Buy Your New House SOONER Rather Than Later

[Haven]

Good for you and your new home in the South. I am in total agreement about having as little a mortgage as possible and living within your means. That is real peace and an important key to happiness (at least for like minded people)!

I agree with this. I know this is subjective, but the peace of mind that comes with living within one's means is PRICELESS.

 

[ksinger]

MISSY SAID:
And Karen as to
throwing the baby out with the bathwater.All I am saying is let's keep that baby healthy and comfortable and out of danger. Get him/her some clean non- polluted bathwater earned by his/her parents. OK? Just because you did a no money down loan doesn't mean it is the right way to go.
And looking at past history I would say it is *not* the right way to go at all. I am glad it worked out well for you but for every one like you there are many others for whom it did not work out well for at all.
END MISSY SAID (I do just despise the kludginess of the quotes on here. Grrr!)

Look, other than the implication that my situation was pure dumb luck - which it was not - there has to be some give here. If you talk about past history then please remember, FHA loans have been around for a long long time and the world did not cease spinning on its axis until just recently when banks, who of all the parties to a loan ought to know the score, got greedy and stupid. It was not ME or people like me - who took out a measly 59,500 note, that ran this country into the dirt, it was the banks allowing and encouraging people to take out massive loans with crazy terms that any sane loan officer would have known they couldn't handle. This whole problem could have been nipped in the bud by THE BANKS. Period. And all we had to do to ensure that, would have been to make it a requirement on the lendor, to HOLD the note for minimum of 5 years. You think they'd have been lax in lending standards or given out one dime on a potentially bad loan if they'd been at risk to eat the cost, instead of being able to immediately unload that note in a tranched security? In any case, I fail to see why a person like me should be penalized because of greedy bankers. If you want to protect people than protect them, I'm all for that actually, and that can easily be done by sensible lending standards (like the ones I got my loan under back in '9, not punitive and not ridculously rigid ones. A blanket moral statement against a no down loan is just silly.

Now, I understand that at this point in time, most housing prices are completely insane, so taking out a note like I did is probably out of the range of most people, even with a dual income. It's not like there are a lot of nice 60,000 homes - and mine is quite nice actually - around anymore, even in my market. When I hear numbers like $3800 to $5200 dollars per month for a mortgage I nearly cough up a lung.

 

[Dancing Fire]

What largely contributed to the recession was the fact that people who should not have been purchasing houses were allowed to and given huge loans by the banks that the home buyers could not afford. It should always be a requirement IMO to place at least 25% down on a home. People who cannot afford to do this cannot afford to purchase their home IMO. It constantly shocks and amazes me that some people buy homes with nothing down or as little as 5 or 10% down. I mean what kind of fiscal responsibility is that person showing? This is what caused the real estate downfall IMO and I still see it happening!

We need to get back to reality and understand that we cannot always get what we want and need to purchase what we can afford. However, I think taking away 30 year fixed mortgages is harmful because that is what allows people who do purchase homes within their means to continue to do so and this in turn drives the economy. My opinion.

missy
agree 101% with your post...

 

[Dancing Fire]

[quote="charbie|1299424852|
I can't say that I totally agree here. The amount of time it would take most people to save 25% for a down payment while also paying off school loans, starting a family, savings for retirement, etc. (And no I don't mean buying fancy bling, nice cars, but living normal lives), would put ownership off until a person reaches their 40's, maybe! Personally, I enjoy the fact that my husband and I can buy a home, not spend our money renting (bc in my area, renting is about the same as a mortgage anyways) and do all of this in our 20's. We actually are purchasing our second home right now, and are holding on to our first property as an investment until the market in our area changes. I agree that many people purchased homes who never should have been approved (heck, my husband probably shouldn't have been able to buy his first house 5 years ago!) But he didn't lose his home, and we are both now growing in our careers and will over time be able to put more towards our mortgage and pay it off earlier than 30 yrs. By making so many more people totally uneligible to own a home will only further drive the economy into the ground.[/quote]

since when was there a law saying "we must own a home"?... ...haven't we learnt anything from the "housing crash of 2006?"

 

[Miss Sparkly]

I bought my first house at 20, with zero down, and lost it in a short sell after my husband and I both had serious cutbacks at work. I blame the bank for valuing our house too high when it wasn't worth that much, I blame my school and parents for not teaching me about inflation and budgeting, I blame my husband for not stepping up and allowing/forcing me to make all the decisions, I blame society for telling me that I'm nothing without a house and that it should be my ultimate goal - but mostly, I blame myself, for not listening to my heart when it told me that it was the wrong thing to do. I was nauseous the entire day after signing the closing docs.

The people who bought our short sell are TEENAGERS. Yes, a 19 year old dating couple that both work at Domino's Pizza. How fair or right is that? How long are they going to be able to keep that house before the same realities of life hit them just like they hit us? I'm all for making homeownership out of reach to those who shouldn't be buying, me included. I just hope that there are caps put on interest rates to prevent the banks from taking complete advantage of the homeowners. Also, I would love to see a series of required classes for all new homeowners that includes budgeting, inflation, the cost of repairs, what to expect, etc. I'm not sure what to expect in the future but I do hope that it's a significant improvement from the greedy past that I know.

I am going to say this and it's going to sound harsh but here it is: When you are over 18 you can't blame anyone else for your actions. That's why, legally, you are an adult. You are responsible for your own actions 100%. Sorry, but I felt I had to say it.

I think you learned some important things:

1. Be skeptical. Whether it's a loan or a used car, the salesman wants you to buy. Don't believe the salesman.

2. Speak up. If you didn't feel like it's the right thing, don't go along with it. Remember "If everyone else jumped off the bridge . . . "

3. Don't blame others. It's a waste of time, because they won't be left holding the bag; you will.

4. Life isn't fair. I'm sorry, but it just plain isn't. It's not fair to people stricken with painful diseases, it's not fair to hard working people whose children are still hungry. It's not fair that 40 million people work full time jobs but still need food stamps to eat. It never Will be fair, either.

I'm really not trying to be mean. Mistakes are worth it if you learn from them. You are wiser.

I get it. I'm not blaming anybody but myself. It's something I've kept bottled up inside for a very long time and just needed to say, to somebody, somewhere. I saw an opportunity to get something out and took it. Maybe I shouldn't have, but it's too late now. You don't have to tell me about life being unfair, my childhood taught me that quite well. I don't need anymore wisdom - I need my silver lining.

 

[RissaLou]

First I want to explain that I do agree with a lot of the points that are being made on here and I am open minded. While home ownership is not for everyone, I personally have always dreamed of having my very own little house that was mine and mine alone that I could start a family in and lay down some roots. My whole life I have never lived anywhere longer than two years and went to a lot of schools and HATED it. I was the first one in my family to graduate High School let alone college and the same goes for my husband. So we have no family support to help us with a down payment on anything, let alone a house. Now I know there are good majority of "comfortable" living people on here, so this may be a silly question, but how the h*** have some of you been able to put 25% down on your first home?? I would understand being able to do that with a second home and using the funds from the sell of a first house, but really? I'm actually in awe or shock I can't tell yet. My husband and I lived on very little (I'm talking lots of Ramon Noodles) and saved every penny we could to just get 5% down, which a lot of you are saying is irresponsible. Now I am smart enough to know that I have no business buying a house if I can't come up with some kind of down payment, but 25%?? We are looking in the $150,000 range and 25% on that would be $37,500, that's more than I make in a year. How do you do it?? Investing, help from family, inheritance?? But what about us little folk who want a place of our own? Are people saying that we don't deserve a shot at good start? I'm not saying give a house to anybody, but if you have good credit, realistic income to afford the mortgage and some kind of down payment; then why take that opportunity away from the general public? Freddie and Fannie have helped many a couple buy their dream home (and by dream home I don't mean a mansion I just mean a home). I really don't know where some people get that kind of money. I guess maybe if you don't buy your first home until your mid-thirties, which I guess could be the case, but if your goal is to eventually own a home why waste that much money on rent when it could be going to your own home equity? In a perfect world where I had some help from my parents or lucky enough to have a great paying job I would LOVE to be able to put 25 percent or more down on a home, it sure would be a lot less stressful, but that's not an option for me, and if this change happens, I really cannot achieve my dream for solid ten more years, sad day

 

[Dancing Fire]

First I want to explain that I do agree with a lot of the points that are being made on here and I am open minded. While home ownership is not for everyone, I personally have always dreamed of having my very own little house that was mine and mine alone that I could start a family in and lay down some roots. My whole life I have never lived anywhere longer than two years and went to a lot of schools and HATED it. I was the first one in my family to graduate High School let alone college and the same goes for my husband. So we have no family support to help us with a down payment on anything, let alone a house. Now I know there are good majority of "comfortable" living people on here, so this may be a silly question, but how the h*** have some of you been able to put 25% down on your first home?? I would understand being able to do that with a second home and using the funds from the sell of a first house, but really? I'm actually in awe or shock I can't tell yet. My husband and I lived on very little (I'm talking lots of Ramon Noodles) and saved every penny we could to just get 5% down, which a lot of you are saying is irresponsible. Now I am smart enough to know that I have no business buying a house if I can't come up with some kind of down payment, but 25%?? We are looking in the $150,000 range and 25% on that would be $37,500, that's more than I make in a year. How do you do it?? Investing, help from family, inheritance?? But what about us little folk who want a place of our own? Are people saying that we don't deserve a shot at good start? I'm not saying give a house to anybody, but if you have good credit, realistic income to afford the mortgage and some kind of down payment; then why take that opportunity away from the general public? Freddie and Fannie have helped many a couple buy their dream home (and by dream home I don't mean a mansion I just mean a home). I really don't know where some people get that kind of money. I guess maybe if you don't buy your first home until your mid-thirties, which I guess could be the case, but if your goal is to eventually own a home why waste that much money on rent when it could be going to your own home equity? In a perfect world where I had some help from my parents or lucky enough to have a great paying job I would LOVE to be able to put 25 percent or more down on a home, it sure would be a lot less stressful, but that's not an option for me, and if this change happens, I really cannot achieve my dream for solid ten more years, sad day

neither did we...wife and i got marry in 1986 the same year our eldest daughter was born.i was 27 and my wife was 26.we starved ourselves since we were teenagers.. so by 1987 we manage to save the 20% d/p (to avoid PMI) took out a $120K mortgage on our first and only house it took us 17 yrs to pay off the mortgage.anyhow,if we can do it any couple can do it.

 

[Trekkie]

I've been following this thread with great interest. I initially thought I had nothing to offer as I live in South Africa. However a lot that has been said stands out to me.

In SA we've only just introduced 30 year mortgages. I think a 30 year mortgage is bloody ridiculous. How can people sign those things? Do they not realise how much interest they are paying when they opt for 30 years instead of 20? The only exception I can think of is buying a house on a 30 year mortgage while you are studying, when you know that once you graduate you will have an income big enough to pay it off in less. And even then, I don't know if I would do it. Too much of a gamble, imho.

I own several properties, I bought the first a few months after I turned 18 and I thought I was exceptionally lucky to get a bond at 11.5% interest. I paid off that house 32 months. No, I received absolutely no parental support. I worked ridiculously long hours in retail for what amounts to pennies in US$, but was a small fortune to me. At 19 I moved to the UK and started earning pounds, which helped my bond enormously.

I turn 27 tomorrow and barring a small bond on a property I own in Milton Keynes, I have no debt. I am not rich by any standard, but I believe in living within my means. My father used to say to me, "if you can't pay cash, you can't afford it". The only exception he made was for property and, in some cases, cars.

Even then, when I was 21 or 22 and wanted to buy my first brand new car and foolishly thought my father would sign as surety, giving me a lower interest rate, he flat-out laughed at me and told me there was nothing wrong with my 1979 Austen Mini, so what if it was older than me and the carpets had a funny smell when it rained? It was so low on fuel it practically ran on fumes, it still got me from A to B, so I should shut up and save until I could afford a good interest rate on my own. He then proceeded lecture me on how a car would depreciate the moment I drive off the showroom floor and told me that if I really had X amount burning a hole in my pocket every month, I should buy a plot of land instead. So I did. I bitched like hell at the time, ranted and raved and complained bitterly about how unfair he was and how unfair the world was, and how I deserved a new car (!!!! Who *deserves* a new car?!?!?!?!?!), but today I'm grateful.

I look at some of my tenants and I can't believe they live like that. Expensive cars, expensive clothes, daily deli lunches, private schools for the children, overseas holidays. How can they afford all of this?! The answer is simple, they can't. They live in perpetual debt. Credit cards, car installments, revolving credit clothing accounts... The list is endless.

Anyway, the point I'm trying to make is that this sense of entitlement others have alluded to is not just an American problem, we have it here in South Africa too. And you know what? I am not exempt from it. I used drugs for years and when I think of the money I wasted and the opportunities I lost as a result, I want to cry. I could have been so much better off than I am now. We all make mistakes. Some people make financial mistakes, others make lifestyle mistakes.

But if you can afford to buy, BUY! And pay it off as quickly as you can. You don't need Starbucks every morning, you don't need pizza every Friday night or imported beers. Work out where you can cut down and pay that into your bond. Even an extra $100 a month makes a huge long-term difference!

 

[Missy]

First I want to explain that I do agree with a lot of the points that are being made on here and I am open minded. While home ownership is not for everyone, I personally have always dreamed of having my very own little house that was mine and mine alone that I could start a family in and lay down some roots. My whole life I have never lived anywhere longer than two years and went to a lot of schools and HATED it. I was the first one in my family to graduate High School let alone college and the same goes for my husband. So we have no family support to help us with a down payment on anything, let alone a house. Now I know there are good majority of "comfortable" living people on here, so this may be a silly question, but how the h*** have some of you been able to put 25% down on your first home?? I would understand being able to do that with a second home and using the funds from the sell of a first house, but really? I'm actually in awe or shock I can't tell yet. My husband and I lived on very little (I'm talking lots of Ramon Noodles) and saved every penny we could to just get 5% down, which a lot of you are saying is irresponsible. Now I am smart enough to know that I have no business buying a house if I can't come up with some kind of down payment, but 25%?? We are looking in the $150,000 range and 25% on that would be $37,500, that's more than I make in a year. How do you do it?? Investing, help from family, inheritance?? But what about us little folk who want a place of our own? Are people saying that we don't deserve a shot at good start? I'm not saying give a house to anybody, but if you have good credit, realistic income to afford the mortgage and some kind of down payment; then why take that opportunity away from the general public? Freddie and Fannie have helped many a couple buy their dream home (and by dream home I don't mean a mansion I just mean a home). I really don't know where some people get that kind of money. I guess maybe if you don't buy your first home until your mid-thirties, which I guess could be the case, but if your goal is to eventually own a home why waste that much money on rent when it could be going to your own home equity? In a perfect world where I had some help from my parents or lucky enough to have a great paying job I would LOVE to be able to put 25 percent or more down on a home, it sure would be a lot less stressful, but that's not an option for me, and if this change happens, I really cannot achieve my dream for solid ten more years, sad day

neither did we...wife and i got marry in 1986 the same year our eldest daughter was born.i was 27 and my wife was 26.we starved ourselves since we were teenagers.. so by 1987 we manage to save the 20% d/p (to avoid PMI) took out a $120K mortgage on our first and only house it took us 17 yrs to pay off the mortgage.anyhow,if we can do it any couple can do it.

Hey Rissa,
I understand what you are saying and I agree with DF. If we could do it anyone who really has the drive to do so can also. When I graduated from graduate school I rented for a few years and in the meantime was saving as much money as I could because it was a dream of mine to own a home just like my parents did before me. I had also been saving from before I graduated so I didn't start from scratch. I was fortunate in that I was able to purchase an apt I fell in love with that I could afford. Did I get an updated kitchen and bathroom? No way. It was in a prewar apt bldg and believe me nothing had been done to it LOL. I didn't care. It was mine and I loved it. That is why it was so affordable. I had to make concessions. I didn't eat out, I didn't spend money on new shoes/clothes/entertainment etc.

I paid it off so quickly because I saved and invested in my mortgage any extra I could each month. This made me feel at peace and I could rest easy at night. So my first place was not razzle dazzle but it was my home and I could afford it which made it a palace to me. And then when I sold it allowed me and my dh who was now in the picture to purchase a larger home because 9 years later it had appreciated quite a bit. Of course NYC RE is different than other places but I believe if you hold onto your home for a long time it will usually appreciate.

My point is you can do it but you must have realistic expectations as to what you can afford. Maybe you cannot afford a 150K home right now. Not if you cannot put down a good sized down payment IMO.
And you cannot think you will sell and upgrade quickly. You must be content to live there for as long (or forever) as you need to. It is no picnic moving and closing etc let me tell you. I almost wish we didn't start this latest process because I am stressed to the max right now. Every day there is a new issue and I am trying not to lose it but I want to strangle the seller's RE agent right now LOL.

It is my opinion though that you should most definitely not purchase a home until you can afford to put as much down as you can to lower your monthly payments to what is comfortable for you. There is too much uncertainty in life and sure you have to take calculated risks but not dangerous risks if you know what I mean. It is much preferable to continue renting till you can afford to purchase a home without losing sleep at night.

Also, when people put nothing down what is to stop them from walking away when things get rough? They have no real commitment to rough it out and do whatever they need to in order to make it work. And that hurts not just them but it hurts all of us as we can see right now with the RE bubble and crash. Sure the banks are to blame but so are the people who took the loans they could not afford. It really bothers me to see responsibility not being taken as blaming others for our mistakes is so much easier isn't it? But it is the responsibility of each homeowner to make sure they can afford what they are purchasing. And it should not be up to the taxpayers to clean up everyone's mess.

 

[ksinger]

First I want to explain that I do agree with a lot of the points that are being made on here and I am open minded. While home ownership is not for everyone, I personally have always dreamed of having my very own little house that was mine and mine alone that I could start a family in and lay down some roots. My whole life I have never lived anywhere longer than two years and went to a lot of schools and HATED it. I was the first one in my family to graduate High School let alone college and the same goes for my husband. So we have no family support to help us with a down payment on anything, let alone a house. Now I know there are good majority of "comfortable" living people on here, so this may be a silly question, but how the h*** have some of you been able to put 25% down on your first home?? I would understand being able to do that with a second home and using the funds from the sell of a first house, but really? I'm actually in awe or shock I can't tell yet. My husband and I lived on very little (I'm talking lots of Ramon Noodles) and saved every penny we could to just get 5% down, which a lot of you are saying is irresponsible. Now I am smart enough to know that I have no business buying a house if I can't come up with some kind of down payment, but 25%?? We are looking in the $150,000 range and 25% on that would be $37,500, that's more than I make in a year. How do you do it?? Investing, help from family, inheritance?? But what about us little folk who want a place of our own? Are people saying that we don't deserve a shot at good start? I'm not saying give a house to anybody, but if you have good credit, realistic income to afford the mortgage and some kind of down payment; then why take that opportunity away from the general public? Freddie and Fannie have helped many a couple buy their dream home (and by dream home I don't mean a mansion I just mean a home). I really don't know where some people get that kind of money. I guess maybe if you don't buy your first home until your mid-thirties, which I guess could be the case, but if your goal is to eventually own a home why waste that much money on rent when it could be going to your own home equity? In a perfect world where I had some help from my parents or lucky enough to have a great paying job I would LOVE to be able to put 25 percent or more down on a home, it sure would be a lot less stressful, but that's not an option for me, and if this change happens, I really cannot achieve my dream for solid ten more years, sad day

RissaLou, just my observation of the news and threads like these, but I would say the general tenor in the country right now is pretty harsh. Harsh reality and people with harsh attitudes towards others. So yes, they are saying that unless you suck it up and prove yourself worthy by bringing yourself up from nothing, you don't deserve a shot. At least that's how I interpret these big moralizing fests we seem to have on PS these days.

I will say this, I think that not many people would qualify for a no-down loan like I got (and honestly I haven't really kept up and don't know if FHA loans are offered much anymore, nor do I remember what the income rules were to get one) simply because houses are so much more expensive these days. When I got my house it was a bit like the perfect storm - there were no-down loans granted using genuinely sensible guidelines, the market was not yet on fire and rising fast, so housing was quite affordable in my market (and has remained so compared to other places), my debt load was minimal (only a car payment and no consumer debt) and my credit rating was golden. They could look over my numbers, talk to me in person, and see I was an excellent risk. And I still am. Oh, and I was in my mid-thirties, so having to wait is not the end of the world, and might even be a better thing, because you aren't tied to a certain location if you decide you need to move for job prospects, since the days of "flipping" houses and making money on each transaction are O.V.E.R. I knew that I was going to be staying here, so buying was a logical choice.

None of us know how the housing thing will eventually pan out - it may be that 20-25% down becomes the norm, and if that happens, as buyers become fewer and harder to find, housing in all but the hottest markets, should go down. (I sometimes think that everyone on here ONLY wants to live like sardines in places that are described as "the most desirable", but there is a whole big country out here where housing does not start at $600,000 and up) But I'm not sure how we (the US) can do that, being as addicted to the constant growth model as we are, and since churning money in finance and flipping houses was darn near the only economic activity keeping us afloat back then. But since the gov allowed the banks to screw us to the wall in one direction - making massive crappy loans and then allowing them to also create investment vehicles to unload those crappy notes to investors, I'm not going to say they won't allow them to now do it in the opposite direction and not give loans to anyone but those who already have lots of money.

Anyway, I will reiterate my advice, which is to not think of a house as an investment, but as a home. It truly will change the way you approach the issue. I get the feeling from your post, that you may be a bit frantic, and think that this MUST be done NOW. If you are in your 20's, really, you have TIME. If you can save, even slowly, now, then do so, and sit back and relax. Saving is always a good thing. Don't be emotionally caught up in this. It won't do your decision making process any good, believe me.

 

[Missy]

Anyway, I will reiterate my advice, which is to not think of a house as an investment, but as a home. It truly will change the way you approach the issue. I get the feeling from your post, that you may be a bit frantic, and think that this MUST be done NOW. If you are in your 20's, really, you have TIME. If you can save, even slowly, now, then do so, and sit back and relax. Saving is always a good thing. Don't be emotionally caught up in this. It won't do your decision making process any good, believe me.

I totally agree with this Karen. Great advice.

RissaLou, just my observation of the news and threads like these, but I would say the general tenor in the country right now is pretty harsh. Harsh reality and people with harsh attitudes towards others. So yes, they are saying that unless you suck it up and prove yourself worthy by bringing yourself up from nothing, you don't deserve a shot. At least that's how I interpret these big moralizing fests we seem to have on PS these days.

I do not agree with this however. Just because you don't like what some of us believe and say doesn't mean you are right and doesn't mean it is OK to be sarcastic and condescending. We are sharing our beliefs and what worked for us. I believe no money down is dangerous for all the reasons previously stated and I (taxpayers) do not want to clean up your (not you specifically) mess, OK? Sorry if you view this as harsh and moralizing or self righteous because that is not how I see it. My motto is do what you want as long as it doesn't hurt me in any way. That includes smoking near me, driving while under the influence, and driving this country deeper into debt (just to name a few).

 

[JewelFreak]

it was the banks allowing and encouraging people to take out massive loans with crazy terms that any sane loan officer would have known they couldn't handle. This whole problem could have been nipped in the bud by THE BANKS. Period. And all we had to do to ensure that, would have been to make it a requirement on the lendor, to HOLD the note for minimum of 5 years. You think they'd have been lax in lending standards or given out one dime on a potentially bad loan if they'd been at risk to eat the cost, instead of being able to immediately unload that note in a tranched security?

A promissory note is a business's asset, just like machinery or warehoused stock. Do you want the gov't to tell, say, a car company, "You can make cars but must keep them on the lot for 5 years?" It was the government's meddling in markets that set things aflame in the first place. Congress required banks to lower loan standards & lend to people who obviously were not good candidates for repayment. At first the banks resisted loudly; Congress insisted ("all those grateful people will re-elect us"). Things began going south; Congress said, "Don't worry, be happy. We'll [meaning you, me, your neighbors, family & friends] buy your worthless notes." In the last 30 yrs world banking has changed from stodgy & conservative to short-term & superficial: the inevitable happened. Allowing (again, Congress) banks to become stockbrokers exacerbated the problem, creating a conflict of interest: make big fees selling mortgages; package them & sell as securities (more fees & profit), then the buyer is left holding the default bag, bank scot-free.

Homebuyers CAN use their brains, though, Karen. In 1993 when we bought our previous house I talked to mortgage lenders -- never have used a broker. One tried to sell me a balloon mortgage, oh....what a FABULOUS deal!! Miniscule payments, until 10 yrs from now. "What then?" I asked. "Oh," she replied breezily, "Who cares what happens in 10 years?" C'mon!!! I hung up on the sleazebag. Millions didn't -- and now blame her for the unhappy result. Remember that old wall sign: THIMK.

Banks are now returning to loan standards taken for granted 20 yrs ago. Duh! Without the rabid bubble in housing values, buyers of mortgage-backed securities will look at them far more critically, thereby forcing banks to eat their mistakes. Good. We need to re-separate banks & stock firms to ensure stability; that could bring about the return of community banks answerable to their local clients.

Also, when people put nothing down what is to stop them from walking away when things get rough? They have no real commitment to rough it out and do whatever they need to in order to make it work. And that hurts not just them but it hurts all of us as we can see right now with the RE bubble and crash. Sure the banks are to blame but so are the people who took the loans they could not afford. But it is the responsibility of each homeowner to make sure they can afford what they are purchasing. And it should not be up to the taxpayers to clean up everyone's mess.

+1 !!! Your life isn't ruined if you cannot buy a house in your 20s. I didn't & my life has been just fine. No trust fund or fancy income here. For heaven's sake! Besides the mortgage, look at home-ownership costs:

1. Closing fees in the thousands.

2. R.E. taxes -- in Conn. ours were $8600/yr! (A big reason we moved; just couldn't afford it anymore.) Here, for similar property: $2200. Still comes to almost $2000/month.

3. Rule of thumb: you spend about 1% of the purchase price on routine mainentance EVERY YEAR.

4. That doesn't include big stuff: our upstairs HVAC died 2 months ago, replacement cost $7200. Downstairs unit will follow soon, no doubt. We need a new roof: minimum $20,000. Family room floor needs major work: $2000 - $3000. Last year my dishwasher, stove & washing machine bit the dirt: around $8000 total. I have terrifying doubts about the health of our leach field: $$$ Uncountable. (25-yr-old house, everything hits its lifespan about that age.)

A pipe springs a leak, you can't call the super. Garage door goes crazy, ditto. Water in the basement, all the calamities endemic to houses -- you pay. THIS is why it's essential to be able to afford not only the house price, but ongoing costs. Not to mention the headaches you get!

--- Laurie

 

[iheartscience]

Anyway, I will reiterate my advice, which is to not think of a house as an investment, but as a home. It truly will change the way you approach the issue. I get the feeling from your post, that you may be a bit frantic, and think that this MUST be done NOW. If you are in your 20's, really, you have TIME. If you can save, even slowly, now, then do so, and sit back and relax. Saving is always a good thing. Don't be emotionally caught up in this. It won't do your decision making process any good, believe me.

I totally agree with this Karen. Great advice.

RissaLou, just my observation of the news and threads like these, but I would say the general tenor in the country right now is pretty harsh. Harsh reality and people with harsh attitudes towards others. So yes, they are saying that unless you suck it up and prove yourself worthy by bringing yourself up from nothing, you don't deserve a shot. At least that's how I interpret these big moralizing fests we seem to have on PS these days.

I do not agree with this however. Just because you don't like what some of us believe and say doesn't mean you are right and doesn't mean it is OK to be sarcastic and condescending. We are sharing our beliefs and what worked for us. I believe no money down is dangerous for all the reasons previously stated and I (taxpayers) do not want to clean up your (not you specifically) mess, OK? Sorry if you view this as harsh and moralizing or self righteous because that is not how I see it. My motto is do what you want as long as it doesn't hurt me in any way. That includes smoking near me, driving while under the influence, and driving this country deeper into debt (just to name a few).

Yeah I'm with Karen on this one. I think it's very easy for people making six figures to say "Sowwies, unless you save 20% you don't deserve a house. Just work harder!" Interestingly enough, I don't see the same harsh feelings towards Wall Street, which my dollars also went to clean up, and which is what actually caused the mess. As a side note, I'm beyond sick of hearing what people don't want their tax dollars going to. I don't want MY tax dollars going to finance 2 wars I don't agree with, but guess what-they do! And I'd wager that the wars in Iraq and Afghanistan cost us much, much more.

I'm not sure why the attitude in this country is to turn on the working people instead of the people who CAUSED the mess. I guess the haves are much better at messaging than the have-nots.

 

[Missy]

I think it's very easy for people making six figures to say "Sowwies, unless you save 20% you don't deserve a house. Just work harder!"

Thing,
When I bought my first house I was not making close to 6 figures and I was single so fortunately people can purchase homes responsibly who are not making a bucket load of money

It really comes down to some people having a sense of entitlement. If you are not earning enough to purchase a home well, then don't purchase it. No one owes you anything.

 

[iLander]

This is for RissaLou and anyone else that is thinking of buying a first home of their own. Just general advice.

Housing should not cost more than 1/4 of your income. So, figure your monthly take home, divide by four, that's your payment. Some people say 1/3, but I think that's too much.

I have found over the years, that if you look at the price of a house, and move the decimal over a couple of spaces, that the number generally equals your monthly payment. EX: $100,000 house is roughly $1,000 payment per month. DON'T be fooled by banks that only give you the mortgage payment number. You will also need to pay taxes, insurance, and sometimes homeowners, every month.

Ask for the amount of the WHOLE payment, which includes principal, interest, taxes, homeowners, and insurance.

Avoid adjustable rates. They can skyrocket very quickly and are DANGEROUS. Run away!

Ask if there is any penalty for early loan pay-off. You'd be surprised, this is sometimes hidden in the paperwork.

Pay yourself every two weeks, not monthly. If you are saving for a downpayment or paying off the house, every two weeks comes to the equivalent of 13 months of payments (52 weeks divided by 4 equals 13). You won't notice much difference, but it will whittle down your debt or add to your savings pretty painlessly.

Pay half your mortgage payment every 2 weeks, and follow up to be Sure the extra is applied to principal. You'd be surprised how many times you have to call to be sure this is happening properly.

Buy in the best neighborhood that you can afford. Better a tiny house in an excellent school district, than a giant house in a marginal area. These tend to hold their value better and you'll be ready for when you have kids. Research!

Research! Check out Zillow for guesstimated home values, check listings on realtor.com

Watch those carrying costs! I don't like to pay homeowners or maintenance, it feels too much like rent and that money can go toward the house. Even $200 a month is a lot when you realize it's almost $2,500 per year. Also, when you move the decimal (see above) it can be $20,000 more house.

Consider a fixer upper in a good neighborhood. There are plenty of dated houses out there, but if you or a relative is handy, you can make it nice. It may take years, but it will be yours to make your own. Ignore old wall paper, dirty carpet, ugly kitchens, hideous baths. In today's market, those are the bargains.

Be sure you can afford ALL a house requires. How's the roof? Can you afford a repair? How's the heating, cooling, foundation? Can you afford to fix it?

Never buy without an inspection, make your offer "contingent on passing inspection".

Save, save, save. Red Box movies instead of theaters, thermos instead of Starbucks, brown bag your lunch, buy paper goods at Costco, clothes at thrift stores, cheapest rent you can stand, turn off lights, A/C, make homemade gifts, restaurants only once in a while, check out your local library (you'd be surprised what they have), drive a beater with great gas mileage, have friends over for potluck and BYOB instead of bars.

Can you do a second job? Can you tutor, teach an instrument, mow lawns, paint houses, pet-sit or dog walk? Can you do handy stuff for seniors, fix a computer, trim a tree, babysit, clean a pool, clean a house? Contemplate your skills, print out business cards and flyers on your home computer, and pass them out to friends, relatives, neighbors, business associates, etc. When I was young I went door to door and washed people's cars in their driveway.

Some banks still offer loans on 5-10% down, but be ready to pay points (fees), etc. Get pre-approved and look in your price range, plus 10% over your price range. In today's market many sellers will bargain down the extra 10%, some even more.

Check the crime rate in the neighborhood. On the net, many police departments report their stats. Call the local precinct. You'll be surprised how honest they are. If the neighbor's yards are unkempt or dirty, avoid it. This will drag down your value.

Okay, this post is going on far too long, but if anyone else has tips, please add.

 

[Missy]

it was the banks allowing and encouraging people to take out massive loans with crazy terms that any sane loan officer would have known they couldn't handle. This whole problem could have been nipped in the bud by THE BANKS. Period. And all we had to do to ensure that, would have been to make it a requirement on the lendor, to HOLD the note for minimum of 5 years. You think they'd have been lax in lending standards or given out one dime on a potentially bad loan if they'd been at risk to eat the cost, instead of being able to immediately unload that note in a tranched security?

A promissory note is a business's asset, just like machinery or warehoused stock. Do you want the gov't to tell, say, a car company, "You can make cars but must keep them on the lot for 5 years?" It was the government's meddling in markets that set things aflame in the first place. Congress required banks to lower loan standards & lend to people who obviously were not good candidates for repayment. At first the banks resisted loudly; Congress insisted ("all those grateful people will re-elect us"). Things began going south; Congress said, "Don't worry, be happy. We'll [meaning you, me, your neighbors, family & friends] buy your worthless notes." In the last 30 yrs world banking has changed from stodgy & conservative to short-term & superficial: the inevitable happened. Allowing (again, Congress) banks to become stockbrokers exacerbated the problem, creating a conflict of interest: make big fees selling mortgages; package them & sell as securities (more fees & profit), then the buyer is left holding the default bag, bank scot-free.

Homebuyers CAN use their brains, though, Karen. In 1993 when we bought our previous house I talked to mortgage lenders -- never have used a broker. One tried to sell me a balloon mortgage, oh....what a FABULOUS deal!! Miniscule payments, until 10 yrs from now. "What then?" I asked. "Oh," she replied breezily, "Who cares what happens in 10 years?" C'mon!!! I hung up on the sleazebag. Millions didn't -- and now blame her for the unhappy result. Remember that old wall sign: THIMK.

Banks are now returning to loan standards taken for granted 20 yrs ago. Duh! Without the rabid bubble in housing values, buyers of mortgage-backed securities will look at them far more critically, thereby forcing banks to eat their mistakes. Good. We need to re-separate banks & stock firms to ensure stability; that could bring about the return of community banks answerable to their local clients.

Also, when people put nothing down what is to stop them from walking away when things get rough? They have no real commitment to rough it out and do whatever they need to in order to make it work. And that hurts not just them but it hurts all of us as we can see right now with the RE bubble and crash. Sure the banks are to blame but so are the people who took the loans they could not afford. But it is the responsibility of each homeowner to make sure they can afford what they are purchasing. And it should not be up to the taxpayers to clean up everyone's mess.

+1 !!! Your life isn't ruined if you cannot buy a house in your 20s. I didn't & my life has been just fine. No trust fund or fancy income here. For heaven's sake! Besides the mortgage, look at home-ownership costs:

1. Closing fees in the thousands.

2. R.E. taxes -- in Conn. ours were $8600/yr! (A big reason we moved; just couldn't afford it anymore.) Here, for similar property: $2200. Still comes to almost $2000/month.

3. Rule of thumb: you spend about 1% of the purchase price on routine mainentance EVERY YEAR.

4. That doesn't include big stuff: our upstairs HVAC died 2 months ago, replacement cost $7200. Downstairs unit will follow soon, no doubt. We need a new roof: minimum $20,000. Family room floor needs major work: $2000 - $3000. Last year my dishwasher, stove & washing machine bit the dirt: around $8000 total. I have terrifying doubts about the health of our leach field: $$$ Uncountable. (25-yr-old house, everything hits its lifespan about that age.)

A pipe springs a leak, you can't call the super. Garage door goes crazy, ditto. Water in the basement, all the calamities endemic to houses -- you pay. THIS is why it's essential to be able to afford not only the house price, but ongoing costs. Not to mention the headaches you get!

--- Laurie

Great points Laurie!
and if we add homeowner's insurance in the mix the $$$ you need keeps going up and up...


edit: also great post iLander

 

[iheartscience]

I think it's very easy for people making six figures to say "Sowwies, unless you save 20% you don't deserve a house. Just work harder!"

Thing,
When I bought my first house I was not making close to 6 figures and I was single so fortunately people can purchase homes responsibly who are not making a bucket load of money

It really comes down to some people having a sense of entitlement. If you are not earning enough to purchase a home well, then don't purchase it. No one owes you anything.

I really don't see how a desire to own a home=a sense of entitlement. Comments like "I don't want MY tax dollars paying for X, Y or Z" seem a lot more entitled than a middle class person with a desire to own a home. I do agree that people can purchase homes responsibly who are not making a bucket load of money, but I don't think 20% down=responsible. I'd say Karen's purchase of her home was more than responsible, even though she didn't put down 20%. 20% doesn't magically mean someone isn't going to default on a mortgage. In fact, some housing markets in certain areas (FL and NV, to name a few) are so under water that even with a 20% down payment at the height of the market's peak it probably still makes more sense financially to walk away now.

I'm not sure who you're speaking to when you say "No one owes you anything" because I didn't say anyone owes me anything, and neither did Rissa Lou, as far as I can tell. I'm a homeowner and I waited until after the bubble burst to buy. I made a solid choice in a desirable location that I can easily afford. And when I bought I knew that if I couldn't sell it, I could rent it out for more than the mortgage because the rental market where I am is very strong.

 

[ksinger]

I think it's very easy for people making six figures to say "Sowwies, unless you save 20% you don't deserve a house. Just work harder!"

Thing,
When I bought my first house I was not making close to 6 figures and I was single so fortunately people can purchase homes responsibly who are not making a bucket load of money

It really comes down to some people having a sense of entitlement. If you are not earning enough to purchase a home well, then don't purchase it. No one owes you anything.

Wow. Couldn't have said it better myself. My situation exactly.

I'm sorry you find me sarcastic. Being continually lumped and judged kinda does that to me. As I said, it's not people like me, who took out TINY no-down notes in backwater markets, who slammed this country into the dirt. People like me are out here, and we aren't an abberation, WE are the ones who sat through, paid our notes, lived small, and watched the whole mess unfold, and will now be tossed out and blamed because of overreaction. As I said, FHA loans have been around since before dirt. If they were the cause of all this mess, they should have dragged us down decades before now.

 

[ksinger]

I think it's very easy for people making six figures to say "Sowwies, unless you save 20% you don't deserve a house. Just work harder!"

Thing,
When I bought my first house I was not making close to 6 figures and I was single so fortunately people can purchase homes responsibly who are not making a bucket load of money

It really comes down to some people having a sense of entitlement. If you are not earning enough to purchase a home well, then don't purchase it. No one owes you anything.

I really don't see how a desire to own a home=a sense of entitlement. Comments like "I don't want MY tax dollars paying for X, Y or Z" seem a lot more entitled than a middle class person with a desire to own a home. I do agree that people can purchase homes responsibly who are not making a bucket load of money, but I don't think 20% down=responsible. I'd say Karen's purchase of her home was more than responsible, even though she didn't put down 20%. 20% doesn't magically mean someone isn't going to default on a mortgage. In fact, some housing markets in certain areas (FL and NV, to name a few) are so under water that even with a 20% down payment at the height of the market's peak it probably still makes more sense financially to walk away now.

I'm not sure who you're speaking to when you say "No one owes you anything" because I didn't say anyone owes me anything, and neither did Rissa Lou, as far as I can tell. I'm a homeowner and I waited until after the bubble burst to buy. I made a solid choice in a desirable location that I can easily afford. And when I bought I knew that if I couldn't sell it, I could rent it out for more than the mortgage because the rental market where I am is very strong.

Yeah, what IS it about this supposedly magical down anyway? I guess the only thing making me do the right thing is money? The whole mindset behind that is just bizarre. It wasn't being raised right, or the feeling that one's house is a home, it's only money that's going to stop me from defaulting? But you know us folks in the backwaters without that 20% down..tsk. I get amused really, because the default rate here was actually minimal compared to those "desirable" markets where all the smarter, more savvy, and more solvent supposedly live.

 

[iLander]

I personally don't care how much someone did (or did not) put down on a house.

That's none of my business (an old phrase, not used nearly enough these days).

I only care if I'm footing the bill on a default.

There were many amateur investors out there that took advantage of no-money down to buy 9, 10, 15, "investment" homes to flip. If these "investors" had to come up with cash, they wouldn't have bought/lost so many properties!

Those people aren't here on Pricescope.

I don't think any posters intentionally meant to lump in the responsible homeowners on this thread with the losers that walked away. They are completely separate entities.

If you managed to get a house with no money down, and you're loving and paying for your home, GOOD FOR YOU! Nice work, glad to see someone get a great deal! Bravo!

If you managed to pull this off, please give details so that other responsible PSer's can do the same.

 

[Missy]

Yeah, what IS it about this supposedly magical down anyway? I guess the only thing making me do the right thing is money? The whole mindset behind that is just bizarre. It wasn't being raised right, or the feeling that one's house is a home, it's only money that's going to stop me from defaulting? But you know us folks in the backwaters without that 20% down..tsk. I get amused really, because the default rate here was actually minimal compared to those "desirable" markets where all the smarter, more savvy, and more solvent supposedly live.

There is *no* magical down payment number. That number varies (depending on your salaries, other investment incomes, other debts and expenses etc) but in general the higher the down payment the better off you are regarding the stability of your investment and ability to complete payments. In other words, the closer you are to paying off your mortgage in full.

I also want to make clear I am not personally directing my comments to anyone in particular. It is the collective you unless I note otherwise. I am just sharing my belief system that got me to this point. Of course values and being the type of person who follows through on their commitments is key but I think the more you put down the more likely you will follow through on your commitment. I am generalizing (as we all are) and what happened in certain markets (ie Fla, Nevada) is a tragedy but happened because people (banks, individual people etc) got greedy and did not think things through enough. Mistakes happened and it is important to learn from them. No one is perfect but if you (collective general you) keep repeating the same mistakes over and over expecting different results, well, enough said.

And with respect to the wars Thing, just because mistakes were made and we may not agree with how the money was spent does that give us free reign to screw around and throw away more money? Do 2 wrongs make a right?

I'm sorry you find me sarcastic. Being continually lumped and judged kinda does that to me. As I said, it's not people like me, who took out TINY no-down notes in backwater markets, who slammed this country into the dirt. People like me are out here, and we aren't an abberation, WE are the ones who sat through, paid our notes, lived small, and watched the whole mess unfold, and will now be tossed out and blamed because of overreaction. As I said, FHA loans have been around since before dirt. If they were the cause of all this mess, they should have dragged us down decades before now.

Times were very different then Karen. We cannot use you as an example because things were more affordable then and money was worth more. Times have changed and we must adjust accordingly. Children today may not be able to live as well as their parents did...is it fair? Very little is fair in life, I think we already established that fact. And I apologize if you felt I was judging you. That was not my intent at all!

 

[Haven]

First I want to explain that I do agree with a lot of the points that are being made on here and I am open minded. While home ownership is not for everyone, I personally have always dreamed of having my very own little house that was mine and mine alone that I could start a family in and lay down some roots. My whole life I have never lived anywhere longer than two years and went to a lot of schools and HATED it. I was the first one in my family to graduate High School let alone college and the same goes for my husband. So we have no family support to help us with a down payment on anything, let alone a house. Now I know there are good majority of "comfortable" living people on here, so this may be a silly question, but how the h*** have some of you been able to put 25% down on your first home?? I would understand being able to do that with a second home and using the funds from the sell of a first house, but really? I'm actually in awe or shock I can't tell yet. My husband and I lived on very little (I'm talking lots of Ramon Noodles) and saved every penny we could to just get 5% down, which a lot of you are saying is irresponsible. Now I am smart enough to know that I have no business buying a house if I can't come up with some kind of down payment, but 25%?? We are looking in the $150,000 range and 25% on that would be $37,500, that's more than I make in a year. How do you do it?? Investing, help from family, inheritance?? But what about us little folk who want a place of our own? Are people saying that we don't deserve a shot at good start? I'm not saying give a house to anybody, but if you have good credit, realistic income to afford the mortgage and some kind of down payment; then why take that opportunity away from the general public? Freddie and Fannie have helped many a couple buy their dream home (and by dream home I don't mean a mansion I just mean a home). I really don't know where some people get that kind of money. I guess maybe if you don't buy your first home until your mid-thirties, which I guess could be the case, but if your goal is to eventually own a home why waste that much money on rent when it could be going to your own home equity? In a perfect world where I had some help from my parents or lucky enough to have a great paying job I would LOVE to be able to put 25 percent or more down on a home, it sure would be a lot less stressful, but that's not an option for me, and if this change happens, I really cannot achieve my dream for solid ten more years, sad day

RissaLou--You make some very good points and I feel for you and your situation.
I'm often guilty of sounding high and mighty about living as debt-free as possible, but I know that this is only possible for us because we had a lot of help along the way. We put 20% down on our home, but I lived with my parents for six years and thus saved a lot of money in the process. My husband was 38 when we were married, which didn't hurt things, either. We do make conscious choices to spend our money only on things that are very important to us, but so many factors helped us get to where we are that I really can't take much credit for our financial situation. (I attended wonderful public schools, earned scholarships, got lucky with a job that paid for grad school, those sorts of things.)

I don't think 20% is a magic number for a down payment. If you qualify for a loan, and if an honest inventory of your income and spending habits, along with your monthly expenses shows that you could handle the cost of a mortgage and home ownership, then that seems to be what you need.

I know people who earn very good livings, but buy homes that are so expensive they are constantly strapped for cash despite the fact that they put 20% down. On the flip side, I know people who earn modest livings, and bought homes that they could comfortably afford, and they are just fine even though they didn't plunk down a huge DP. I really don't think this is an all-or-nothing situation.

 

[sctsbride09]

RissaLou- I understand where you are coming from. My DH and I are in the similar position to you and your DH. Young, zero financial assistance from any of our families. For the past 5 years, we have been living far beneath our means in order to save for our house. Like living in a crappy area because its the cheapest we can find, (we save over 300 a month just by not staying in a fancier rental), driving used cars we own, we buy things from yard sales/ craigslist, etc. Believe me I understand its hard, especially when you see lots of people around you "skipping ahead" as I like to say to DH. But you will be better off in the long run! By doing this ALL.BY.YOURSELF. you have learned responsibility, and I guarantee you will appreciate your house so much more than someone who was given a down payment, or help from their family etc. It seems hard now, (I know) but keep going! There is time still, and you sound like a smart woman. Keep saving, and you will get your house. Best of luck to you!!

 

[NewEnglandLady]

RissaLou- I understand where you are coming from. My DH and I are in the similar position to you and your DH. Young, zero financial assistance from any of our families. For the past 5 years, we have been living far beneath our means in order to save for our house. Like living in a crappy area because its the cheapest we can find, (we save over 300 a month just by not staying in a fancier rental), driving used cars we own, we buy things from yard sales/ craigslist, etc. Believe me I understand its hard, especially when you see lots of people around you "skipping ahead" as I like to say to DH. But you will be better off in the long run! By doing this ALL.BY.YOURSELF. you have learned responsibility, and I guarantee you will appreciate your house so much more than someone who was given a down payment, or help from their family etc. It seems hard now, (I know) but keep going! There is time still, and you sound like a smart woman. Keep saving, and you will get your house. Best of luck to you!!

I just want to ditto this. I feel like such a brat, but there were literally times when my husband and I were eating Ramen in our cramped, ghetto apartment, driving our old, paid-off car while our friends were buying new cars or nice homes that I would cry and feel like we'd never reach our goal. We prided ourselves on doing it on our own, but there were times when it was really hard. Sometimes more emotionally than financially.

Eventually we met our goals and it felt liberating. The funny thing is--by meeting our goals we went into debt (for the house), so there are many times when I miss that our assets outweighed our debt instead of vice versa! Now it's hard to juggle paying off the house with home improvement projects, future kids' college accounts, etc. I guess it never ends!!

I usually agree that 20% down is what I would deem "safe", but really I think it just depends on what works for the couple. I realize that not everybody's priorities are the same and there are so many variables that go into big financial decisions. I don't tend to fault people for making financial mistakes because we all do it--but taking responsibility for them and learning from it is what really matters.

 

[movie zombie]

i would add to this page of advice: remember Remember REMEMBER that families used live and be raised in homes of 800 square feet or less! be very realistic about what it takes to keep the home repaired and functional. realize that the fuel costs for larger homes are going to be expensive. realize that having new furniture isn't necessary to having a home.

i'm not saying we should go back to the days of outhouses, but we do not have to buy into the marketing of consumerism. living small is the way of the future for many reasons. quality in small spaces.

at one time, think prior to WWII, there were loans by banks for about 5 years only to buy a home. if you couldn't pay it off in that time you didn't get the loan. of course, this was still when banks held the notes. imo, until we return to that time...banks holding the notes rather than trading them as investment products.....we won't have a return to anything resembling sanity regarding our real estate.

i'm not opposed to some government help for making and guaranteeing loans. i am opposed to what the banking industry did with it, the further push for deregulation, the marketing that one was stupid to not use their home as an ATM machine, and using the notes as investment products on the market.

MoZo

ps it is not a right to own a home. it has always been the American DREAM. dreams are goals worked for, saved for, savored, and appreciated once obtained. i have never thought of a home as being an investment product. if the American Dream is to own a home, repeat the mantra that it is a home and work to get your dream but also buy wisely because it may be your one and only shot at it. i cannot state this enough.

 

[chemgirl]

I personally don't care how much someone did (or did not) put down on a house.

That's none of my business (an old phrase, not used nearly enough these days).

I only care if I'm footing the bill on a default.

There were many amateur investors out there that took advantage of no-money down to buy 9, 10, 15, "investment" homes to flip. If these "investors" had to come up with cash, they wouldn't have bought/lost so many properties!

Those people aren't here on Pricescope.

I don't think any posters intentionally meant to lump in the responsible homeowners on this thread with the losers that walked away. They are completely separate entities.

If you managed to get a house with no money down, and you're loving and paying for your home, GOOD FOR YOU! Nice work, glad to see someone get a great deal! Bravo!

If you managed to pull this off, please give details so that other responsible PSer's can do the same.

Just wanted to point out that there have been a few threads by long time and frequent posters about walking away from homes after the value dropped and they were left paying off a loan for something worth a fraction of the purchase price. They were definitely threads full of controversy and debate, but these particular ladies were not losers.

I don't want to sound harsh Islander, I know you are a caring member of this community and wouldn't want to unintentionally hurt anyone.

 

[chemgirl]

First I want to explain that I do agree with a lot of the points that are being made on here and I am open minded. While home ownership is not for everyone, I personally have always dreamed of having my very own little house that was mine and mine alone that I could start a family in and lay down some roots. My whole life I have never lived anywhere longer than two years and went to a lot of schools and HATED it. I was the first one in my family to graduate High School let alone college and the same goes for my husband. So we have no family support to help us with a down payment on anything, let alone a house. Now I know there are good majority of "comfortable" living people on here, so this may be a silly question, but how the h*** have some of you been able to put 25% down on your first home?? I would understand being able to do that with a second home and using the funds from the sell of a first house, but really? I'm actually in awe or shock I can't tell yet. My husband and I lived on very little (I'm talking lots of Ramon Noodles) and saved every penny we could to just get 5% down, which a lot of you are saying is irresponsible. Now I am smart enough to know that I have no business buying a house if I can't come up with some kind of down payment, but 25%?? We are looking in the $150,000 range and 25% on that would be $37,500, that's more than I make in a year. How do you do it?? Investing, help from family, inheritance?? But what about us little folk who want a place of our own? Are people saying that we don't deserve a shot at good start? I'm not saying give a house to anybody, but if you have good credit, realistic income to afford the mortgage and some kind of down payment; then why take that opportunity away from the general public? Freddie and Fannie have helped many a couple buy their dream home (and by dream home I don't mean a mansion I just mean a home). I really don't know where some people get that kind of money. I guess maybe if you don't buy your first home until your mid-thirties, which I guess could be the case, but if your goal is to eventually own a home why waste that much money on rent when it could be going to your own home equity? In a perfect world where I had some help from my parents or lucky enough to have a great paying job I would LOVE to be able to put 25 percent or more down on a home, it sure would be a lot less stressful, but that's not an option for me, and if this change happens, I really cannot achieve my dream for solid ten more years, sad day

We are trying to save for a house and we're having a hard time with the 20% thing as well. Detached homes in our area go for around $400, 000 so 20% of that is not going to happen any time soon. I'm not talking about anything particularly fancy either. That price will get a 50 year old 3 bedroom 1 bathroom complete with leaky basement and 1970's appliances. We are considering a townhouse in a more upscale area to stretch our downpayment. It might not be an option in your area, but in ours, townhouses in the best areas are about half the price of detached homes in questionable areas. I had no idea until I started looking. Its not ideal since a townhouse won't give us the outdoor space of a detached, but it does get us in to a good school district within our budget.

I guess my advice would be to really look in to your options and see if a semi or a townhome might be a easier to get in to.

 

[Dancing Fire]

[quote="thing2of2|
I really don't see how a desire to own a home=a sense of entitlement. Comments like "I don't want MY tax dollars paying for X, Y or Z" seem a lot more entitled than a middle class person with a desire to own a home. I do agree that people can purchase homes responsibly who are not making a bucket load of money, but I don't think 20% down=responsible. I'd say Karen's purchase of her home was more than responsible, even though she didn't put down 20%. 20% doesn't magically mean someone isn't going to default on a mortgage. In fact, some housing markets in certain areas (FL and NV, to name a few) are so under water that even with a 20% down payment at the height of the market's peak it probably still makes more sense financially to walk away now.

thing2
20% d/p = 20% responsibility 0% d/p = 0% responsibility,anyway back in 1987 when we bought our house banks didn't want to give us a loan w/o the 20% down since my wife and i were both young in our mid 20's with no credit history.

about those FL and NV homes...if buyers were require to put 20% down we wouldn't be in this RE mess today since most of these buyers wouldn't able to come up with 20% d/p. the only reason we are in this housing mess b/c of 0% or very little d/p.

 

[Dancing Fire]

[quote="missy|]

Also, when people put nothing down what is to stop them from walking away when things get rough? They have no real commitment to rough it out and do whatever they need to in order to make it work. And that hurts not just them but it hurts all of us as we can see right now with the RE bubble and crash. Sure the banks are to blame but so are the people who took the loans they could not afford. It really bothers me to see responsibility not being taken as blaming others for our mistakes is so much easier isn't it? But it is the responsibility of each homeowner to make sure they can afford what they are purchasing. And it should not be up to the taxpayers to clean up everyone's mess.[/quote]

missy, again i agree with you 101%...

 

[RissaLou]

First I want to explain that I do agree with a lot of the points that are being made on here and I am open minded. While home ownership is not for everyone, I personally have always dreamed of having my very own little house that was mine and mine alone that I could start a family in and lay down some roots. My whole life I have never lived anywhere longer than two years and went to a lot of schools and HATED it. I was the first one in my family to graduate High School let alone college and the same goes for my husband. So we have no family support to help us with a down payment on anything, let alone a house. Now I know there are good majority of "comfortable" living people on here, so this may be a silly question, but how the h*** have some of you been able to put 25% down on your first home?? I would understand being able to do that with a second home and using the funds from the sell of a first house, but really? I'm actually in awe or shock I can't tell yet. My husband and I lived on very little (I'm talking lots of Ramon Noodles) and saved every penny we could to just get 5% down, which a lot of you are saying is irresponsible. Now I am smart enough to know that I have no business buying a house if I can't come up with some kind of down payment, but 25%?? We are looking in the $150,000 range and 25% on that would be $37,500, that's more than I make in a year. How do you do it?? Investing, help from family, inheritance?? But what about us little folk who want a place of our own? Are people saying that we don't deserve a shot at good start? I'm not saying give a house to anybody, but if you have good credit, realistic income to afford the mortgage and some kind of down payment; then why take that opportunity away from the general public? Freddie and Fannie have helped many a couple buy their dream home (and by dream home I don't mean a mansion I just mean a home). I really don't know where some people get that kind of money. I guess maybe if you don't buy your first home until your mid-thirties, which I guess could be the case, but if your goal is to eventually own a home why waste that much money on rent when it could be going to your own home equity? In a perfect world where I had some help from my parents or lucky enough to have a great paying job I would LOVE to be able to put 25 percent or more down on a home, it sure would be a lot less stressful, but that's not an option for me, and if this change happens, I really cannot achieve my dream for solid ten more years, sad day

RissaLou, just my observation of the news and threads like these, but I would say the general tenor in the country right now is pretty harsh. Harsh reality and people with harsh attitudes towards others. So yes, they are saying that unless you suck it up and prove yourself worthy by bringing yourself up from nothing, you don't deserve a shot. At least that's how I interpret these big moralizing fests we seem to have on PS these days.

I will say this, I think that not many people would qualify for a no-down loan like I got (and honestly I haven't really kept up and don't know if FHA loans are offered much anymore, nor do I remember what the income rules were to get one) simply because houses are so much more expensive these days. When I got my house it was a bit like the perfect storm - there were no-down loans granted using genuinely sensible guidelines, the market was not yet on fire and rising fast, so housing was quite affordable in my market (and has remained so compared to other places), my debt load was minimal (only a car payment and no consumer debt) and my credit rating was golden. They could look over my numbers, talk to me in person, and see I was an excellent risk. And I still am. Oh, and I was in my mid-thirties, so having to wait is not the end of the world, and might even be a better thing, because you aren't tied to a certain location if you decide you need to move for job prospects, since the days of "flipping" houses and making money on each transaction are O.V.E.R. I knew that I was going to be staying here, so buying was a logical choice.

None of us know how the housing thing will eventually pan out - it may be that 20-25% down becomes the norm, and if that happens, as buyers become fewer and harder to find, housing in all but the hottest markets, should go down. (I sometimes think that everyone on here ONLY wants to live like sardines in places that are described as "the most desirable", but there is a whole big country out here where housing does not start at $600,000 and up) But I'm not sure how we (the US) can do that, being as addicted to the constant growth model as we are, and since churning money in finance and flipping houses was darn near the only economic activity keeping us afloat back then. But since the gov allowed the banks to screw us to the wall in one direction - making massive crappy loans and then allowing them to also create investment vehicles to unload those crappy notes to investors, I'm not going to say they won't allow them to now do it in the opposite direction and not give loans to anyone but those who already have lots of money.

Anyway, I will reiterate my advice, which is to not think of a house as an investment, but as a home. It truly will change the way you approach the issue. I get the feeling from your post, that you may be a bit frantic, and think that this MUST be done NOW. If you are in your 20's, really, you have TIME. If you can save, even slowly, now, then do so, and sit back and relax. Saving is always a good thing. Don't be emotionally caught up in this. It won't do your decision making process any good, believe me.

Okay I'm from stress relief. I think I was totally just freaking out because when I heard the news about the loan programs changing I automatically starting making all the calculations in my head; I WAS going to be able to buy a house by Nov. of this year and now OH NO! Now I had to wait another FIVE years to have 20% down instead of 5% down! But really that should have been my plan from the beginning, I know better.
So anyway thank you to ksinger you hit the nail on the head with your last paragraph, it was the only response that really jumped out at me, I was having an emotional freak out moment, and your right, five more years is NOT the end of the world.
To everyone else I REALLY do appreciate the advice that was offerd, but to be quite honest I worked for a title company for four years and my mom was a mortgage broker for 20 years, and DH's mom was a real estate agent for two years. So I kind already knew everything else, advise wise, that was being offered. I'm glad it was all brought up though because there have been some AMAZING points brought up, and it's kind of a wake-up call as to the direction our society is heading. I think more and more that my generation is going to be living a life more like our grandparents did than our parents. But heck I think we need that right?? Heaven forbid, we have to work really hard for what want!