100% loans are gone...What will this do to San Diego? (foreclosures, rent)

[wanttoteach]

Hey,
Well I have been sharing my ordeal this past year with finally selling our home in Northern California, finally getting a job, and looking for a home here. Unfortunately last Friday loan companies anounced that 100% loans are DONE. This puts us in a horrible position. We are cash poor but have FANTASTIC credit, and I also have a secure job. Just last week we made a few offers on homes but one of the home owners was so completely rude and unrealistic. They gave one of these "value ranges" and countered back at us in the middle of their range. The agent was angry with the offer, and even asked our agent why we even bothered. Just so you know, our offer was 50k under the start of their range. Yes, I know that price is a lot lower, but their price was so high compared to their other home comps. We were just wanting to start the countering game and were willing to pay more. They are nuts thinking that they are going to get asking price on their home. The realtor didn't even send us the counter until 2 days later, and then called our realtor and tried to sweet-talk her when they realized that they had missed out. We asked for an extension on the counter to think about it, but now I am wondering what we should do.

So now I ask you, what do you think that the stopping of 100 percent loans is going to do to the market here? Do you think that people will start dropping their prices this week in reaction to this and the stock market plunge? If we happen to be successful in obtaining a loan somehow, do we have lots of power now to lowball people due to the recent change in loans? Hmmm...I would love to hear your opinion!

[kettlepot]

Well, if their asking price is completely nuts, you just have to wait for reality to sink in. That may take several months. If that's too long for you to wait, move on to a house where the owner's price is more realistic. Realistically priced homes sell, unrealistically priced homes do not.

As for 100% financing being done, that's not true. VA loans still provide 100% financing. But even the end of 100% civilian financing doesn't mean that there still won't be 97% financing available. If you're expecting the market turmoil of the last few weeks to knock another 10% off of prices that have already dropped 12%-15%, you may have a long wait. Minus 5% over the next 6 to 9 months sure, another 10%? Maybe by the end of next year or maybe never.

[wanttoteach]

Originally Posted by kettlepot

Well, if their asking price is completely nuts, you just have to wait for reality to sink in. That may take several months. If that's too long for you to wait, move on to a house where the owner's price is more realistic. Realistically priced homes sell, unrealistically priced homes do not.

As for 100% financing being done, that's not true. VA loans still provide 100% financing. But even the end of 100% civilian financing doesn't mean that there still won't be 97% financing available. If you're expecting the market turmoil of the last few weeks to knock another 10% off of prices that have already dropped 12%-15%, you may have a long wait. Minus 5% over the next 6 to 9 months sure, another 10%? Maybe by the end of next year or maybe never.

My stepfather preached at me (he is wonderful-just very overprotective) and told me to NOT buy a home now. He said that I will lose big if I do...but it is really important to me that I am a homeowner. I have owned 2 homes over the last 7 years and it is difficult for me to pour my hard earned money into monthly rent. Is there still 97% financing? My husband has been on the phone for the past 48 hours trying to get us a loan. I can't believe this is happening.

[wanttoteach]

Originally Posted by kettlepot

Well, if their asking price is completely nuts, you just have to wait for reality to sink in. That may take several months. If that's too long for you to wait, move on to a house where the owner's price is more realistic. Realistically priced homes sell, unrealistically priced homes do not.

As for 100% financing being done, that's not true. VA loans still provide 100% financing. But even the end of 100% civilian financing doesn't mean that there still won't be 97% financing available. If you're expecting the market turmoil of the last few weeks to knock another 10% off of prices that have already dropped 12%-15%, you may have a long wait. Minus 5% over the next 6 to 9 months sure, another 10%? Maybe by the end of next year or maybe never.

Okay...my husband and I are kinda excited about the possibility of a 97% loan. We can ask for that on our offer and we do have enough put away for closing costs. Thanks for the idea!

[wally99]

There's an auction next weekend

There will be more of these auctions to come, more foreclosures.

Why hurry to make an offer? Unless it's a great deal, why not wait till next year?

[wanttoteach]

Originally Posted by wally99

There's an auction next weekend

There will be more of these auctions to come, more foreclosures.

Why hurry to make an offer? Unless it's a great deal, why not wait till next year?

Why not wait? Because I have absolutely no patience. I never have. I hate that aspect about myself. Also, we are currently renting an hour away from my job, and the commute is horrible. Of course, my job hasn't technically started yet so I have only commuted there a few times but I suspect that it will grow very annoying. Or maybe I will just get used to it like all of the other San Diegans.

I heard that for home auctions you need 100 percent in cash.

[wally99]

Originally Posted by wanttoteach

I heard that for home auctions you need 100 percent in cash.

You need a $5000 cashier's check and then you can bid. You need a check book to pay 5% of the final price.

The rest you can finance, they have an area where you can sign paperwork and open escrow at the auction.

Note - I have not actually attended one of these auctions. I am just summarizing what I read on the website.

I don't know that you'll get a great deal at the auction. I think people may bid up the prices, and you could get caught up in the auction frenzy. Then again, there may be some good deals at the auction.

[kettlepot]

Given that at least one of you is just starting a new job, it does seem that you may be jumping the gun purchasing a home. Lenders would prefer you had more time in your present job. Impatience in this market is a definite vice.

[justsomeguy]

I completely agree with the others that said to wait to buy a home here. I am no expert, but I do have a degree in economics, home prices more than doubled in a span of 2-3 years here, and priced 95% of the people out of the market! Those prices cannot sustain themselves, and they will continue to fall, more ARMs are going to reset at the end of this year - just rent a place til the end of the year and start looking to buy a home next year. Your stepfather is right, don't buy a home yet, unless you throw a lowball offer out there and get picked up on it. I guess perhaps the question is, will prices drop $10,000 or more by next year? 5 months rent x $2000=$10,000 you will have paid in rent. But what if home prices drop another $20k-$40k by next year?

[Calihappy]

justsomeguy is SO right on the money. Don't get sucked into the hype of being on the property ladder yet! Put your down payment in a high interest savings account, save up for a year or two, then buy. Yes you are putting money into someone else's house for a year, but the prices WILL drop, you WILL earn some interest on your deposit, and by saving money, that will go further to a down payment of a house who's price drops. MORE equity for you in the long run, not less Just be patient. Or be a chump and rush into a falling market - the choice is yours.