What person that could afford to put at least $20,000 (5%) down and qualify for a $400,000 loan buys these houses? (Los Angeles: for sale, to rent)

[Charles]

Originally Posted by ifif474

!!!!!WOW!!!!!


$399,900
3 Bed, 2 Bath
2,520 Sq. Ft.
0.07 Acres

Huge back yard with a pool option.

Approximate lot is 25x129.03
Lot is 3225 sq. ft.
School District: 27 - Houston

Huge back yard? 3225 square foot lot? Pool option?

[prim2007]

Originally Posted by ifif474

Then who's buying these $400,000 homes? It takes $20,000 to make a 5% down payment on these.

Having good credit helps with qualifying for an 80/20 loan where you need hardly anything to put down. The good credit can be achieved through a technique called "piggybacking" where you pay to be authorized on credit cards of those with excellent credit so you boost your score. Some people can boost scores as much as 100 points. The issues from granting credit to people that would otherwise not qualify has become so rampant that FICO (the company that started the whole credit scoring process) is looking at not counting authorized user accounts for purposes of credit score calculation.

[shannon94]

Originally Posted by kettlepot

And don't give me the 33% of income rule for housing costs. That hasn't applied in coastal California for two generations. The housing in California looks suburban, and provides a false sense that it should have suburban pricing, but you should really look at it as a New York City Brownstone with more land, and price it accordingly. A lot of these shacks will eventually be torn down and redeveloped with 8 story apartment blocks. Not for decades, but eventually, as California's population reaches 50, 60 million people or more, and the commutes from the exurbs become untenable. Whoever owns those shacks at the time will make a nice profit.

Ha!! Two generations? I don't think so. This rule should still apply (well actually it does ...people just like to ignore it) there would be alot less people in trouble right now!!

I spend LESS than 33% of my income on housing...............guess I'm an idiot.

[shannon94]

Originally Posted by prim2007

Having good credit helps with qualifying for an 80/20 loan where you need hardly anything to put down. The good credit can be achieved through a technique called "piggybacking" where you pay to be authorized on credit cards of those with excellent credit so you boost your score. Some people can boost scores as much as 100 points. The issues from granting credit to people that would otherwise not qualify has become so rampant that FICO (the company that started the whole credit scoring process) is looking at not counting authorized user accounts for purposes of credit score calculation.

This should be stopped immediatley in my opinion. Wow just one more facade to get into a home. I'm almost sick to my stomach.

[ifif474]

Originally Posted by ndfmnlf

You also need to include some amount for retirement savings in 401ks and IRAs. At least 10% of your gross income should be allocated to these. So that brings down your discretionary funds to $39,100 - 11,000 = 28,100. A single person might be able to live on it, but having a family makes it difficult.

My idea of a comfortable income is not living paycheck to paycheck. I like having a margin of safety, i.e., having enough funds left over after all expenses are paid for so that any unexpected event like job loss, illness, etc will not become a major financial crisis that will spiral me towards bankruptcy.

Very very well said.

[ifif474]

Originally Posted by prim2007

Having good credit helps with qualifying for an 80/20 loan where you need hardly anything to put down. The good credit can be achieved through a technique called "piggybacking" where you pay to be authorized on credit cards of those with excellent credit so you boost your score. Some people can boost scores as much as 100 points. The issues from granting credit to people that would otherwise not qualify has become so rampant that FICO (the company that started the whole credit scoring process) is looking at not counting authorized user accounts for purposes of credit score calculation.

5% down is for the people with good credit

[shannon94]

I agree...ndfmnlf and ifif474

[ifif474]

Originally Posted by shannon94

I agree...ndfmnlf and ifif474

Thanks Shannon! By the way, do you know how much more than your yearly income will the banks allow you to borrow if you're buying a house in Los Angeles?

[shannon94]

Originally Posted by ifif474

Thanks Shannon! By the way, do you know how much more than your yearly income will the banks allow you to borrow if you're buying a house in Los Angeles?

To be honest with you I don't even know anymore!! lol It's obvious to me people are getting approved for alot more than they should be right now. Why don't you just call a bank. Are you thinking of moving to LA?

[kettlepot]

Don't know if I should bother but here goes:

110 gross income, less 5% for 401K contribution 5.5k
104.5 Less 10% for Payroll taxes SS/UI/SDI etc. 10.5k
94.0 Mortgage Principal and interest on 570k loan at 6.5% 37k
57.0 Less R/E Tax 6k
51.0 Less House Insurance 1k
50.0 Less Home Owners Association dues - 0k - don't know why everyone assumes all houses in California have these. The vast majority do not.
50.0 Less Fed Income Tax 7.5k Big fat mortgage = Big Schedule A deduction
42.5 Car Insurance 2 cars 2.5k
40.0 Car Note (None) you should tidy up your debt situation before buying a house.
40.0 Gas 5k Assumes 2 Cars 18k miles each 25mpg at $3/gal.
35.0 Car Repairs 2.5k Thats enough for one semi-major repair per year plus maintenance.
32.5 Utilities (all) 5.0k or $400/month. I spend less than half that.
27.5 Medical 4k. A pharmacist will be working at a place with emplyer provided insurance.
23.5 Food 10k. That allows plenty for buying a sandwich at work, and take out type food here and there every month. Learn how to cook!
13.5 Clothing 3k. You're homeowners not teenagers. You don't need a whole new wardrobe every year.
10.5 State Income tax 1.5k. Big mortgage equals little state tax
9.0 In City entertainment. 2k. That's a nice night out once a month.
7.0 Yard Maintenance - fertilizer, shrubs... 1k. Mow your own damn lawn.
6.0 Furniture/Electronics 2k. Add to your collection piece by piece.
4.0 Left for whatever else crops up.

Kids? Wait a couple more years after inflation boosts your income 5% - 10% but your mortgage payment stays the same because of your fixed 30 year mortgage and Prop 13.