Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
If you are a potential home buyer that may need downpayment assistance through a government program, you better buy before October 1st of this year. With the new housing rescue bill about to be signed into law, it will do away with a loophole in FHA loans that have allowed sellers to basically provide the 3% downpayment for buyers.
I see both positives and negatives associated with this. On one hand, the sellers almost always added the downpayment on top of the actual price of the home, thereby slightly inflating the sales price. Also, one could argue that if a buyer can not afford at least a 3% downpayment, maybe they should not buy a home because it increases the likelihood of possible foreclosure.
On the other hand, I've bought all of my homes with no money down in one way or another because the financial aspect made more sense for me. One can also argue that the demise of downpayment assistance will decrease the number of homes sold, which is probably true. At < $120K, a buyer can buy a home in the Huntsville market for less than what they can rent some homes for, but they may be forced to rent because they don't have enough reserves for the downpayment. This is especially true for the first time home buyer.
Granted, with the new bill, a first time home buyer will get a tax credit for 10% of the purchase price of the home (up to $7,500 BUT, has to be paid back starting two years after buying the home).
IMO, if you can't afford the down payment, you shouldn't be buying a home. Save your money until you can afford to put a down payment on a home, or buy a smaller home. Part of the purpose of a down payment is assurance that you are good for the money. That you are responsible and can budget and save. A down payment doesn't do what it's supposed to do if someone else is paying it.
Part of the reason we're experiencing the problems we are in the housing market is because so many people bought homes they couldn't afford. No money down, outrageous loans for people who couldn't afford to pay them back. The bubble bursts and it causes quite a bit of havok.
I witnessed it at its extreme in the Southern California housing market. We just entered escrow to finally sell our house. It's at a price less than what we paid for it in 2003, because we finally threw up our arms and decided to be competitive with foreclosures, and into the range where people buying starter homes could conceivably bid on our house.
But in all honesty still quite a bit of money for the kind of house it is. It's hard to get too upset over not getting inflated phantom money we never had, and that the house was never objectively worth by any sane person.
In spite of my own loss I'm glad to see the housing market return to something sane - where people are putting in offers in on homes that are sane, with a decent down payment and a loan within their means.
And to me, "decent downpayment" is 10-20%. 3%? If someone can't save enough to put down 3% on a house, they shouldn't be a homeowner, as I question their ability to and save for property taxes or home maintenance. Home ownership comes with a lot of responsibility.
Everything you say is true, or definitely can be argued as true. I have a soft spot for people wanting to buy a home with no money down. My very first home was bought with a program like this because I couldn't afford the downpayment of 3% because I was just starting out and I was only 20 years old. The house payment, including taxes(keeping in mind, Alabama taxes only cost me about $200 a year) and insurance was $500 and change, which was $50 more than I was paying for a 1BR apartment in town.
I agree with you that it should be a progression, buyers should be smart. Just because one is approved for $300,000 does not mean one should buy that home. Sticking to a budget and knowing the full deal about ARMs would have prevented many foreclosures.
But, it is a self-adjustment to the market. Banks are becoming banks again. Mortgage companies aren't throwing money at everyone that walks in the door. Home prices and inventory are readjusting. Realtors (some) are panicking and getting real jobs. It happens once every 10-15 years. It will happen again. It's not over just yet, but it will be relatively soon.
The only part that bothers me is the $7500 tax credit. I plan on buying a home in the next 3 years. Can you deny or not use that credit if you don't want to (I don't know much about these things). I'd rather not have to add $7500 to what I have to pay back. That is the whole reason why I am still saving up money right now.
The only part that bothers me is the $7500 tax credit. I plan on buying a home in the next 3 years. Can you deny or not use that credit if you don't want to (I don't know much about these things). I'd rather not have to add $7500 to what I have to pay back. That is the whole reason why I am still saving up money right now.
I believe that you do not have to claim the credit if you choose not to. Plus, the amount of the credit is based on the purchase of your home at 10% of the purchase price. So:
You buy a $250K home, your tax credit is only $2,500. It applies to homes up to $750K, hence the $7,500 number everyone is throwing around. You must begin paying back the tax credit two years after the purchase of the home, and is repaid over the course of 15 years....which basically turns it into an interest free loan.
Keep in mind, this only applies to first-time home buyers. Which is stretched by the government to include anyone that has not owned a home in 3 years.
So ZennJenn, what I understand you to be implying is that if one does not have 25K plus in savings they should not be able to own/afford a home. I applaud you for being "thrifty" and saving! I for one would love to purchase a new home, however I am a single father who has been raising his son since he was five months old alone with help from no one. Yes my credit is in shambles due to an ex wife who was an addict, thief, and an all around bad person and yes I and my son are paying for it, but he goes without nothinng . She took advantage of "power of attorneys" while I was deployed in the military, bought cars, jet ski's, jewelry etc..etc... I have always been responsible, provide for my child, changed careers as to keep custody of him and I pay over 1K a month for rent (never late by the way) and I do earn over 100K yearly, don't own a credit card and everything I do own is paid for. Yes I am working diligently to clean up my credit, but if you have never walked in "these" shoes you would have no idea how difficult it is. I don't think you are a bad person, just rubbed me the wrong way with your two cents. But hey most of US on "this side of the mountain" are a bit snooty anyway!
I'm sincerely sorry for your unfortunate circumstances.
We have proof positive going on right now that giving people big no-money down loans has NOT been good for our economy. You may think it would be nice, but it's not good for the economy. There are people who got no-money down mortgages whose homes have lost value, and now they are simply walking away and letting the bank take it. They have little to no cash invested in the house, and the house value is dropping from what they agreed to pay for it, so what do they care? When people can so fleetingly run away from their investments, because they've put no real money into it, it breaks the system and there are widespread economic ripples. I'm sorry, but those kinds of consequences are not a price worth paying just because people in your unfortunate circumstances think it's a bummer to be a renter.
And what's wrong with renting, anyways? Just about everyone rents while they save money for a down payment (or some decide to rent simply by choice, and not necessarily unwisely I might add. There are a lot of advantages to renting!)
You can think I'm snooty, that's fine. I'll think you're self-entitled for thinking home ownership should be bestowed to people who invest nothing in their property. I'm all for the government encouraging home ownership via things like tax deductions for your mortgage, but I draw the line on them giving you free money to own a house. There's nothing inhumane about renting a place. Almost all of us have done it.
There are lots of things I'd love to spend money on that I don't have the money for. Even things that would benefit my health or my children. Oh well, that's the breaks. I don't expect the government to fund my desires. People can live a perfectly happy, healthy, well-adjusted life without owning a house. If we want to talk about who has walked in whose shoes, there are those far worse than yours. How about the government takes the money it might have used for downpayment assistance for people with six-figure salaries, and instead uses it to subsidize low-income apartments (and keeping them clean and safe) for people who have no shelter.
we have proof positive going on right now that giving people big no-money down loans has not been good for our economy. ......
You can think i'm snooty, that's fine. I'll think you're self-entitled for thinking home ownership should be bestowed to people who invest nothing in their property. I'm all for the government encouraging home ownership via things like tax deductions for your mortgage, but i draw the line on them giving you free money to own a house. There's nothing inhumane about renting a place. Almost all of us have done it.
We have proof positive going on right now that giving people big no-money down loans has NOT been good for our economy. You may think it would be nice, but it's not good for the economy. There are people who got no-money down mortgages whose homes have lost value, and now they are simply walking away and letting the bank take it. They have little to no cash invested in the house, and the house value is dropping from what they agreed to pay for it, so what do they care? When people can so fleetingly run away from their investments, because they've put no real money into it, it breaks the system and there are widespread economic ripples. I'm sorry, but those kinds of consequences are not a price worth paying just because people in your unfortunate circumstances think it's a bummer to be a renter.
.
I disagree. The problem was not no-money down loans. The problem is that people took out ARM loans without being able to afford the consequences once those rates adjusted.
And, I just wanted to add that even renters are feeling the pinch in this economy. Landlords are leaving them high and dry when the house is foreclosed on. So, I can certainly understand people wanting the security of owning their own home and deciding their own fate. The government isn't giving those loans away. People still have to make payments on the loan. You talk as if the house is a freebie.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hmmm?
