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Old 06-07-2018, 03:55 PM
 
193 posts, read 76,774 times
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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?
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Old 06-07-2018, 04:11 PM
 
Location: Rochester, WA
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Certainly if there is more than one offer to choose from, one might choose either someone with more money down or a simpler loan type if you are concerned about the house passing more detailed appraisals.

But that doesn't mean people with 0 down necessarily have a weaker offer. I do know many who have good solid resources, and choose 0 down VA loans because VA interest rates are low and they're conserving or other otherwise investing their cash.

If you're uncertain, a call from your realtor to the lender can sometimes help confirm whether buyer is well qualified.
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Old 06-07-2018, 04:11 PM
 
Location: Finally the house is done and we are in Port St. Lucie!
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I don't think it would affect you at all. If anything, it is only the lender that has to worry about it. Once you get the money from the lender, your involvement is gone. That can't come back and take the money you got from the sale.
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Old 06-07-2018, 04:21 PM
 
193 posts, read 76,774 times
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Quote:
Originally Posted by Diana Holbrook View Post
Certainly if there is more than one offer to choose from, one might choose either someone with more money down or a simpler loan type if you are concerned about the house passing more detailed appraisals.

But that doesn't mean people with 0 down necessarily have a weaker offer. I do know many who have good solid resources, and choose 0 down VA loans because VA interest rates are low and they're conserving or other otherwise investing their cash.

If you're uncertain, a call from your realtor to the lender can sometimes help confirm whether buyer is well qualified.
My husband says that he views people who don't put down a substantial down payment (and earnest money) as "not serious." He has pretty strong opinions as he flipped houses in college and after to help finance post grad education and was burned by a buyer who had a 0% down loan. He blames the lack of skin in the game for some of what happened in that situation (as well as the 2008 financial crisis.)

A loan is a loan is a loan to me as long as we get paid. But when we have had multiple offers the no money down goes to the bottom of the pile.
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Old 06-07-2018, 04:22 PM
 
Location: DFW - Coppell / Las Colinas
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NO money down is usually only a VA loan and is a problem in a hot market where they may be bidding up the proce of the home.

Appraisal problems.
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Old 06-07-2018, 04:24 PM
 
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As long as their RE agent can verify that they are preapproved for the loan and qualify it should not be a problem. If they financially burdened and their DTI ratio is tight and changes during underwriting you don't want to waste a month or more on something that may fall thru. Is it fair to the buyer? Life is not fair. If you want to sell them your house as a good deed if you have other offers beware the phrase "no good deed goes unpunished". It's my understanding that some sellers don't want to sell with people using VA loans because there are more hoops to jump thru for the seller and the buyer.
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Old 06-07-2018, 04:27 PM
 
Location: Florida
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George Bush asked the same question in 2005.
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Old 06-07-2018, 04:30 PM
 
Location: Rochester, WA
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Quote:
Originally Posted by desperatedogadvice View Post
My husband says that he views people who don't put down a substantial down payment (and earnest money) as "not serious." He has pretty strong opinions as he flipped houses in college and after to help finance post grad education and was burned by a buyer who had a 0% down loan. He blames the lack of skin in the game for some of what happened in that situation (as well as the 2008 financial crisis.)

A loan is a loan is a loan to me as long as we get paid. But when we have had multiple offers the no money down goes to the bottom of the pile.

Your husband's opinion is like most broad generalizations.... it can be true, but it's often not.



The big picture is what's important. And sometimes our experiences and biases help us, and sometimes not.
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Old 06-07-2018, 04:48 PM
 
1,463 posts, read 334,628 times
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Quote:
Originally Posted by desperatedogadvice View Post
My husband says that he views people who don't put down a substantial down payment (and earnest money) as "not serious." He has pretty strong opinions as he flipped houses in college and after to help finance post grad education and was burned by a buyer who had a 0% down loan. He blames the lack of skin in the game for some of what happened in that situation (as well as the 2008 financial crisis.)

A loan is a loan is a loan to me as long as we get paid. But when we have had multiple offers the no money down goes to the bottom of the pile.
As a buyer who used a 0% down USDA loan (guaranteed, not direct), you'd think I'd be offended, but I can see your side.

0% down means they're going to ask you to cover closing costs.

0% down means they're using some sort of government program or government guaranteed product, this is subject to hangups. The government shutdown was right in the middle of my mortgage underwriting and it took 4 full months to close. The seller did not drop me. I am thankful. I only had $1000 in earnest money.

If you have options, and one of those options is cash in full, you don't want to risk holding out for financing and losing your right-now money, unless it's just an insulting offer.

You're a-ok by me.
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Old 06-07-2018, 04:52 PM
 
10,274 posts, read 6,515,435 times
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I think even asking or considering it is a good thing as it doesn't always mean it's a warning sign it may just be a smart buyer who's money is tied up in something else or who wants to save that money for their own reserve should something come up.
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