[Scarlett]

HLS, I was pre-qualified with Chase. For $500K loan with 10% down , or if I wanted only 5% down, an FHA loan; that was about 6 months ago. I have stopped looking actively so I haven’t updated my pre-qual. I don’t remember all the details, since I wasn’t too serious about buying, but I doubt I wouldn’t qualify now.

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

Cash flow criterion works, Patientrenter!
[quote=patientrenter]
Scarlett, I am sure that you are a wonderful person, but if it would take you “years and years” to save 10% of the price of the home you want to buy, then you cannot afford it. The only way you can “afford” it is if its price only goes up, not down. That is never guaranteed. It is widespread denial of the simple ‘cash flow’ criterion for affordability that got the entire economy into its current fix.[/quote]

We have $170K income and excellend FICO scores. If we can’t afford a decent 4 br house that now goes for 550-600K, how many can then? By “years and years” I meant more like 5 years in the current conditions, playing it safe by first putting away money for college and retirement, before saving for down payment.

I am paying rent of $2700 and save ~$1000 per month, after retirement, college fund savings. I think in terms of cash flow, assuming steady income, it works just fine. With $3600 total PITI and 10% down, I could buy something quite decent right now, instead of waiting those 5 years. I don’t care much if the prices don’t go up, though it would be nice.

What if in 5 yrs the rates are over 10-15% and the prices haven’t dropped dramatically (though they probably would, with those rates)? I may not be able to afford the monthly payment then, even if I have 20% down. Why wait (except for prices to decline further)? Why should I turn off all the other savings and live in a crappy place in order to save that those money in couple years instead? What’s wrong in this case to buy now with only 10% down?

I can tell you what’s wrong. You are right, it shouldn’t take us years to come up with an extra 10%, when you have 170K yearly income, even with that high of a rent. The house market is still so much out of whack. The prices should be HALF of what they are now!!! Ok, maybe not quite half, but at most 66%. Then yes, I’d have 20% down right now. Well, I am waiting, maybe they will go down that much in a couple years. I think they will.

Scarlett

[Scarlett]

[quote=SD Realtor]
(…) first that the lending conditions when you submit the short sale may be drastically different then when the short sale is actually accepted. Additionally keep in mind that it is difficult, though not impossible to get any concessions from the lender authorizing the short sale after it has been accepted. What I mean by that is you may want to try to make sure that you either build in repair costs to your original offer. [/quote]

Thanks a lot, SD Realtor, that is a very good point, I haven’t thought about it! Very important to take into account.

I probably would eat the repair costs within, let’s say, 10K. I am not that much of a haggler…But if you submit an offer right away – no time for inspection, and then later find out something major, like 20K repairs for something wasn’t easy to spot with the naked eye, would you recommend to try to get concessions in this case if we don’t want to pay for it – or be prepared to walk out of the deal? Is it ok to walk?

[Scarlett]

[quote=SD Realtor]
(…) first that the lending conditions when you submit the short sale may be drastically different then when the short sale is actually accepted. Additionally keep in mind that it is difficult, though not impossible to get any concessions from the lender authorizing the short sale after it has been accepted. What I mean by that is you may want to try to make sure that you either build in repair costs to your original offer. [/quote]

Thanks a lot, SD Realtor, that is a very good point, I haven’t thought about it! Very important to take into account.

I probably would eat the repair costs within, let’s say, 10K. I am not that much of a haggler…But if you submit an offer right away – no time for inspection, and then later find out something major, like 20K repairs for something wasn’t easy to spot with the naked eye, would you recommend to try to get concessions in this case if we don’t want to pay for it – or be prepared to walk out of the deal? Is it ok to walk?

[Scarlett]

[quote=SD Realtor]
(…) first that the lending conditions when you submit the short sale may be drastically different then when the short sale is actually accepted. Additionally keep in mind that it is difficult, though not impossible to get any concessions from the lender authorizing the short sale after it has been accepted. What I mean by that is you may want to try to make sure that you either build in repair costs to your original offer. [/quote]

Thanks a lot, SD Realtor, that is a very good point, I haven’t thought about it! Very important to take into account.

I probably would eat the repair costs within, let’s say, 10K. I am not that much of a haggler…But if you submit an offer right away – no time for inspection, and then later find out something major, like 20K repairs for something wasn’t easy to spot with the naked eye, would you recommend to try to get concessions in this case if we don’t want to pay for it – or be prepared to walk out of the deal? Is it ok to walk?

[Scarlett]

[quote=SD Realtor]
(…) first that the lending conditions when you submit the short sale may be drastically different then when the short sale is actually accepted. Additionally keep in mind that it is difficult, though not impossible to get any concessions from the lender authorizing the short sale after it has been accepted. What I mean by that is you may want to try to make sure that you either build in repair costs to your original offer. [/quote]

Thanks a lot, SD Realtor, that is a very good point, I haven’t thought about it! Very important to take into account.

I probably would eat the repair costs within, let’s say, 10K. I am not that much of a haggler…But if you submit an offer right away – no time for inspection, and then later find out something major, like 20K repairs for something wasn’t easy to spot with the naked eye, would you recommend to try to get concessions in this case if we don’t want to pay for it – or be prepared to walk out of the deal? Is it ok to walk?

[Scarlett]

[quote=SD Realtor]
(…) first that the lending conditions when you submit the short sale may be drastically different then when the short sale is actually accepted. Additionally keep in mind that it is difficult, though not impossible to get any concessions from the lender authorizing the short sale after it has been accepted. What I mean by that is you may want to try to make sure that you either build in repair costs to your original offer. [/quote]

Thanks a lot, SD Realtor, that is a very good point, I haven’t thought about it! Very important to take into account.

I probably would eat the repair costs within, let’s say, 10K. I am not that much of a haggler…But if you submit an offer right away – no time for inspection, and then later find out something major, like 20K repairs for something wasn’t easy to spot with the naked eye, would you recommend to try to get concessions in this case if we don’t want to pay for it – or be prepared to walk out of the deal? Is it ok to walk?

[Scarlett]

[quote=FormerSanDiegan][quote=SD Realtor]

I am not sure I agree with that concept but it is indeed happening. Also you may not have to save another 10% to get to 20% down. Maybe you need to save 5% and housing prices drop another 5% and then you have made it.
[/quote]

Not sure the lender would apply the same interest rate and relieve the buyer of PMI though. So, it’s not really 20% down.

But a good point, nonetheless.[/quote]

True, true! But also to keep in mind the PMI, albeit not negligible, is only for a few years, while the rate is until you re-fi (assuming fixed rate loan)

[Scarlett]

[quote=FormerSanDiegan][quote=SD Realtor]

I am not sure I agree with that concept but it is indeed happening. Also you may not have to save another 10% to get to 20% down. Maybe you need to save 5% and housing prices drop another 5% and then you have made it.
[/quote]

Not sure the lender would apply the same interest rate and relieve the buyer of PMI though. So, it’s not really 20% down.

But a good point, nonetheless.[/quote]

True, true! But also to keep in mind the PMI, albeit not negligible, is only for a few years, while the rate is until you re-fi (assuming fixed rate loan)

[Scarlett]

[quote=FormerSanDiegan][quote=SD Realtor]

I am not sure I agree with that concept but it is indeed happening. Also you may not have to save another 10% to get to 20% down. Maybe you need to save 5% and housing prices drop another 5% and then you have made it.
[/quote]

Not sure the lender would apply the same interest rate and relieve the buyer of PMI though. So, it’s not really 20% down.

But a good point, nonetheless.[/quote]

True, true! But also to keep in mind the PMI, albeit not negligible, is only for a few years, while the rate is until you re-fi (assuming fixed rate loan)

[Scarlett]

[quote=FormerSanDiegan][quote=SD Realtor]

I am not sure I agree with that concept but it is indeed happening. Also you may not have to save another 10% to get to 20% down. Maybe you need to save 5% and housing prices drop another 5% and then you have made it.
[/quote]

Not sure the lender would apply the same interest rate and relieve the buyer of PMI though. So, it’s not really 20% down.

But a good point, nonetheless.[/quote]

True, true! But also to keep in mind the PMI, albeit not negligible, is only for a few years, while the rate is until you re-fi (assuming fixed rate loan)

[Author]

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