Want to buy but can’t come up with 20% down payment,

[temeculaguy]

AN, I think the type of purchases today is also causing people to want larger reserves. Most sales are foreclosures, with no warranty. I know I held back an additional chunk of change because I couldn’t turn the water on until after escrow was closed, energizing the main line was a very tense experience, positioning friends and relatives at every sink and bathroom. I accidentally watched Red October on cable a few days before and had nighmares about pipes busting and floods, not to mention my fear of cemented drain pipes that I had read about. It’s like going “all in” before seeing the flop. Most piggies are such planners that it borders on mental illness, spinning the wheel of chance isn’t something we are comfortable with.

I do envy the loyalty that your family has, perhaps it’s cultural or perhaps I just dislike some of my relatives because there a couple that I don’t even let in the house let alone loan them money.

[Bob]

[quote=SD Realtor]Personally I could not sleep at night if I didn’t have at least 6 months to a year reserves stashed somewhere or at least some type of plan to take care of my family if I lost employment. It doesn’t matter if the loan was an FHA loan or if I put all cash in. Having a strong reserve is in my opinion very important these days. That is just me though.
[/quote]

And thats my point.

The person who started this thread seemed to suggest that they only had $55K in savings without much of a reserve. Purchasing a $450K house under that scenario is extremely risky and should be avoided. On the other hand, if they have another $50K stashed away in addition to the $55K down payment, then there isn’t as much risk.

As far as my point about FHA loans, the stats don’t lie. People with little or no equity in their home tend to default at a much higher rate. Therefore, I believe purchasers should be required to have a sufficient amount of down payment…say 20%.

[Bob]

[quote=SD Realtor]Personally I could not sleep at night if I didn’t have at least 6 months to a year reserves stashed somewhere or at least some type of plan to take care of my family if I lost employment. It doesn’t matter if the loan was an FHA loan or if I put all cash in. Having a strong reserve is in my opinion very important these days. That is just me though.
[/quote]

And thats my point.

The person who started this thread seemed to suggest that they only had $55K in savings without much of a reserve. Purchasing a $450K house under that scenario is extremely risky and should be avoided. On the other hand, if they have another $50K stashed away in addition to the $55K down payment, then there isn’t as much risk.

As far as my point about FHA loans, the stats don’t lie. People with little or no equity in their home tend to default at a much higher rate. Therefore, I believe purchasers should be required to have a sufficient amount of down payment…say 20%.

[Bob]

[quote=SD Realtor]Personally I could not sleep at night if I didn’t have at least 6 months to a year reserves stashed somewhere or at least some type of plan to take care of my family if I lost employment. It doesn’t matter if the loan was an FHA loan or if I put all cash in. Having a strong reserve is in my opinion very important these days. That is just me though.
[/quote]

And thats my point.

The person who started this thread seemed to suggest that they only had $55K in savings without much of a reserve. Purchasing a $450K house under that scenario is extremely risky and should be avoided. On the other hand, if they have another $50K stashed away in addition to the $55K down payment, then there isn’t as much risk.

As far as my point about FHA loans, the stats don’t lie. People with little or no equity in their home tend to default at a much higher rate. Therefore, I believe purchasers should be required to have a sufficient amount of down payment…say 20%.

[Bob]

[quote=SD Realtor]Personally I could not sleep at night if I didn’t have at least 6 months to a year reserves stashed somewhere or at least some type of plan to take care of my family if I lost employment. It doesn’t matter if the loan was an FHA loan or if I put all cash in. Having a strong reserve is in my opinion very important these days. That is just me though.
[/quote]

And thats my point.

The person who started this thread seemed to suggest that they only had $55K in savings without much of a reserve. Purchasing a $450K house under that scenario is extremely risky and should be avoided. On the other hand, if they have another $50K stashed away in addition to the $55K down payment, then there isn’t as much risk.

As far as my point about FHA loans, the stats don’t lie. People with little or no equity in their home tend to default at a much higher rate. Therefore, I believe purchasers should be required to have a sufficient amount of down payment…say 20%.

[Bob]

[quote=SD Realtor]Personally I could not sleep at night if I didn’t have at least 6 months to a year reserves stashed somewhere or at least some type of plan to take care of my family if I lost employment. It doesn’t matter if the loan was an FHA loan or if I put all cash in. Having a strong reserve is in my opinion very important these days. That is just me though.
[/quote]

And thats my point.

The person who started this thread seemed to suggest that they only had $55K in savings without much of a reserve. Purchasing a $450K house under that scenario is extremely risky and should be avoided. On the other hand, if they have another $50K stashed away in addition to the $55K down payment, then there isn’t as much risk.

As far as my point about FHA loans, the stats don’t lie. People with little or no equity in their home tend to default at a much higher rate. Therefore, I believe purchasers should be required to have a sufficient amount of down payment…say 20%.

[Bob]

[quote=temeculaguy]Bob, do you not like FHA loans because you read they were risky or that they look similar to the toxic loans of the past. I can probably help you over those fears. [/quote]

Actually, I’m not fearful of anything, just providing my advice based on what the poster asked. And the fact is, FHA loans have a high default rate. Various reasons for that – one of which is the purchaser has far less skin in the game making a 4% down payment rather than a 20% down payment. The Feds are well aware of the risk, but don’t care because they know the taxpayers will cover the costs when the loans go bad.

[Bob]

[quote=temeculaguy]Bob, do you not like FHA loans because you read they were risky or that they look similar to the toxic loans of the past. I can probably help you over those fears. [/quote]

Actually, I’m not fearful of anything, just providing my advice based on what the poster asked. And the fact is, FHA loans have a high default rate. Various reasons for that – one of which is the purchaser has far less skin in the game making a 4% down payment rather than a 20% down payment. The Feds are well aware of the risk, but don’t care because they know the taxpayers will cover the costs when the loans go bad.

[Bob]

[quote=temeculaguy]Bob, do you not like FHA loans because you read they were risky or that they look similar to the toxic loans of the past. I can probably help you over those fears. [/quote]

Actually, I’m not fearful of anything, just providing my advice based on what the poster asked. And the fact is, FHA loans have a high default rate. Various reasons for that – one of which is the purchaser has far less skin in the game making a 4% down payment rather than a 20% down payment. The Feds are well aware of the risk, but don’t care because they know the taxpayers will cover the costs when the loans go bad.

[Bob]

[quote=temeculaguy]Bob, do you not like FHA loans because you read they were risky or that they look similar to the toxic loans of the past. I can probably help you over those fears. [/quote]

Actually, I’m not fearful of anything, just providing my advice based on what the poster asked. And the fact is, FHA loans have a high default rate. Various reasons for that – one of which is the purchaser has far less skin in the game making a 4% down payment rather than a 20% down payment. The Feds are well aware of the risk, but don’t care because they know the taxpayers will cover the costs when the loans go bad.

[Bob]

[quote=temeculaguy]Bob, do you not like FHA loans because you read they were risky or that they look similar to the toxic loans of the past. I can probably help you over those fears. [/quote]

Actually, I’m not fearful of anything, just providing my advice based on what the poster asked. And the fact is, FHA loans have a high default rate. Various reasons for that – one of which is the purchaser has far less skin in the game making a 4% down payment rather than a 20% down payment. The Feds are well aware of the risk, but don’t care because they know the taxpayers will cover the costs when the loans go bad.

[patientrenter]

[quote=ybitz]Aye…why are prices still so high relative to people’s incomes, despite the high foreclosure rates?[/quote]

Because the money used to pay for the houses doesn’t come from the buyers – it’s “monopoly money” from lenders like the FHA. If buyers had to put up most, or even a good portion, of the money to buy a house, prices would plummet to levels that were comfortably supportable.

[patientrenter]

[quote=ybitz]Aye…why are prices still so high relative to people’s incomes, despite the high foreclosure rates?[/quote]

Because the money used to pay for the houses doesn’t come from the buyers – it’s “monopoly money” from lenders like the FHA. If buyers had to put up most, or even a good portion, of the money to buy a house, prices would plummet to levels that were comfortably supportable.

[patientrenter]

[quote=ybitz]Aye…why are prices still so high relative to people’s incomes, despite the high foreclosure rates?[/quote]

Because the money used to pay for the houses doesn’t come from the buyers – it’s “monopoly money” from lenders like the FHA. If buyers had to put up most, or even a good portion, of the money to buy a house, prices would plummet to levels that were comfortably supportable.

[patientrenter]

[quote=ybitz]Aye…why are prices still so high relative to people’s incomes, despite the high foreclosure rates?[/quote]

Because the money used to pay for the houses doesn’t come from the buyers – it’s “monopoly money” from lenders like the FHA. If buyers had to put up most, or even a good portion, of the money to buy a house, prices would plummet to levels that were comfortably supportable.

[Author]

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