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It was not the size of the down payments that brought on the real estate crash. It was federal laws brought on by congress that caused the real estate crash, which forced mortgage companies to make real estate loans to people that were not qualified to buy homes that caused the crash. The reason for those laws, was Barney Frank a former congressman kept saying we have to help the poor people buy homes. At the end of that cycle, lenders were required by federal law to make 22% of all loans to people that could not qualify for loans under normal lending standards. Lenders had to come up with all types of crazy loans to meet that requirement. George Bush tried to get the laws changed, but Barney Frank kept hollering that he was trying to hurt the poor people, and we had to keep having those requirements to help poor people, and enough Democrats to keep them in force kept saying the same thing like parrots, and Bush could not stop the train wreck of the home meltdown from happening. Either they made bad loans, or they had to stop lending money for mortgages.
This brought on those loans that should never have been made. No credit check loans, and loans were made to anyone that applied. Small payments below even the interest rate for 5 years, and then refinance, and the people were so week they could not refinance. Etc., Etc., Etc. Loans made that never should have been made.
As the poor could buy with these loans, so could anyone else. People with good credit and steady jobs, bought with these loans and bought homes priced far above what they could afford. When 5 years passed and they could not refinance, they were foreclosed. People were not buying homes they could afford, they were buying dream homes, using bad financing that would end up biting them in their rear end, and a lot of good people lost homes they should never have bought in the first place.
There has always been low down loans, even when credit requirements were the most strict to buy homes. I personally used my G.I Bill benefits to buy 4 different homes with a 5% down FHA in the middle in 16 years, with nothing down. We kept moving up to better homes. The last one was in 1970, and with the sellers (developer) to pay $X in closing costs, we got $260 at the closing table as the closing costs were below the amount the sellers were to pay. To be able to use our V.A. loan more than once, we only had to make sure the home was refinanced and our V.A. loan was paid off, our credit was very good, and we had the income to support the purchase.
It was not the amount of the down payment that caused the real estate fiasco, it was federal laws that required lenders to make bad loans on a certain percent of the loans they made to stay in business. The V.A. no money down loans, were some of the best loans ever made and were no problem for the country. The made it possible for a lot of veterans to be able to buy homes for their families as they got out of the service at the ends of wars, and helped get the economy going great. It was kind of a reward for them which debunks any thinking that the size of the down payment is what keeps real estate from crashing. As long as the lenders only make solid loans to people that can afford the homes they buy, the real estate industry is in good shape.
It was not the size of the down payments that brought on the real estate crash. It was federal laws brought on by congress that caused the real estate crash, which forced mortgage companies to make real estate loans to people that were not qualified to buy homes that caused the crash. The reason for those laws, was Barney Frank a former congressman kept saying we have to help the poor people buy homes. At the end of that cycle, lenders were required by federal law to make 22% of all loans to people that could not qualify for loans under normal lending standards. Lenders had to come up with all types of crazy loans to meet that requirement. George Bush tried to get the laws changed, but Barney Frank kept hollering that he was trying to hurt the poor people, and we had to keep having those requirements to help poor people, and enough Democrats to keep them in force kept saying the same thing like parrots, and Bush could not stop the train wreck of the home meltdown from happening. Either they made bad loans, or they had to stop lending money for mortgages.
This brought on those loans that should never have been made. No credit check loans, and loans were made to anyone that applied. Small payments below even the interest rate for 5 years, and then refinance, and the people were so week they could not refinance. Etc., Etc., Etc. Loans made that never should have been made.
As the poor could buy with these loans, so could anyone else. People with good credit and steady jobs, bought with these loans and bought homes priced far above what they could afford. When 5 years passed and they could not refinance, they were foreclosed. People were not buying homes they could afford, they were buying dream homes, using bad financing that would end up biting them in their rear end, and a lot of good people lost homes they should never have bought in the first place.
There has always been low down loans, even when credit requirements were the most strict to buy homes. I personally used my G.I Bill benefits to buy 4 different homes with a 5% down FHA in the middle in 16 years, with nothing down. We kept moving up to better homes. The last one was in 1970, and with the sellers (developer) to pay $X in closing costs, we got $260 at the closing table as the closing costs were below the amount the sellers were to pay. To be able to use our V.A. loan more than once, we only had to make sure the home was refinanced and our V.A. loan was paid off, our credit was very good, and we had the income to support the purchase.
It was not the amount of the down payment that caused the real estate fiasco, it was federal laws that required lenders to make bad loans on a certain percent of the loans they made to stay in business. The V.A. no money down loans, were some of the best loans ever made and were no problem for the country. The made it possible for a lot of veterans to be able to buy homes for their families as they got out of the service at the ends of wars, and helped get the economy going great. It was kind of a reward for them which debunks any thinking that the size of the down payment is what keeps real estate from crashing. As long as the lenders only make solid loans to people that can afford the homes they buy, the real estate industry is in good shape.
I can't believe people still spout this BS. You are delusional.
Well we only put 5% down though we could have put more. There's no way we were gonna plunk down $85000 on a house. We have yet to default on any of our loans and have strong credit. I don't care to put down 20%, plain and simple. I'd rather put down 5, keep the rest to do whatever. With our first home together, we also put down 5%. Down the road, we refinanced and substantially reduced our monthly payment. Sold the home at a profit. No regrets about not putting more down. The PMI didn't really faze me since we weren't going to be in the home forever anyway.
Well we only put 5% down though we could have put more. There's no way we were gonna plunk down $85000 on a house. We have yet to default on any of our loans and have strong credit. I don't care to put down 20%, plain and simple. I'd rather put down 5, keep the rest to do whatever.
We could see it in our offers. One was a VA loan with 3% down and we said thanks but no thanks. Not putting more down makes the appraisal far too important and depending on the market and either reduce or notch your sales price. Of course we are in a hot market and had multiple offers so it was easy to do...but my point is you can see it.
On a side note why would anyone buy with less than 10% down? Seems like a bad financial decision to me. Of course I refuse to buy with less than 20% and we always buy below our means so I am definitely on the conservative side financially. I just can't see buying a house until you have 20% down and another 10% for repairs when something breaks or a roof leaks.
Who cares how much the buyer is putting down? Also, nice work not even giving the vet any consideration. He/she served our country and because of that, they have the privilege of having a low money down mortgage. It doesn't mean that they aren't qualified as a buyer.
And actually, buying with less than 10% wasn't that bad for us at all. There's little difference in payment between 5% and 10% and I'd rather keep all of the cash in my bank account.
There is nothing morally wrong with buying a house with no money down. If you can get it, more power to you.
What the rest of us are worried about is the banks that are lending with no money down to people who probably can't pay. Personally, I think it is unethical to loan money to people who can not afford it. It is also exceptionally bad business to do a real estate loan where you have a larger than normal chance of getting the house back with absolutely no equity in it at all. It is financial malfeasance to the stock holders of that bank.
It is also exactly what caused the last real estate market crash that brought down the entire economy. It's a really poor business model.
When my husband and I were obtaining a mortgage, they scrutinized every little thing, even though we have great credit and we were putting down 25%. We were also pre-approved for more than twice the amount we ended up taking out. They wanted every single check, proof of every single deposit---seriously, as stupid as, "Please explain where this $8 deposited into your account five years ago came from---please try to obtain the original documentation."
I highly doubt they are giving away money regularly to people who don't have it. They put us through the ringer even though I had plenty of money saved after putting money down.
I highly doubt they are giving away money regularly to people who don't have it.
You are absolutely correct. Anyone who says otherwise has their blinders on, or understands little as to how banking/lending works.
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