09-04-2010 10:35 PM
Got it, it wont happen again.
I was really pretty upset to see posted opinions that imply that people who didnt put a certain amount down would be Felons.
What someone can pay or not for a down-payment their own business, if they pay their bills on time, thats what matters.
I do feel Dr. Acme's post is still a little biased towards the better off and would really damage the country if people cant buy homes. I really didnt want to be 40 to own a home, so I made it happen and I am great-full of the process and the transaction. Renting is not necessarily good financial because you are throwing your money away and because your fico score actually hits a plateau without a real-estate account.
Perhaps the felony term could be scrubbed from the post since
I do have to thank the myfico forums as it was a integral factor of dealing with my credit and reaching this goal.
I was just really disappointed to see that post. The only reason I created an account again is I am making moves to bring my score up even higher.
Imagine making one of the most important descsions of your life, completing that goal and then read that you what you did was criminal and you were likely to fail.
Thats not supportive or friendly if you think about it, people that don't pay their bills is the problem.
You could put 50% down and be foreclosed on.
Anyways I will tone it down.
09-06-2010 06:34 PM
I owe everyone an apology. My intention was to reply to those issues one can control. It never occurred to me to clearly list the exceptions like job-loss, illness or death; I guess I was sloppy in assuming that one does not need to mention that those are truly legitimate reasons for help. For that I owe everyone an apology. With regard to 20% down, I will not apologize, its my opinion. But I agree that the analogue was a bit strong and in no way am I calling anyone a felon, it's an analogy. I am tickled that many have successfully bought a new home and everything went well; I truly am. But at some point as a nation we need to refine our saving and spending skills, perhaps a 20% down payment is too high; but where does one draw the line? Having great credit is one part, having enough collateral is what will keep the consumer and bank strong(er) when something does go wrong. If a bank wants to loan 95% or more on a mortgage, then they have every right to make that loan. But if the government is to underwrite (spelling?) the loan, then they have the right to expect some collateral. Those who are now making the loan(s) should be held accountable for their decision(s), not the tax payers. The best analogue I can draw would be, why is there a law that one must be a certain age to do something? Perhaps the average person (that age) would be plenty responsible to do so, but it's a few that make it necessary to draw a line at a specific age. No-one is saying that all folks at a specific age are irresponsible. My intention was not to implicate anyone as a felon, but to clearly (and perhaps too colorful language) the point that as important as a home purchase is, should we not expect more collateral than 0 to 5%? Similar to an age requirement. By the way, not to change the topic, the tipping point for why we are in a housing crisis isn't because of collateral or lack of saving (although it would help). Its because developing countries are raising their standard of living (thank goodness). However it makes everyone compete for the very same resources (such as iron, petroleum, etc). These countries can afford to pay more for resources because they don't pay as high of a wage as us; and in turn it makes us pay more for the same goods and sometimes it causes us to even take pay cuts. So in a sense, their higher quality of life reduces ours. It's sad because everyone deserves the same (good) quality of life as the next, but as time goes by, one will find it more difficult finically speaking. Bringing this topic full circle, making sound investments and saving more (for housing at least) as a country are a good start. Giving loans at 95 - 100% is dangerous, absolutely dangerous. Good luck everyone, I am truly sorry if I offended, that is not my intention. I look forward to hearing more responses, for I sure have a lot to learn. And thank you for calling me out on this one...
09-06-2010 07:46 PM
Good evening Shaun... I hope everything is well. In response to your earlier question about how I saved for my 1st home; I came across a home that was older (and less expensive) and worked it out with the previous owners where I rehabbed the home so it could appraise higher (sweat equity I guess you could say). In other words, I got rid of the harvest gold counters and appliances (honestly) and did a lot of painting and landscaping... That sweat equity plus some tender from the savings account as a down payment got me the loan. I was 27 years old and it put me at slightly above 21% down. I wouldn't recommend this to everyone, because in the short run (as much as i love my home), the renovations seem to never end. Like I said, its not a short term investment. At ay rate, now I'm 37 and about 3 years away from that new home I wanted back in 2001. Most of my friends tell me what a mistake I've been making and that I should cut my losses and get that new home, since I qualify for it. But I tell them if I keep it another 3 years it will almost be paid for and that will open up a lot of other options I don't have today. At ay rate Shaun, I hope you don't take my earlier response as brash or arrogant; but I wanted to give you some insight into how I did it. Good luck Shaun, I look forward to seeing you around the forum.
09-19-2010 05:06 AM
I realize that this forum is a bit touchy but I am rather insulted and a little scared that I would be considered criminal for buying a home with only 5% down.
Just curious can you give some constructive advice on how you were able save your down payment?
By living in a small rental for 10 years before purchasing the condo where we live now. We could have bought sooner but knew friends who got caught in the previous housing downturn of the early 1990s and wanted to avoid that trap.
09-22-2010 03:33 PM
If I were a bank, and Barney (Franks) told me to loan my cash to imbeciles with no track record of ever paying anything back before, no need to check for income or if they were lying, Id say NO WAY Barn! you have to make me a guarantee I wont lose my a$$ on that kind of deal.. Oh wait..
10-05-2010 08:38 AM
I'm of mixed minds. My story is similar to those who suffered hardships..4 years ago my wife passed and I made several disastrous financial decisions. It's absolutely true when they say wait a year in such circumstances. I did not and purchased an investment property on top of one I already owned. This was in Aug 2006. The broker talked me into getting mortgages where you could chose payments. She said since I was putting 25% down and had that equity + in the remaining mortgages, negative amortization made sense in this case. I would be buying back my equity she said and then could refy down the road. It all made sense at the time. I figured that even if the market went flat I would be OK..Well we then had the housing collapse and these properties lost 40% of their value..In 2009 I then lost my job and have gone through a third of my retirement; two thirds of which have been to maintain these mortgages on investment properties that are losing value by the month.
The loans are now about to reset on these to investment properties; to date I've lost $250,000. I DO NOT EXPECT A GOVERNMENT BAILOUT! However, I know damned well the banks will not work with me to refinance so I can get a better rate and continue to carry these properties in hopes someday I can recoup my losses..I was fortunate to get another great job after 18 months (at 55 despite reading and being told repeatedly to give it up because of my age!) and I actually got through the horrendous hoops of buying a new primary residence after moving and selling my previous house. The new place has a mort %40 of what my old place was is well within my current means and I feel fortunate to have gotten it..But again the banks and brokers made me walk on glass, pay 3 points and saddled me with an interest rate half % over prime because of my employment gap..So much for sympathy from the banks..I'm sure you've who have lost their jobs (myself after 22 years of service) got the same spiel." It's not personal, it's just a business decision."
Well I've secured my primary residence, had the credit card companies reduce my credit lines, the minute I paid them down to zero, almost to nothing after years of paying on time and insuring my balances against hardship (loss of job), and paid off my jeep. As long as I pay my primary mortgage, have no debt, they can't touch me now..Sooooo I will call the banks and try to renegotiate my loans on my investment properties. If they will not work with me they'll get the keys in the mail with a note," Nothing personal, it's just a business decision!"
01-05-2011 02:43 PM
I had not seen this thread before and just have to respond. Years ago, we purchased a house and put a reasonable sum of money down on it. When the local employment market had a downturn, I was given the option to be fired or relocated. I did the responsible thing - I relocated.
Suddenly, we had a home in one state and still had to pay living expenses in a new city, across the country. In order to keep the home in top-selling shape, we paid for housekeeping, lawn care (over an acre of irrigated land), and full utilities. We never received an offer equal to what we owed PLUS the realtor's fee.
We kept this up for TWO YEARS. Eventually, basic living expenses were more important than trying to keep the house. We continued all the maintenance, but stopped paying the mortgage. We tried to work with the lender to do a short sell - we were talking only about $5,000 short. They would not work with us. We eventually filed bankruptcy and they took the home back. I did get a call from the lender explaining that bad things happen to good people. They appreciated the fact that we left the house in pristine shape and they wished us luck in the future. They may not have worked with us - but I appreciate that they didi not treat us like criminals.
Since then, I have worked hard to advance my career. We were able to buy a home in our new location. We were fortunate to sell at the peak of the market and moved to a new job. We then rode it out until after the market crash and purchased a home at the bottom. I sympathize with people caught up in this last round of the housing crisis. They will survive and move forward. For them, the stigma of foreclosure won't be as bitter as it was for us. We felt all alone and noone understood what we went through.
03-11-2011 03:41 PM - edited 03-11-2011 03:43 PM
When I hear of a family who played by the rules, paid their mortgage and through no fault of their own, what they've considered an asset, soon becomes a liability as the value of their home is wiped out by the economy and actions by a few who profited from the housing bubble. My heart goes out to them and hope they can continue the payments and at least keep their over-leveraged home. But there are far more people I know who got caught up in the mortgage mess, first with the zero down, no interest and 80/20 Adj ARMS. These were the same people who overextended their credit cards, took advantage of the bubble economy and refinanced, repeating this cycle 2 and 3 times and didn't miss a vacation through the years either. When they got caught at the 4th attempt at the refi game and failed, they started yelling bloody murder! I don't feel badly about those people. They completely mismanaged their money, liabillities and are now losing their assets. As the first family I mentioned struggles to pay their mortgage, month after month, I see no reason to bail the others out. Home ownership is not a right, its a privilege to own and live in your own home. I see no reason to support people who so easily would shift their financial burden on the rest of us.
The govt needs to get out of the private lives of people, privatize Freddie/Fannie and allow the markets to capitualate and to correct themselves.
04-13-2011 03:37 PM
We know how the housing crisis unfolded...and my best wishes go to the families who lost their houses when their intent was to keep it. But in 2011, Darwin's theory still proves itself right. The best suited for environmental changes are the ones who survive. After the housing bubble exploded in 2005, we sold our properties in Mexico and waited for a bottom in prices, then purchased our house in California (San Bernardino County) for $50K in 2010 cash. Now we r selling another house in Mexico which will most likely help us buy another house here for around $80K. Then I'm improving my credit scores to buy another one on credit with 25% down.
My realtor has explained that Asians travel to California, get pick up by a bus, see houses within 3 days, sign papers for purchase and go back.
Whoever took care of their credit and saved money for the last couple of years is in the best situation to purchase a home now.
The problem is that a downturn in prices occured during the 1990's as well....doesn't people know this is a 10-15years cycle?