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Old 06-11-2018, 10:13 AM
 
Location: Round Rock, Texas
10,103 posts, read 9,337,589 times
Reputation: 13180

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Quote:
Originally Posted by desperatedogadvice View Post
Just checked in on this after a weekend away- wow! Lots of strong opinions. I sent it to my husband who had a good chuckle.
I don't think he is changing his mind on this issue anytime soon.

I read somewhere that the average down payment in the US is something like 6%. I must live in a bubble because it shocked me. We have never paid less than 20% if we didn't buy cash and have always accepted offers much like the ones we make ourselves. But thank everyone for their opinions and experiences.
Well we only put down 5%, same as with the last house. We could have put down more but didn't want to. As for paying with cash, sorry, no shame in saying that we weren't going to pay over 400k in cash and we weren't going to live in a lesser neighborhood so that we could. We've never defaulted on any loan, have solid credit, and didn't carry loads of debt.

We've never had an issue with sellers rejecting us due to how much we put down. In fact, we've never been rejected. the home we wanted, we got, and the first was new construction.

also never obtained more than a pre-qual letter either.

we were buying in a seller's market too.

maybe it's good karma, we didn't give a flip about the downpayment when it came to our veteran buyers and likewise, the sellers of our home didn't care about our downpayment.
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Old 06-11-2018, 10:20 AM
 
Location: Round Rock, Texas
10,103 posts, read 9,337,589 times
Reputation: 13180
Quote:
Originally Posted by MikeJaquish View Post
Buyers will close on two VA loan-funded purchases next week.
Smooth as can be.

Another one in the hopper for later. It will be fine.

Focusing on any loan program, over the nuts and bolts of the property, the transaction, and the borrower's performance are unfortunate behaviors.
Yeah, if the property is crap, and the seller doesn't care and wants to blame the world, and the seller and their agent don't know how to work a transaction, there can be issues.

But, I have just as many or more transaction issues when buyers are making 5%, 10%, 20% or more down payments as I do with FHA and VA borrowers.
Yup, our transaction was VERY smooth. Everything happened so quickly and was very organized. If you're dealing with one of the bigger banks that handle VA loans, you can expect a very fast, streamlined process. It didn't hurt that the buyers were solid and already had their ducks lined up when they approached us. They didn't ask for any concessions and didn't nitpick with the inspection. We had already pre-inspected our home and took care of any potential landmines so the appraiser found nothing out except for a safety issue with the back patio, so we spent $500 to install a handrail. big deal. considering we were getting $315k it was worth it. The appraisers want to make sure that the buyers (read: government) aren't taking on a crap house and can you blame them? if you take care of your home and don't defer maintenance then you won't have to worry much about the appraisal.

I'm happy that they found our home to be their "dream home" and I'd take buyers like them any day of the week. In fact, they still live in the home. Good for them, I hope it gives them the same joy that it gave us.
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Old 06-11-2018, 10:51 AM
 
Location: Raleigh
7,036 posts, read 5,219,555 times
Reputation: 9508
One would think that the market and property you're selling would factor in as well.

If you're selling an eight year old home in good repair, you likely have less to worry about with a VA loan than a 65 year old home that has a handful of "hassles" that might flag the VA inspection process that wouldn't bother a buyer with a conventional loan.
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Old 06-11-2018, 12:55 PM
 
9,336 posts, read 11,177,326 times
Reputation: 12521
Quote:
Originally Posted by desperatedogadvice View Post
We have been lucky with real estate sales. Multiple offers on every home we have ever sold in quick turn around of listing. And as this is the case, we have our pick of buyers. We always look for (in order of preference) 1) full price or over listing cash offer 2) full price or over listing conventional loan with at least 20% down 3) everything else. My husband is very leery of any kind of loan with 0% down.

I got to wondering if this is just a quirk of his or if other sellers also view a no money down loan as a red flag. And really, is that fair to a buyer? How do others view this?
Not a huge red flag for some people:

My neighbor is a plastic surgeon, he bought with just 10% down. Guy makes huge money but has huge student loans too!

FHA- 3% down is one of the most successful programs out there for first time homebuyers.

That being said if I had a 20% guy and a 0% guy for the same price, I'd go with your husband and take the 20% guy.
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Old 06-11-2018, 01:06 PM
 
Location: Cary, NC
31,648 posts, read 55,401,531 times
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Quote:
Originally Posted by City Guy997S View Post
Not a huge red flag for some people:

My neighbor is a plastic surgeon, he bought with just 10% down. Guy makes huge money but has huge student loans too!

FHA- 3% down is one of the most successful programs out there for first time homebuyers.

That being said if I had a 20% guy and a 0% guy for the same price, I'd go with your husband and take the 20% guy.
Medical doctors are regularly offered 100% JUMBO loans.
They are a good bet to close.
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Old 06-11-2018, 02:22 PM
 
Location: Raleigh NC
7,788 posts, read 6,144,732 times
Reputation: 6905
Quote:
Originally Posted by emotiioo View Post
That's great that its your experience that zero money down loans close smoothly. It has not been mine. We have to operate on what works for each of us. I won't deal with a zero money down loan as a seller.

Its always amazing to me on this forum how many pros want to blame a buyer or seller for not sharing their perspective. Why not just work with people where they are at instead of trying to talk them out of their own experiences? Obviously you have sellers who are okay with VA loans/zero money down loans. Great. But its a big world with a lot of different kinds of people in it. If someone says "I don't want to deal with X" why try and tell them "X is great-- smooth sailing"? Why not just say "okay, we won't consider that option?"
when a Seller enjoys the opportunity to weigh one offer against another, then it is very easy to say "I didn't choose offer B because it was 100% LTV" and leave it at that.

Would a cash deal at 100% ask price, with a 14 day walk-away period and close in 30 days, with $100 deposit be superior to a VA loan with a 14 day walk period and a $10,000 non-refundable deposit? Possibly not.

Each situation is unique and to be weighed against the other opportunity available.

Do MANY 100% LTV buyer/borrowers suffer from very low cash, and thus create a higher incidence of issues (repairs, delays, appraisals, etc) - YES.

Do MANY cash buyers demand to pay below asking price, or try to renegotiate the deal over time - also YES!!

neither of the above tells the whole scenario.

I don't think anyone would fault a Seller who took an equal offer with better financing certainty rather than "support a Vet". Similarly, I have seen Sellers willing to give a little BECAUSE the buyer was a Vet, and that's OK too.
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Old 06-11-2018, 04:07 PM
 
828 posts, read 959,603 times
Reputation: 1689
Bought my current place on a USDA zero down loan. According to USDA guidelines, I couldn't put _ANY_ money down even if I wanted to, though it would be perfectly OK to throw that 20% or whatever as a lump sum at the loan on the 1st payment.

Bought my prior place on a conventional loan, 30% down.

Both times, I asked for the seller to cover closing costs. Why, you may ask? Why not?!?!? What...am I supposed to have some kind of artificial pride to impress people I don't even know by throwing more money at the place than I have to? Both times, I got closing costs covered by the seller.

I could have easily went the traditional, conventional, 20% down route on this place too. But it would have been absolutely foolish. Even after accounting for the PMI on this loan, between the lower interest rate and far lower loan costs, the USDA monthly ended up being a few dollars more a month than the conventional, meanwhile that 20% down payment stayed in MY bank account collecting interest for me and serving as a larger emergency fund. According to my loan officer, what I ended up with via the USDA even beat out what I could have gotten from a VA loan.

Oh, and before buying this place, I did put in an offer on another property via conventional loan. Appraisal came in low..way low. About 15% below listing price...on a foreclosed property....that the bank has been sitting on for almost a year. Bank's agent insisted that I come up with the difference in cash. Which I could have easily done...but I still told them to pound sand. Why in the world would anyone in their right mind immediately put themselves in a position of being tens of thousands of dollars underwater the moment they signed on the dotted line??? I get someone putting an extra few thousand on top for their dream home in a multiple offer situation, but 15%??? That's insanity. That place did end up getting sold, about 6 months later, at a price about $5K below what I ultimately offered, lol.
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Old 06-11-2018, 04:16 PM
 
1,493 posts, read 337,683 times
Reputation: 1712
Quote:
Originally Posted by urbex View Post
Bought my current place on a USDA zero down loan. According to USDA guidelines, I couldn't put _ANY_ money down even if I wanted to, though it would be perfectly OK to throw that 20% or whatever as a lump sum at the loan on the 1st payment.

Bought my prior place on a conventional loan, 30% down.

Both times, I asked for the seller to cover closing costs. Why, you may ask? Why not?!?!? What...am I supposed to have some kind of artificial pride to impress people I don't even know by throwing more money at the place than I have to? Both times, I got closing costs covered by the seller.

I could have easily went the traditional, conventional, 20% down route on this place too. But it would have been absolutely foolish. Even after accounting for the PMI on this loan, between the lower interest rate and far lower loan costs, the USDA monthly ended up being a few dollars more a month than the conventional, meanwhile that 20% down payment stayed in MY bank account collecting interest for me and serving as a larger emergency fund. According to my loan officer, what I ended up with via the USDA even beat out what I could have gotten from a VA loan.

Oh, and before buying this place, I did put in an offer on another property via conventional loan. Appraisal came in low..way low. About 15% below listing price...on a foreclosed property....that the bank has been sitting on for almost a year. Bank's agent insisted that I come up with the difference in cash. Which I could have easily done...but I still told them to pound sand. Why in the world would anyone in their right mind immediately put themselves in a position of being tens of thousands of dollars underwater the moment they signed on the dotted line??? I get someone putting an extra few thousand on top for their dream home in a multiple offer situation, but 15%??? That's insanity. That place did end up getting sold, about 6 months later, at a price about $5K below what I ultimately offered, lol.
I like your thinking.

The bank already hounds you to put money down, you don't need the seller singing the same tune.

The only purpose of money down is to save the bank's tail if the property goes underwater AND they have to foreclose and sell it.

And a home underwater is only temporary unless you decide to try to sell it. Then you lose your own money, or have to short sell (or can't sell).

I look at it like this, I'm already recording this note on my credit history, along with the timeliness of each monthly payment. I don't need yet another thing at stake (lump sum of cash) if something unforeseeable and catastrophic happens.
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Old 06-11-2018, 04:24 PM
 
1,778 posts, read 880,695 times
Reputation: 3813
USDA loans have income restrictions. Not sure those bragging about not putting anything down "even if they wanted to" would have a lot to put down in any case. At least not in my area. The income restrictions are not generous.
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Old 06-11-2018, 04:56 PM
 
1,493 posts, read 337,683 times
Reputation: 1712
Quote:
Originally Posted by emotiioo View Post
USDA loans have income restrictions. Not sure those bragging about not putting anything down "even if they wanted to" would have a lot to put down in any case. At least not in my area. The income restrictions are not generous.
This is true. Rural areas do not have generous income limitations. Fringes of urban sprawl areas (Exurbs) that still have some pockets of decently priced housing (Atlanta Metro) caps out guaranteed loans at about $90k a year.
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