How to buy a house with no money down?

[Dancing Fire]

Date: 5/11/2008 6:42:54 AM
Author: violet02

Anyways due to the mortgage crisis no lender here will do a 0% down loan. On the other hand my co-worker in washington state got a zero down loan a few months ago on a much cheaper house. He just barely got that though. He said they''re not offering them anymore where he got his loan. He lives in a much cheaper area though so it''s different. My FI feels strongly about the fact that if we can''t have positive cash flow (ie not owe money on our credit cards) and we can''t come up with a down (at a min. 5% on our own) then we shouldn''t be buying a house. Being house poor is no way to live. I think doing a 0 down may be okay for some folks but there''s a lot of things to consider, that''s if you can even get that.

I think consulting a financial planner was the best decision we made honestly. It put things into perspective for us.

That''s my two cents. Hope that was somewhat useful.

if you owe money on your CC don''t even think about buying a house yet. don''t worry about missing the boat,we won''t see a up trend in the Ca housing market for the next few yrs.

 

[Dancing Fire]

Date: 5/11/2008 1:14:13 PM
Author: UCLABelle
I think in Orange County (where I live) they stopped doing 100% financing due to the crisis right now...In fact, I think you need at least 20% down....

We bought a small condo last August that we knew we could afford with 15%.

I would personally probably not consider buying a house with no money down, because I believe typically the loans are more risky..However, I am not an expert, and this is clearly your choice, if you can find someone willing to lend you money for it.

and thats the way it should be.well....at least 15% down,then we wouldn''t of have this mess.

 

[Dancing Fire]

Date: 5/9/2008 8:46:17 PM
Author: robbie3982



The sad truth is that for many people 20% down on a first home isn't a possibility. By the time we would've been able to save enough for 20% down AND a large enough emergency fund, what we'd saved would no longer have been enough for 20% down!

why not?

my grandparents did,my parents did,i did.

the sad truth is that people with no money down cause this housing mess that we see today.if my english were better i would write in detail explainning to you what cause this housing bubble.

 

[crown1]

Date: 5/9/2008 3:55:14 PM
Author: icekid
Many many of the problems we are having right now can be directly attributed to the fact that Americans feel they are entitled to live the high life. They DESERVE a big house, a huge SUV, plus an enormous TV. Moreover, they deserve it NOW. Who wants to wait? And screw everyone else, because they''re not ME.


I wouldn''t personally ever consider buying a house without a downpayment. given the current market? absolutely not! You''re just setting yourself up for future problems.


neatfreak- I agreed with you

thank you for saying this. i have not read all of the thread yet. i am working on it. i agree with what you and some others have said. i have long been agitated reading the everyday comments people make telling others to go ahead and whatever that they deserve it. truth told we don''t know what others deserve from reading an internet forum. i am totally all about not buying anything you can not afford.

 

[DivaDiamond007]

Date: 5/12/2008 5:07:13 AM
Author: Dancing Fire

Date: 5/9/2008 8:46:17 PM
Author: robbie3982




The sad truth is that for many people 20% down on a first home isn''t a possibility. By the time we would''ve been able to save enough for 20% down AND a large enough emergency fund, what we''d saved would no longer have been enough for 20% down!

why not?

my grandparents did,my parents did,i did.

the sad truth is that people with no money down cause this housing mess that we see today.if my english were better i would write in detail explainning to you what cause this housing bubble.

That is not a true statement. As I stated before, the housing mess was created by BOTH consumers and the mortgage companies. Consumers were approaching lenders with grossly inflated appraisals and (sometimes) overstating their income or not providing proof of their income at all (i.e. "no doc" loans). The lenders were giving out loans to consumers that did not have the ability to repay - downpayment or not. Lenders were also using practices that are largely considered to be unsavory in many markets - ARM loans, baloon payments, high fees, etc.

I really hope the lenders and mortgage companies have learned their lesson here. Don''t lend money to people who can''t provide proof of their ability to reapy and; likewise, consumers really need to wise up and only buy what they can truly afford and be diligent in seeking an honest appraisal of the property they want to buy. If it sounds too good to be true, then it usually is.

Further, just because you put money down on a home loan does not mean that your financial future is set in stone. These days factories are laying workers off left and right and sometimes closing up shop completely - thus leaving workers without their wages - and thus leading to late payments and no payments on consumer debt. I see this everyday at my job. As foreclosures rise so do bankruptcies because when people lose their income they lose their ability to repay their bills - downpayment or not and even if they are otherwise living within their means. Point is that the economy is bad all around - not just in the housing market.

Jess

 

[robbie3982]

Date: 5/12/2008 9:41:34 AM
Author: DivaDiamond007

Date: 5/12/2008 5:07:13 AM
Author: Dancing Fire

Date: 5/9/2008 8:46:17 PM
Author: robbie3982





The sad truth is that for many people 20% down on a first home isn''t a possibility. By the time we would''ve been able to save enough for 20% down AND a large enough emergency fund, what we''d saved would no longer have been enough for 20% down!

why not?

my grandparents did,my parents did,i did.

the sad truth is that people with no money down cause this housing mess that we see today.if my english were better i would write in detail explainning to you what cause this housing bubble.

That is not a true statement. As I stated before, the housing mess was created by BOTH consumers and the mortgage companies. Consumers were approaching lenders with grossly inflated appraisals and (sometimes) overstating their income or not providing proof of their income at all (i.e. ''no doc'' loans). The lenders were giving out loans to consumers that did not have the ability to repay - downpayment or not. Lenders were also using practices that are largely considered to be unsavory in many markets - ARM loans, baloon payments, high fees, etc.

I really hope the lenders and mortgage companies have learned their lesson here. Don''t lend money to people who can''t provide proof of their ability to reapy and; likewise, consumers really need to wise up and only buy what they can truly afford and be diligent in seeking an honest appraisal of the property they want to buy. If it sounds too good to be true, then it usually is.

Further, just because you put money down on a home loan does not mean that your financial future is set in stone. These days factories are laying workers off left and right and sometimes closing up shop completely - thus leaving workers without their wages - and thus leading to late payments and no payments on consumer debt. I see this everyday at my job. As foreclosures rise so do bankruptcies because when people lose their income they lose their ability to repay their bills - downpayment or not and even if they are otherwise living within their means. Point is that the economy is bad all around - not just in the housing market.

Jess

Thank you DivaDiamond!

Dancing Fire, just because you were able to put down 20% on your first home doesn''t mean that everyone can. What year did you buy your first home? Just because you''re able to do something doesn''t mean everyone else can. My parents were able to pay for their home in cash. No mortgage. That doesn''t mean that I can or ever will be able to.

Why should I waste money on rent for at least 4 years (the minimum amount of time it would have taken us to save up 20%) while I''m saving up for a down payment when I''m capable of getting a loan and making the payments on it now? That wasted rent money would be about $36,000. I''d rather it go towards my mortgage even if most of it will go towards interest. Not to mention the fact that I''m not in a declining market and the cost of my house 4 years from now could easily have been out of my price range and therefore what I would''ve spent all that time saving would no longer have actually been 20%. Inflation sucks.

 

[violet02]

I think the california market in my area is starting to go up again. The awesome house we wanted sold so fast they didn''t even let us make a counter offer. Later that week we went down the street to open houses one of which sold that very week! They seem to be going very fast now! Frustrating... Our planner and broker believe the bottom of the market was actually January so prices are starting to go up slowly but surely. This is the silicoin valley area though and we live in a bubble.

 

[sumbride]

Date: 5/12/2008 5:07:13 AM
Author: Dancing Fire

Date: 5/9/2008 8:46:17 PM

Author: robbie3982


The sad truth is that for many people 20% down on a first home isn't a possibility. By the time we would've been able to save enough for 20% down AND a large enough emergency fund, what we'd saved would no longer have been enough for 20% down!

why not?

my grandparents did,my parents did,i did.

the sad truth is that people with no money down cause this housing mess that we see today.if my english were better i would write in detail explainning to you what cause this housing bubble.

My parents' house cost $30k. Mine cost $275k and is about half the size. My down payment, if I'd had 20%, would have paid for their house almost twice, yet they had a 30 year mortgage. See the difference? Wages have not gone up (by age group) to make up the difference in housing prices. Proportionally it is still a significant stretch. Situations are different for different people and there is no way to say "well, I did it so you should be able to..." The judgment is up to the individual and their lending group.

 

[Selkie]

Date: 5/12/2008 12:33:46 PM
Author: sumbride

My parents'' house cost $30k. Mine cost $275k and is about half the size. My down payment, if I''d had 20%, would have paid for their house almost twice, yet they had a 30 year mortgage. See the difference? Wages have not gone up (by age group) to make up the difference in housing prices. Proportionally it is still a significant stretch. Situations are different for different people and there is no way to say ''well, I did it so you should be able to...'' The judgment is up to the individual and their lending group.

Exactly. In California, where we live, the MINIMUM income needed to afford the MEDIAN home price(a whopping 400K) is more than 100K. DH and I have both been steadily working in our current jobs/fields for 10-15 years, and still make less than 100K/yr combined. We both have advanced degrees and good jobs that we love, but our fields just don''t pay the big bucks. We are responsible, we save as much as possible, and someday soon we hope to own a home. However to afford even a tiny fixer-upper, if we waited until we could put down 20%, we won''t own until I''m in my 40s. The 10% is a much more reasonable guideline, given that the housing market has inflated at a far greater rate than general inflation recently. That said, we have no intention of buying until we can put down 10%, and safely afford the monthly payments. We should NOT be penalized for not having the advantage of being independently wealthy.

That said, I completely agree that the mortage meltdown could be seen coming from miles away, even three years ago. Hopefully things will get back to equilibrium soon, so that even non-millionaires and non-risk takers like ourselves can get into the market.

 

[Dancing Fire]

Date: 5/12/2008 11:10:09 AM
Author: robbie3982

Thank you DivaDiamond!

Dancing Fire, just because you were able to put down 20% on your first home doesn''t mean that everyone can. What year did you buy your first home? Just because you''re able to do something doesn''t mean everyone else can. My parents were able to pay for their home in cash. No mortgage. That doesn''t mean that I can or ever will be able to.

Why should I waste money on rent for at least 4 years (the minimum amount of time it would have taken us to save up 20%) while I''m saving up for a down payment when I''m capable of getting a loan and making the payments on it now? That wasted rent money would be about $36,000. I''d rather it go towards my mortgage even if most of it will go towards interest. Not to mention the fact that I''m not in a declining market and the cost of my house 4 years from now could easily have been out of my price range and therefore what I would''ve spent all that time saving would no longer have actually been 20%. Inflation sucks.

robbie....
in 1987 for $147K. i was 28 yrs old which was a lot of money to a young married couple with a baby girl .we took out a 30 yr ARM b/c i was betting the interest rate to go down in the next few yr. in 1990 we refi into a 15 yr fix and by adding an extra $225 into our payment each month we paid off our mortgage in 2004. sooo...if we can do it....any couple can do it.

btw; back then...without a 20% down,mortgage Co''s didn''t really want to talk to us.


renting isn''t always a bad idea....go ask those couples that are homeless today and with their credit scores ruin. what are their chances of getting a mortgage in the future?

 

[Skippy123]

I heard something on the radio that it is much harder to qualify for loans, because right now good credit is a score of 760 and 2 years ago it was 620; that is a big difference.

 

[Dancing Fire]

Date: 5/12/2008 9:41:34 AM
Author: DivaDiamond007

Date: 5/12/2008 5:07:13 AM
Author: Dancing Fire

Date: 5/9/2008 8:46:17 PM
Author: robbie3982





The sad truth is that for many people 20% down on a first home isn''t a possibility. By the time we would''ve been able to save enough for 20% down AND a large enough emergency fund, what we''d saved would no longer have been enough for 20% down!

why not?

my grandparents did,my parents did,i did.

the sad truth is that people with no money down cause this housing mess that we see today.if my english were better i would write in detail explainning to you what cause this housing bubble.

That is not a true statement. As I stated before, the housing mess was created by BOTH consumers and the mortgage companies. Consumers were approaching lenders with grossly inflated appraisals and (sometimes) overstating their income or not providing proof of their income at all (i.e. ''no doc'' loans). The lenders were giving out loans to consumers that did not have the ability to repay - downpayment or not. Lenders were also using practices that are largely considered to be unsavory in many markets - ARM loans, baloon payments, high fees, etc.
AGREE!!

Further, just because you put money down on a home loan does not mean that your financial future is set in stone. These days factories are laying workers off left and right and sometimes closing up shop completely - thus leaving workers without their wages - and thus leading to late payments and no payments on consumer debt. I see this everyday at my job. As foreclosures rise so do bankruptcies because when people lose their income they lose their ability to repay their bills - downpayment or not and even if they are otherwise living within their means. Point is that the economy is bad all around - not just in the housing market.

Jess

no it doesn''t. but, since they nothing invested in this house, it would be a no brainer for them to walk away from it. this is what''s been happening in the past 2 years. people are up side down in their house really fast b/c of no down payment.

lunch time!!!

 

[Dancing Fire]

Date: 5/12/2008 3:38:37 PM
Author: Skippy123
I heard something on the radio that it is much harder to qualify for loans, because right now good credit is a score of 760 and 2 years ago it was 620; that is a big difference.

do people check their credit score?

 

[DivaDiamond007]

Date: 5/12/2008 3:31:35 PM
Author: Dancing Fire

Date: 5/12/2008 11:10:09 AM
Author: robbie3982


Thank you DivaDiamond!

Dancing Fire, just because you were able to put down 20% on your first home doesn''t mean that everyone can. What year did you buy your first home? Just because you''re able to do something doesn''t mean everyone else can. My parents were able to pay for their home in cash. No mortgage. That doesn''t mean that I can or ever will be able to.

Why should I waste money on rent for at least 4 years (the minimum amount of time it would have taken us to save up 20%) while I''m saving up for a down payment when I''m capable of getting a loan and making the payments on it now? That wasted rent money would be about $36,000. I''d rather it go towards my mortgage even if most of it will go towards interest. Not to mention the fact that I''m not in a declining market and the cost of my house 4 years from now could easily have been out of my price range and therefore what I would''ve spent all that time saving would no longer have actually been 20%. Inflation sucks.

robbie....
in 1987 for $147K. i was 28 yrs old which was a lot of money to a young married couple with a baby girl .we took out a 30 yr ARM b/c i was betting the interest rate to go down in the next few yr. in 1990 we refi into a 15 yr fix and by adding an extra $225 into our payment each month we paid off our mortgage in 2004. sooo...if we can do it....any couple can do it.

btw; back then...without a 20% down,mortgage Co''s didn''t really want to talk to us.


renting isn''t always a bad idea....go ask those couples that are homeless today and with their credit scores ruin. what are their chances of getting a mortgage in the future?

Actually, quite good my friend. One can get a mortgage 2 years out of bankruptcy with a credit score of 620 and some money down. It only takes a bit of effort to rebuild your credit after something damaging - even a bankruptcy or foreclosure and yes, even in this market. Rebuilding and maintaining good credit is key though - and that''s where a lot of consumers go wrong.

 

[DivaDiamond007]

Date: 5/12/2008 3:38:37 PM
Author: Skippy123
I heard something on the radio that it is much harder to qualify for loans, because right now good credit is a score of 760 and 2 years ago it was 620; that is a big difference.

I spoke with a mortgage broker on Friday about credit scores and mortgages (for a client). A score of 620 will get you a mortgage at the going rate with ~15 - 20% down. A score of 680 will get you a mortgage at the going rate with ~5 - 10% down and anything above 680 will possibly open the door to no money down. Obviously, the higher the better. Unfortunately, our client was sitting at 580 so she still has a bit to go before she''ll qualify for anything.

Also - it is sooo important to check your credit scores from all three agencies (Experian, Equifax and Transunion) at least one time per year. You can get free reports at www.annualcreditreport.com and also buy your scores from that site. I personally do this at least once per year. Further, always, always, always dispute all inaccurate information contained in your credit reports as soon as you become aware of it and this will help raise your scores. See www.creditboards.com for more info on how to do this. I tell all of our bankruptcy clients this information and it has helped them get back on their feet after tough times.

 

[Kayakqueen83]

Date: 5/9/2008 1:58:12 PM
Author: DivaDiamond007
I feel your pain, Peepa. The housing/mortgage market in my area sucks big time and has been really hard hit with foreclosures, declining values and declining sales. I think a lot of it depends on your credit and income. Obviously if your credit scores are low (below 600) and if you don't have good, stable jobs (if there is such a thing) then you have to put at least 20% and maybe more depending on your credit history. If your scores are good (600-670) with stable jobs then at least 10% down and if your scores are 'excellent' (680+) and you have good jobs then less than 10% down can be possible.

Off topic, but important:

I work in bankruptcy and that can complicate things a bit - these days you have to wait until 2 years after filing to get a conventional loan and be 2 years from discharge for an FHA loan. At that point, the bankruptcy won't affect the interest rate and it is unlikely that you will be able to get any loan before the respective 2-year marks. Also, a lot of it depends on how the person has rebuilt their credit after the bankruptcy.

Jess

Sorry to go off on a tangent... but is this true? In finding out my own credit score (we are going to look into purchasing a home in about a year and I wanted to find out what I would need to do to prepare) And it says that my credit score would be viewed as a "medium-low credit risk by lenders" it is low 780s/high 770s. I thought this was just "ok"?

We are looking to put down about 20-25% so hopefully we will be ok.

Good luck to the OP. I don't think I would ever do 100% financing just because I don't think I could handle such large payments.

ETA: I just saw your new post DivaDiamond! Thanks for the info!

 

[KCCutie]

Date: 5/12/2008 4:25:24 PM
Author: DivaDiamond007

Date: 5/12/2008 3:38:37 PM

Author: Skippy123

I heard something on the radio that it is much harder to qualify for loans, because right now good credit is a score of 760 and 2 years ago it was 620; that is a big difference.

I spoke with a mortgage broker on Friday about credit scores and mortgages (for a client). A score of 620 will get you a mortgage at the going rate with ~15 - 20% down. A score of 680 will get you a mortgage at the going rate with ~5 - 10% down and anything above 680 will possibly open the door to no money down. Obviously, the higher the better. Unfortunately, our client was sitting at 580 so she still has a bit to go before she'll qualify for anything.


Also - it is sooo important to check your credit scores from all three agencies (Experian, Equifax and Transunion) at least one time per year. You can get free reports at www.annualcreditreport.com and also buy your scores from that site. I personally do this at least once per year. Further, always, always, always dispute all inaccurate information contained in your credit reports as soon as you become aware of it and this will help raise your scores. See www.creditboards.com for more info on how to do this. I tell all of our bankruptcy clients this information and it has helped them get back on their feet after tough times.

AGREE!

I check my credit scores about once a quarter. However do not buy your score from annualcreditreport.com. Those scores are provided but the credit reporting agencies and are not a FICO score which is what most LO's look at. You can get your FICO scores from MyFICO.com for about $12 each and there are always coupon codes around especially on credit forums.

I find this thread very interesting b/c I'm looking into buying a house soon and need to weigh all the pros and cons of the different types of loans. Although I have to say I don't think KC was hit as hard as many other parts of the country as far as the mortgage crisis goes and there may still be 80/20 and 100% loans here...not that I would run out and get one.....but I think they are out there. I'm definitely planning on seeing a financial planner or taking a home buyers class soon though.

ETA: KQ if your scores are above 720 you should have no problem getting a good loan. 780 is near perfect credit so you're doing great! I wish I was doing that great!

 

[Selkie]

Date: 5/12/2008 3:55:21 PM
Author: Dancing Fire

Date: 5/12/2008 3:38:37 PM

Author: Skippy123

I heard something on the radio that it is much harder to qualify for loans, because right now good credit is a score of 760 and 2 years ago it was 620; that is a big difference.

do people check their credit score?

Yes, I do, at least twice a year.

 

[TravelingGal]

Hey, those credit score tiers are good to know! I hadn''t researched much on it yet but when we went to buy our car in August, they told me my credit score was 825. Yay!

 

[KCCutie]

Date: 5/12/2008 5:45:57 PM
Author: TravelingGal
Hey, those credit score tiers are good to know! I hadn''t researched much on it yet but when we went to buy our car in August, they told me my credit score was 825. Yay!

If you were buying a car it may have been an Auto Enhanced score which is usually a little higher than your normal FICO score, but hey 825 is great! Good for you!

 

[TravelingGal]

Date: 5/12/2008 5:49:29 PM
Author: KCCutie

Date: 5/12/2008 5:45:57 PM
Author: TravelingGal
Hey, those credit score tiers are good to know! I hadn''t researched much on it yet but when we went to buy our car in August, they told me my credit score was 825. Yay!

If you were buying a car it may have been an Auto Enhanced score which is usually a little higher than your normal FICO score, but hey 825 is great! Good for you!

It was through Experian, so I think it was FICO?

 

[neatfreak]

Date: 5/12/2008 5:45:57 PM
Author: TravelingGal
Hey, those credit score tiers are good to know! I hadn''t researched much on it yet but when we went to buy our car in August, they told me my credit score was 825. Yay!

That doesn''t surprise me Tgal! If anyone would have close to perfect credit I would assume you would!

 

[Dancing Fire]

Date: 5/12/2008 5:45:57 PM
Author: TravelingGal
Hey, those credit score tiers are good to know! I hadn''t researched much on it yet but when we went to buy our car in August, they told me my credit score was 825. Yay!

good for ya TG....
the last time i check my FICO was 821. been trying to teach my daughters about the importance of a high FICO score. you get the best rates from mortgage to car loans,CC etc,etc...

 

[MichelleCarmen]

Date: 5/12/2008 4:25:24 PM
Author: DivaDiamond007

I spoke with a mortgage broker on Friday about credit scores and mortgages (for a client). A score of 620 will get you a mortgage at the going rate with ~15 - 20% down. A score of 680 will get you a mortgage at the going rate with ~5 - 10% down and anything above 680 will possibly open the door to no money down. Obviously, the higher the better. Unfortunately, our client was sitting at 580 so she still has a bit to go before she'll qualify for anything.

Also - it is sooo important to check your credit scores from all three agencies (Experian, Equifax and Transunion) at least one time per year. You can get free reports at www.annualcreditreport.com and also buy your scores from that site. I personally do this at least once per year. Further, always, always, always dispute all inaccurate information contained in your credit reports as soon as you become aware of it and this will help raise your scores. See www.creditboards.com for more info on how to do this. I tell all of our bankruptcy clients this information and it has helped them get back on their feet after tough times.

Definetly check your credit report IN DEPTH months before buying a home.

My current FICO is 733 and it probably was higher when DH and I refinanced last summer, but get this, I was TURNED DOWN to be on the loan because a number of years ago, I over paid on a medical bill by $7.00 and it was marked on my credit report as a debt rather than a credit!!! SEVEN DOLLARS! The bank wouldn't approve me because I couldn't get that issue resolved within two weeks. Our mortgage broker had said it was no big deal, so we never disputed it and so here we are: Just DH on the loan.

 

[TravelingGal]

Date: 5/12/2008 6:03:14 PM
Author: neatfreak

Date: 5/12/2008 5:45:57 PM
Author: TravelingGal
Hey, those credit score tiers are good to know! I hadn''t researched much on it yet but when we went to buy our car in August, they told me my credit score was 825. Yay!

That doesn''t surprise me Tgal! If anyone would have close to perfect credit I would assume you would!

Ha! Trust me, it wasn''t always that way. Lessons learned in my early 20''s, with a car repo courtesy of my dad thrown in (he used my name on a truck he bought because his credit was so bad).

 

[neatfreak]

Date: 5/12/2008 7:09:03 PM
Author: TravelingGal

Date: 5/12/2008 6:03:14 PM

Author: neatfreak

Date: 5/12/2008 5:45:57 PM

Author: TravelingGal

Hey, those credit score tiers are good to know! I hadn''t researched much on it yet but when we went to buy our car in August, they told me my credit score was 825. Yay!

That doesn''t surprise me Tgal! If anyone would have close to perfect credit I would assume you would!

Ha! Trust me, it wasn''t always that way. Lessons learned in my early 20''s, with a car repo courtesy of my dad thrown in (he used my name on a truck he bought because his credit was so bad).

Well those lessons were obviously learned well! You always have such good thoughts on fiscal matters!

 

[movie zombie]

hello, Dancing Fire! one thing we always agreed on was the housing bubble that loomed.......and i totally agree with what you are saying here in this thread.

there is a program in chico, california to help first time buyers with the down payment....and they require the buyer to have $5k of their own money because that shows that the buyer is committed. we''re talking entry level housing here folks, which may or may not contain that child friendly yard, a nice neighborhood, and the square footage that many seem to desire.

i for one hope that the day of 100% loans is over and gone. harsh?! maybe. but the reality is that while we all want to own a part of the american dream, up until the GI bill after WWII, homeownership was out of the realm of most class people. we''ve become accustomed to the media telling us we deserve to have things without telling us we deserve those things if we save for them. it was hard for me to buy my first home as a single woman but i managed to pull together 15% down and the buyer carried a 5% balloon with a minimal payment each month but due in 5 years. the market was such that i knew i could handle that balloon in 5 years. i''m not so sure i''d do it now given the current economic down turn in this country.

and given the current economics, i''m not sure i''d want to put all my eggs into one basket and buy a home now. as a renter one can always pack up and leave.....or move to take a new job. i was just listening to a radio program and they were saying that even berkeley university grads as engineers, reporters, you name it, face a job market where even the jobs they have trained for have been outsources.

each of us makes those decisions by assessing the tradeoffs and risks......but there is a lot to be learned from this mess and i think one of those things to learn is to save save save save save save save.

movie zombie

 

[Dancing Fire]

MZ
remember what i posted 3 yrs ago?

i said,within the next few yrs... we will see the biggest mortgage default in history....and now, here we are 3 yrs later.

and.....IO sub-prime loans took this housing market to the stratosphere and it will bring it back down to reality.

Hmmm....maybe DF ain't so DUMB as people think.

 

[violet02]

When we pulled our credit to find out if we qualified for a loan my FI (who is debt free) found out he had a 95 cent error on his credit score which put him at 703. He got it fixed right away and that boosted his credit to 780! It''s definitely VERY important to keep tabs on your credit score. I had the same situation with trans-union which I just got fixed. Without a min. of 20% down no lender will give us money if our credit scores are below 720. That''s what we were told by multiple lenders. One lender said maybe if you were over 700 but that was a big MAYBE. Anything below 700 forget it. This also has a lot to do with the fact that we''d be borrowing a very large sum of money. Houses cost a lot here and with only a 5-10% down your loan winds up being huge. It''s risky for sure.

 

[violet02]

Date: 5/12/2008 2:15:04 PM
Author: Selkie


Exactly. In California, where we live, the MINIMUM income needed to afford the MEDIAN home price(a whopping 400K) is more than 100K. DH and I have both been steadily working in our current jobs/fields for 10-15 years, and still make less than 100K/yr combined. We both have advanced degrees and good jobs that we love, but our fields just don''t pay the big bucks. We are responsible, we save as much as possible, and someday soon we hope to own a home. However to afford even a tiny fixer-upper, if we waited until we could put down 20%, we won''t own until I''m in my 40s. The 10% is a much more reasonable guideline, given that the housing market has inflated at a far greater rate than general inflation recently. That said, we have no intention of buying until we can put down 10%, and safely afford the monthly payments. We should NOT be penalized for not having the advantage of being independently wealthy.

That said, I completely agree that the mortage meltdown could be seen coming from miles away, even three years ago. Hopefully things will get back to equilibrium soon, so that even non-millionaires and non-risk takers like ourselves can get into the market.

Selkie is that a min. combined income or per person??