Instructions to my son on how to buy a house in the SF Bay Area (San Francisco: house prices, neighborhoods)

[TR95]

Originally Posted by 2sleepy

Sorry about that, sometimes I could swear you and life are the same person. But DTI does affect your interest rate and your ability to get a conforming loan. And by the way, the DTI ratio on refi's is higher than on new purchase loans, but by all means jump right in and chastise me for having the audacity to disagree with you, it adds so much to a discussion.

Two were purchase loans and both rates were less than 4%. One was 3.75% and the other was 3.625%. One was super conforming and the other was conforming. Shoot, investment property rates are not much above 4% either. So yes I will say you don't know what you are talking about. Credit score is what matters. If the lender qualifies you at the 43% DTi and you have a 720 credit score you will get the best rates. If credit score is above 740 you get the best best rates. Stop wasting people's time. You must be talking about lower credit scores.

[bodyforlife99]

2sleepy,

You do realize that most SF residents spend roughly 41% of their income on their mortgage, and SF renters spend 47% of their income on rent, don't you?

[TR95]

Real rate quotes showing all the information required up to a 43% DTI. But go ahead and argue with facts. Jumbo loan rates are slightly higher.


Loan Information March 11, 2016 11:07 AM CT
Loan Purpose: Purchase
Amount: $400,000
Property Value: $500,000
Property Type: Single Family Home
Est. Credit Score: 740+
Occupancy: Primary Residence
City: All
County: Alameda
State: California
Lock Period: 30 Day
Escrow: Yes
Change Information
Showing 45 of 45 Results |
30-Year Fixed Rate
Apply Now
Rate APR Points Closing Costs Payment Details
3.125% 3.325% 1.837% $11,129.05 $1,713.50 View
3.250% 3.377% 0.935% $7,521.05 $1,740.83 View
3.375% 3.442% 0.173% $4,473.05 $1,768.38 View
3.500% 3.553% 0.000% $1,405.05 $1,796.18 View


Loan Information March 11, 2016 11:11 AM CT
Loan Purpose: Purchase
Amount: $720,000
Property Value: $900,000
Property Type: Single Family Home
Est. Credit Score: 740+
Occupancy: Primary Residence
City: All
County: Alameda
State: California
Lock Period: 30 Day
Escrow: Yes
Change Information
Showing 18 of 18 Results |
Jumbo 30-Year Fixed Rate
Apply Now
Rate APR Points Closing Costs Payment Details
3.375% 3.532% 1.579% $15,589.85 $3,183.09 View
3.500% 3.611% 1.000% $11,421.05 $3,233.12 View
3.625% 3.693% 0.468% $7,590.65 $3,283.57 View
3.750% 3.780% 0.000% $4,221.05 $3,334.43 View
3.875% 3.905% 0.000% $1,830.65 $3,385.71 View
4.000% 4.030% 0.000% $1,542.65 $3,437.39 View

[CA4Now]

Originally Posted by 2sleepy

And by the way, the DTI ratio on refi's is higher than on new purchase loans, but by all means jump right in and chastise me for having the audacity to disagree with you, it adds so much to a discussion.

Yes. Heaven forbid that one might carry a different opinion on this subject.

Obviously putting the minimum down doesn't really benefit a first time homeowner in the long run.
Six Reasons To Make A Large Down Payment On A House

[bodyforlife99]

Originally Posted by CA4Now

Yes. Heaven forbid that one might carry a different opinion on this subject.

Obviously putting the minimum down doesn't really benefit a first time homeowner in the long run.
Six Reasons To Make A Large Down Payment On A House

Versus what? Paying rent?




And yet another straw man argument. If you look at the examples given by TR95, each one has a 20% down payment. In addition, no one ever advocated putting less than 20% down. However, if one doesn't have that much, there are certainly products out now that allow for it without the PMI penalty (so your article is incorrect on that comment). I have pointed this out in other posts (and questioned whether it would be better to even put 0 down versus paying exorbitant rent prices....and an argument can be made for it). Although no one knows what the future lies, the question remains is it better to pay a mortgage at an average of 41% of your income, or rent at 47% (based on the trend of the last 40+ years, I would say in the long run, one would be better paying a mortgage). Last I checked, that rent payment isn't doing anything to build equity. And personally, I can't think of an investment that would turn $60K into $900K over a 20 year period (which was the case with me and my wife). But feel free to disagree. One is always welcome to take the renter's route.

P.S. The writer of that article doesn't know what future home prices will be or what future rent prices will be. My guess is rents will continue to rise based on lack of supply of houses, and the desirability of people to live in the Bay Area. Anyone is welcome to guess the other way and we'll see who's right in 20 to 30 years. I personally love paying a mortgage that is $2000-2500 less than the current rental price for my dwelling.

[neutrino78x]

41% of your income is far too much to spend on housing. You're supposed to pay only 1/3 or 33%. So if you make 6k per month your rent or house payment should not be more than 2k.

Personally, as a guy who never had the opportunity to get married and have kids (women aren't interested in me as more than a platonic friend), I have no reason to purchase a condo. I would have done it had anyone liked me back, assuming I had stayed in the USN or got a good job in IT.

But yeah in a large city, middle class is owning a condo, not a single family home, and that is the way it should always be in the future. You can't have a city of 20 million people and have everyone live in a sfh. Your city would have to cover a huge and unrealistic land area. I strongly support continuing to grow the human population -- I am morally opposed to antinatalism and "childfree by choice" -- but we have to do it in an enviornmentally responsible way, and that means dense cities with condos, not SFHs.

[WithDisp]

Originally Posted by bodyforlife99

Versus what? Paying rent?

Last I checked, that rent payment isn't doing anything to build equity. And personally, I can't think of an investment that would turn $60K into $900K over a 20 year period (which was the case with me and my wife). But feel free to disagree. One is always welcome to take the renter's route.

P.S. The writer of that article doesn't know what future home prices will be or what future rent prices will be. My guess is rents will continue to rise based on lack of supply of houses, and the desirability of people to live in the Bay Area. Anyone is welcome to guess the other way and we'll see who's right in 20 to 30 years. I personally love paying a mortgage that is $2000-2500 less than the current rental price for my dwelling.

Which is why you are an advocate for buying.
You purchased at a better time.
Property values have gone up 10X+, thus Tax has gone up 10X+. The majority of salaries have not.


Now we look at a point where rising costs have put more than 50% of the population in the area out of the ability to purchase.

This means house prices can only continue to rise if salaries do, and thus in a disproportionate way to the rest of the country.

I rather see this as the WORST time to buy. I only see Bay Area prices going down, even if ever so slightly... or at least stagnating.

The 5% 10% 20% argument website is GROSSLY flawed.
Stating that someone who put 20% into their home is less likely to be underwater in the event of property values dropping.

Rather, the 5% investor who walked away from their mortgage when property values dropped 50%. See Sacramento, Orlando, Las Vegas, West Palm Beach, Scottsdale in 2010.

Especially at shockingly low mortgage rates, I'd rather float a low interest loan 3%, and have hundreds of thousands of liquid cash available to me.

[WithDisp]

Originally Posted by neutrino78x

41% of your income is far too much to spend on housing. You're supposed to pay only 1/3 or 33%. So if you make 6k per month your rent or house payment should not be more than 2k.

Personally, as a guy who never had the opportunity to get married and have kids (women aren't interested in me as more than a platonic friend), I have no reason to purchase a condo. I would have done it had anyone liked me back, assuming I had stayed in the USN or got a good job in IT.

But yeah in a large city, middle class is owning a condo, not a single family home, and that is the way it should always be in the future. You can't have a city of 20 million people and have everyone live in a sfh. Your city would have to cover a huge and unrealistic land area. I strongly support continuing to grow the human population -- I am morally opposed to antinatalism and "childfree by choice" -- but we have to do it in an enviornmentally responsible way, and that means dense cities with condos, not SFHs.

You can't decide how much is too much to spend on housing. It depends on the individuals. What does matter is the loan approval process. TR95 is nutbags if he/she thinks people with 60K incomes are going in and getting jumbo loans for 500K.

Houston is a huge city with mostly SFH, and is the most affordable large metro in the country.
Mostly because zoning restrictions are pretty much nil. They'll allow any construction so long as it is postiive growth for the city.
SF is quite the complete opposite.

I don't advocate anyone purchasing a SFH for reasons other than that's what they really want- but I think this thread can be more generalized to even Condo ownership in SF, as it's still through the roof.
In fact, in most hot urban areas Condos are more expensive than their SFH equivalent.

Growing the human population is expensive in a big city.
If the majority of people are struggling to get housing, having a child is a whole other element.

[CA4Now]

Originally Posted by bodyforlife99

no one ever advocated putting less than 20% down.

I believe that you did.

Originally Posted by bodyforlife99

Also realize that you don't necessarily have to put 20% down and their are currently vehicles out there that will prevent you from paying PMI.

Originally Posted by bodyforlife99

You don't have to come up with 20% now if you don't want to either

[TR95]

Originally Posted by WithDisp

You can't decide how much is too much to spend on housing. It depends on the individuals. What does matter is the loan approval process. TR95 is nutbags if he/she thinks people with 60K incomes are going in and getting jumbo loans for 500K.

Houston is a huge city with mostly SFH, and is the most affordable large metro in the country.
Mostly because zoning restrictions are pretty much nil. They'll allow any construction so long as it is postiive growth for the city.
SF is quite the complete opposite.

I don't advocate anyone purchasing a SFH for reasons other than that's what they really want- but I think this thread can be more generalized to even Condo ownership in SF, as it's still through the roof.
In fact, in most hot urban areas Condos are more expensive than their SFH equivalent.

Growing the human population is expensive in a big city.
If the majority of people are struggling to get housing, having a child is a whole other element.

Once again, never said such a thing. Again, for those that seem to struggle with basic math skills or just refuse to believe, someone buying a $650k house with a $520k mortgage, the PITI (yes that includes principal, interest, taxes and insurance for those that seem to have no clue), monthly payment is $3,158. Someone needs to make $88k and have no other debt, which equates to a 43% DTI. As Body has been saying all along it would likely take two people to afford a house. No where have i ever said someone making $60k can afford a $500k mortgage. Again, a lack of basic reading skills.

Also, so many seem to be whining about salaries of social workers, psych majors, etc. All those majors have always had trouble making enough money to afford a house here. It's been going on for generations as Body, R4T and Ultrarunner have all said.

If you want a reality check go see the thread titled "Full Time Offer Check." Plenty of recent grads making close to or over six figures so no need to really keep whining about how this generation is different. It's been the same for several decades.

I'd say go live in Houston then if you find so much appeal in it. Not a chance, spent 4 years in Dallas with thoughts of Houston and it's the most unbearable place to even consider living, but hey it's the most affordable large metro in the country. You can't honestly think that if SF relaxed and had nominal zoning regulations like Houston that it would become that much more affordable. People live here and in CA for a reason. Just as people live in Houston for a reason. But again, feel free to move if there if it will stop your incessant whining.