a 5% down payment in San Diego should be banned from borrowing from the FED. They are farting away money. ‘Poof’, and all that is left is the stench.

[Anonymous]

Loan policy has been so ridiculous and permissive during the bubble that a return to fiscally sound loan policy will no doubt be perceived by many as draconian, “you mean you actually have to put 20% down?, how unreasonable!” lol

[Anonymous]

Loan policy has been so ridiculous and permissive during the bubble that a return to fiscally sound loan policy will no doubt be perceived by many as draconian, “you mean you actually have to put 20% down?, how unreasonable!” lol

[Anonymous]

Loan policy has been so ridiculous and permissive during the bubble that a return to fiscally sound loan policy will no doubt be perceived by many as draconian, “you mean you actually have to put 20% down?, how unreasonable!” lol

[Anonymous]

Loan policy has been so ridiculous and permissive during the bubble that a return to fiscally sound loan policy will no doubt be perceived by many as draconian, “you mean you actually have to put 20% down?, how unreasonable!” lol

[Anonymous]

Loan policy has been so ridiculous and permissive during the bubble that a return to fiscally sound loan policy will no doubt be perceived by many as draconian, “you mean you actually have to put 20% down?, how unreasonable!” lol

[HLS]

Ranjan….

I have been quite busy, and haven’t read these posts lately, sorry. I didn’t read this entire thread, it’s 50+ posts now.

Believe it or not, there are still programs for 100% purchases, and there are still stated income loans,
IF you qualify…

The current comforming loan of $417K and under are conditioned by FNMA and FreddieMac. They didn’t offer 100% financing, only 95%. The talk of raised conf loan amounts hasn’t been addressed yet.

As of late, certain areas have been determined to be “areas of declining value” and any property in that class is automatically reduced by 5%, so the the old 95% loan is now only 90%.

FHA still has 97% financing (3% down) but the costs/fees are too high IMO.

Loans over 80% still require mortgage insurance.

If you would like my contact info, please email me at [email protected] and I will send you my contact info.
Please post that you have sent me an email, as I don’t check that address unless prompted.

Will be happy to provide any information that I can.

[bsrsharma]

there are still programs for 100% purchases, and there are still stated income loans, IF you qualify…

That is a teaser! Who in this day wants to give away money for 100% and stated income, knowing full well the incentives for "Heads I win, tails you lose" mindset of many home buyers?

[HLS]

A teaser from WHOM ?

The loans are out there. Based on lender risk/reward, people with high credit scores who want to buy a primary residence are a risk that the lending industry is willing to take for a full doc loan.

They are in the lending business. The fact is that in the past the vast majority of people with high credit scores have not defaulted on their loans, even when upside down.

Of course they are going to have losses, and the next few years will be a test of their guidelines.

I didn’t say it was sane.

[HLS]

A teaser from WHOM ?

The loans are out there. Based on lender risk/reward, people with high credit scores who want to buy a primary residence are a risk that the lending industry is willing to take for a full doc loan.

They are in the lending business. The fact is that in the past the vast majority of people with high credit scores have not defaulted on their loans, even when upside down.

Of course they are going to have losses, and the next few years will be a test of their guidelines.

I didn’t say it was sane.

[HLS]

A teaser from WHOM ?

The loans are out there. Based on lender risk/reward, people with high credit scores who want to buy a primary residence are a risk that the lending industry is willing to take for a full doc loan.

They are in the lending business. The fact is that in the past the vast majority of people with high credit scores have not defaulted on their loans, even when upside down.

Of course they are going to have losses, and the next few years will be a test of their guidelines.

I didn’t say it was sane.

[HLS]

A teaser from WHOM ?

The loans are out there. Based on lender risk/reward, people with high credit scores who want to buy a primary residence are a risk that the lending industry is willing to take for a full doc loan.

They are in the lending business. The fact is that in the past the vast majority of people with high credit scores have not defaulted on their loans, even when upside down.

Of course they are going to have losses, and the next few years will be a test of their guidelines.

I didn’t say it was sane.

[HLS]

A teaser from WHOM ?

The loans are out there. Based on lender risk/reward, people with high credit scores who want to buy a primary residence are a risk that the lending industry is willing to take for a full doc loan.

They are in the lending business. The fact is that in the past the vast majority of people with high credit scores have not defaulted on their loans, even when upside down.

Of course they are going to have losses, and the next few years will be a test of their guidelines.

I didn’t say it was sane.

[bsrsharma]

there are still programs for 100% purchases, and there are still stated income loans, IF you qualify…

That is a teaser! Who in this day wants to give away money for 100% and stated income, knowing full well the incentives for "Heads I win, tails you lose" mindset of many home buyers?

[bsrsharma]

there are still programs for 100% purchases, and there are still stated income loans, IF you qualify…

That is a teaser! Who in this day wants to give away money for 100% and stated income, knowing full well the incentives for "Heads I win, tails you lose" mindset of many home buyers?

[bsrsharma]

there are still programs for 100% purchases, and there are still stated income loans, IF you qualify…

That is a teaser! Who in this day wants to give away money for 100% and stated income, knowing full well the incentives for "Heads I win, tails you lose" mindset of many home buyers?

[bsrsharma]

there are still programs for 100% purchases, and there are still stated income loans, IF you qualify…

That is a teaser! Who in this day wants to give away money for 100% and stated income, knowing full well the incentives for "Heads I win, tails you lose" mindset of many home buyers?

[HLS]

Ranjan….

I have been quite busy, and haven’t read these posts lately, sorry. I didn’t read this entire thread, it’s 50+ posts now.

Believe it or not, there are still programs for 100% purchases, and there are still stated income loans,
IF you qualify…

The current comforming loan of $417K and under are conditioned by FNMA and FreddieMac. They didn’t offer 100% financing, only 95%. The talk of raised conf loan amounts hasn’t been addressed yet.

As of late, certain areas have been determined to be “areas of declining value” and any property in that class is automatically reduced by 5%, so the the old 95% loan is now only 90%.

FHA still has 97% financing (3% down) but the costs/fees are too high IMO.

Loans over 80% still require mortgage insurance.

If you would like my contact info, please email me at [email protected] and I will send you my contact info.
Please post that you have sent me an email, as I don’t check that address unless prompted.

Will be happy to provide any information that I can.

[HLS]

Ranjan….

I have been quite busy, and haven’t read these posts lately, sorry. I didn’t read this entire thread, it’s 50+ posts now.

Believe it or not, there are still programs for 100% purchases, and there are still stated income loans,
IF you qualify…

The current comforming loan of $417K and under are conditioned by FNMA and FreddieMac. They didn’t offer 100% financing, only 95%. The talk of raised conf loan amounts hasn’t been addressed yet.

As of late, certain areas have been determined to be “areas of declining value” and any property in that class is automatically reduced by 5%, so the the old 95% loan is now only 90%.

FHA still has 97% financing (3% down) but the costs/fees are too high IMO.

Loans over 80% still require mortgage insurance.

If you would like my contact info, please email me at [email protected] and I will send you my contact info.
Please post that you have sent me an email, as I don’t check that address unless prompted.

Will be happy to provide any information that I can.

[HLS]

Ranjan….

I have been quite busy, and haven’t read these posts lately, sorry. I didn’t read this entire thread, it’s 50+ posts now.

Believe it or not, there are still programs for 100% purchases, and there are still stated income loans,
IF you qualify…

The current comforming loan of $417K and under are conditioned by FNMA and FreddieMac. They didn’t offer 100% financing, only 95%. The talk of raised conf loan amounts hasn’t been addressed yet.

As of late, certain areas have been determined to be “areas of declining value” and any property in that class is automatically reduced by 5%, so the the old 95% loan is now only 90%.

FHA still has 97% financing (3% down) but the costs/fees are too high IMO.

Loans over 80% still require mortgage insurance.

If you would like my contact info, please email me at [email protected] and I will send you my contact info.
Please post that you have sent me an email, as I don’t check that address unless prompted.

Will be happy to provide any information that I can.

[HLS]

Ranjan….

I have been quite busy, and haven’t read these posts lately, sorry. I didn’t read this entire thread, it’s 50+ posts now.

Believe it or not, there are still programs for 100% purchases, and there are still stated income loans,
IF you qualify…

The current comforming loan of $417K and under are conditioned by FNMA and FreddieMac. They didn’t offer 100% financing, only 95%. The talk of raised conf loan amounts hasn’t been addressed yet.

As of late, certain areas have been determined to be “areas of declining value” and any property in that class is automatically reduced by 5%, so the the old 95% loan is now only 90%.

FHA still has 97% financing (3% down) but the costs/fees are too high IMO.

Loans over 80% still require mortgage insurance.

If you would like my contact info, please email me at [email protected] and I will send you my contact info.
Please post that you have sent me an email, as I don’t check that address unless prompted.

Will be happy to provide any information that I can.

[Author]

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