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I bought my house way before the bubble, and put nothing down. As a recently divorced single parent at the time, I had good credit and a decent paying job, but no cash. I guess I never thought about it, but I was "upside down" for the first 8 or 9 years I lived here. But I didn't buy my house as an investment; I bought it as a place to live. After paying my mortgage for all of those years, real estate went through the roof and my house suddenly tripled in value, at least on paper. But it never occured to me to pull out my equity and blow it on fancy cars or vacations or other frivolous purchases. I refinanced to lower my rate and reduce the term, and kept on making payments.
Now things have settled down, and my house is worth about double what I paid back in 1993. Meanwhile, I've steadily made payments, and I now have an asset that I would not have had if I had been paying rent this last 15 or 16 years. But that wasn't why I bought in the first place. It was to provide my family with a stable, secure place to live without being at the mercy of some landlord who might decide to sell, or raise the rent, or just not renew the lease.
The problem, isn't that people can buy homes with no money down, it's that people were buying them for the wrong reason - as a quick way to make a buck instead of as a place to put down roots. Lenders just need to reduce risk by requiring documentation and only lending to responsible borrowers with decent credit and reliable incomes. And buyers need to realize that they are purchasing a house for the long term, and not as a money-making scheme.
VA loans do not require anything down. I could have put money down, but we did the numbers and it would have cost more in the long run. We don't plan on retiring in this house, it will sell when the economy is turned around and we can make money on it, until then my money is working for me elsewhere.
Now things have settled down, and my house is worth about double what I paid back in 1993. Meanwhile, I've steadily made payments, and I now have an asset that I would not have had if I had been paying rent this last 15 or 16 years. But that wasn't why I bought in the first place. It was to provide my family with a stable, secure place to live without being at the mercy of some landlord who might decide to sell, or raise the rent, or just not renew the lease.
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Boy, you must be OLD, don't you know you should use the equity in your home like an ATM???
I know alot of people who lok at too much maney in their homes as bad investments not working for them. I also know many that put little down and made out like bandits in the past. Its like anyhting tho. Otherwise no on ewould buy a nnew car as your in the hole once you take poseesion really. It really depends on teh person and thier views on risk and why they are buying the home.
When you bought your first home housing median price was 1.5-2x median individual income, which meant 20% down was still less than inflation adjusted 10% down on a median house price in 2009 dollars. Which meant, you actually had less skin in the game than the proverbial 10% guy today.
What a silly boomer thing to say.......
maybe what we need to see is housing to be allowed to drop to its actual worth, instead of being propped up artificially by the government.
people could then put 20% down and be able to afford to live in their homes.
Location: Sometimes Maryland, sometimes NoVA. Depends on the day of the week
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Quote:
Originally Posted by Tek_Freek
When we bought our first you could not do it without putting down 20%, financially irresponsible or not.
Silly thing to say. Must be some young whippersnapper.
Quote:
Originally Posted by hindsight2020
When you bought your first home housing median price was 1.5-2x median individual income, which meant 20% down was still less than inflation adjusted 10% down on a median house price in 2009 dollars. Which meant, you actually had less skin in the game than the proverbial 10% guy today.
What a silly boomer thing to say.......
Totally agree with hingsight2020 here.
My first house, bought in 2003, a year out of grad school, earning $60k/year, living in Washington, DC. Rents running $1200/month. To be able to buy a house by Tek_Freak's rules, I would have needed to save the equivelent of over half my yearly income, just to get into the townhome I bought ($140k). How exactly is one supposed to save up half their income while living in a high cost area? Oh, I bet Tek_Freak figures we should have lived off my non-existant husband's income and saved mine*. Never missed a payment, never went underwater. Oh, and btw, I one point I refied into an intrest-only 7-1 ARM. Hang me out to dry now for being a terribly irresponsible kid! Sold that house a couple years ago, now sitting on a depreciating house, but such is life. I wouldn't walk away, I care about my obligations and credit too much.
* even now married that wouldn't work, shocking to Boomer's I'm sure, but I earn twice as much.
What is up with people thinking that "Appraised Value" is what one can SELL their house for?
People do realize that if you are buying the said house and it is apprasied for more doesn't matter since until YOU ponied up no one else was buying it for MORE than what you just paid right?
+ when you buy a house you drop around 3% on closing costs and when you sell you drop another 6% on average (with realtor) to sell. Do you take that into account?
Ain't the trend these days is to ask the seller for closing cost or a portion of it since it's a buyers market now. At least that's what HGTV is portraying. True or not. I don't know.
"responsible adults" pay their bills... no matter how much money they put down. So, if somebody has strong credit and the bank wants to give them a loan with 5% or 3.5% down, I don't see an issue... provided they could make the payment... and have shown they're inclined to do so. How much they put in to get there doesn't matter much.
Yep. I paid 3% down (FHA) and qualified for some other loans with higher down payments too but chose not to take them. I have a steady, but not huge income and have always had excellent credit. I bought a relatively inexpensive house. I've never missed a mortgage payment (or any other bill), can't foresee doing so in the future, and have savings to cover emergencies.
Frankly I don't care whether I'm "underwater" on paper, because I'm not selling the house. I need to live somewhere, this house suits my purposes, and I'd be paying rent if I didn't have it - and would have had a very hard or impossible time finding a place to rent that would have suited my needs.
So who cares how much I put down? I'm as responsible as they come.
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