3% down for first home....oh boy :(

[KFC911]

Same as it ever was...

[Rick Lee]

I've done it a few times. I'm currently at about 73% LTV on a house I put 3% down on. It can work out, but then we pay $500/mo extra.

[KFC911]

Rick, you're an old pro at this . I personally think if you can't save up at least 5%, then you probably aren't ready as a first time buyer. At least these are fixed and require private PMI. 3% down on these enticers and ultra low adj. back in vogue...I don't see what can possibly go wrong

[Evans, Marv]

I just hate to see things go back to the way they were after such a big stink over the conditions that led to the great real estate melt down. Seems like things get corrected for awhile and then lenders try to go back to the edge where they are trying to walk a fine line between making max profit and trying to avoid catastrophe. Natural though, I guess.

[sc_rufctr]

If you know the right broker you can get a 0% down loan on a house in Aus... But were do you find the idiots that would sign up for one?

To me financial problems like this are are also a form of Darwinism.

[porwolf]

Originally Posted by Evans, Marv

I just hate to see things go back to the way they were after such a big stink over the conditions that led to the great real estate melt down. Seems like things get corrected for awhile and then lenders try to go back to the edge where they are trying to walk a fine line between making max profit and trying to avoid catastrophe. Natural though, I guess.

Of course things are going back to the golden times for the real estate industry. Too much money to be made by too many people and no risks. The industry is still too big too fail. And they will be bailed out, again.

[sc_rufctr]

Originally Posted by porwolf

Of course things are going back to the golden times for the real estate industry. Too much money to be made by too many people and no risks. The industry is still too big too fail. And they will be bailed out, again.

Makes you wonder....

[Porsche-O-Phile]

It's been like this for quite a while - nothing new.

Not everyone can realistically save 20%. I see no problem with it. Why force people to rent (waste of $$$, possibly more expensive, no tax deduction, etc.) which is a worse financial situation than having a home, a sense of pride and purpose, etc.?

I have no issue with this at all. We SHOULD be incentivizing home ownership. The ones that could / did cause the problems were the 0%, "interest only" mortgages. How anyone thought those ever made sense or were all sustainable is beyond me. At least with 3%-5% down (which is not a small sum of money, especially given how expensive houses are these days) people have enough skin in the game where they're going to take it seriously and not want to take stupid risks - for the most part.

My brother did this recently on his first place - 5% on $350k is still a crapload of money - $17.5k plus all the fees and other "add-on" crap? It was about $25k or so just to close (and then they had to do a bunch of stuff once they got in, maybe another $5k worth). Took him and his wife about six years to save up that much. Life is just too damn expensive nowadays for young kids / families starting out to realistically be saving up 20% in all cases. I think it makes sense to have a sensible, managed-risk way of getting their feet in the door - literally and figuratively.

20% on $300k? $60k. Probably need $75k realistically. You really think a young family is going to be able to save that before they're in their 50s these days? Yeah right.

Also consider that there are still millions of vacant properties sitting around out there in "shadow inventory". The banks want to dump those and not be holding the notes or paying the taxes for those. Way better deal for them if they can find someone - anyone - who can take them over and make them a little money at the same time, especially someone with a down payment and who's a relatively low risk.

Some of you guys are way too linear / curmudgeonly in your thinking. 20% is an arbitrary number. Just because you had to pay it doesn't mean everyone else should have to - especially now. It's a different world out there now and as long as there's reasonable balance I see it as a good thing.

[Scuba Steve]

Originally Posted by KC911

Same as it ever was...

This is why I've been saying recently it feels a lot like 2006 again.

[KFC911]

Originally Posted by Porsche-O-Phile

It's been like this for quite a while - nothing new.

Not everyone can realistically save 20%. I see no problem with it. ....Some of you guys are way too linear / curmudgeonly in your thinking. 20% is an arbitrary number. .....

It's not new for Fannie/Freddie....they're dropping their minimum down payment from 5 to 3. I agree with you regarding ALL of you points (at the 20% down levels you reference), but NOT at 5%...that's a historical min that seems prudent to me. Any less is playing with fire and probably not helpful for the big picture and allows folks to over extend themselves right from the git-go. And no, we havent' learned. Niece just purchased a home up in your area....very little equity in their prior, purchased a house 50% larger, borrowed to the max on her director's salary, hubby has no viable job skills....and now for the kicker....so over extended that they couldn't even lock in on fixed rates. NOW GEY OFF MY LAWN

[KFC911]

Originally Posted by Scuba Steve

This is why I've been saying recently it feels a lot like 2006 again.

Last summer it sure was around here when the interest rates ticked up. A buying frenzy that realtors had never seen in their careers with cash buyers also heavy in the mix...houses were indeed selling at 2005-2006 levels. "Veja Do"...again

[motion]

Are we back to stated income loans yet? I honestly don't know... If so, I would like to start buying up towns again

[KFC911]

Originally Posted by motion

Are we back to stated income loans yet? I honestly don't know... If so, I would like to start buying up towns again

At least in your situation we won't call 'em "liar loans"

[motion]

Originally Posted by KC911

At least in your situation we won't call 'em "liar loans"

Back in the good old days, my WAMU loan guy, whom I had used for years, used to tell me straight to my face: "Richard, you can buy any home you want, for any amount. We'll fund you, don't worry". I'm glad I never really took him seriously I'm more cautious these days. Being married and getting old will do that to you.

[Instrument 41]

Some wide eyed young first time buyers better look at the big picture. It used to be that the PMI, which is outrageous, can be satisfied after you meet a certain point of equity. BUT...today on any govt backed loan, PMI is for the life of the loan. A $250K loan for 30 years, PMI is @
$275.00 per month added to the monthly payment. So initially it looks good but then in the end can they really afford the payment??

[BK911]

I am currently buying 4 houses. Total out of pocket for all 4 combined was $0.00, including closing costs. First 2 were 80/20s and last 2 were VA loans.

[motion]

Originally Posted by BK911

I am currently buying 4 houses. Total out of pocket for all 4 combined was $0.00, including closing costs. First 2 were 80/20s and last 2 were VA loans.

I thought you could only use your VA for one home and it had to be a primary residence?

[KFC911]

Originally Posted by BK911

I am currently buying 4 houses. Total out of pocket for all 4 combined was $0.00, including closing costs. First 2 were 80/20s and last 2 were VA loans.

Loans are a lot like spoons imo....useful tools for some, totally dangerous in the hands of others. Most of the folks on this board probably fall into the former category imo and not the ones that cause me concern...good luck!

[Rick Lee]

AFAIK, FHA never changed anything other than their upfront and monthly MIPs and some paperwork/disclosures. Down payment didn't change. Oh, they banned seller assist on down payment, but it still worked out to be a max of 3% out of pocket for those who could find the right deal.

Why wouldn't Fannie/Freddie want to compete with that? Since FHA doubled their MIP, conventional loans can actually get you a better deal on PMI. It has always been a race to the bottom. The gov't. wants everyone to own a house, even if they have no business owning. FHA makes that possible. And then you have CRA and various state programs to make it even easier than FHA makes it. Can't do all that and then not let Fannie/Freddie play along.

[BK911]

Originally Posted by motion

I thought you could only use your VA for one home and it had to be a primary residence?

That's what most people think.
But you can have more than one.
It does have to be primary residence when you purchase.
I bought ~2 years apart and turned the first into a rental.