TN housing Market (Memphis, Knoxville, Jackson: mortgage, good credit, loans)

[Tony1790]

Originally Posted by mbmouse

Tony, please don't think I was disagreeing with you. I am not, I DO understand and see your perspective, not saying it is right or wrong because a lot of how we all live our lives and make our choices is based on our own perspective. I was just sharing mine too.
And yes, I do agree with you about housing bubble effected regions of this country, the prices of over inflated values WILL have to come down and that puts a lot of people in a bad position. However, I just do not see that here in East TN.
What that lender was saying about de-emphasizing is more of not offering incentives and lower rates for those programs and being stricter on them in underwriting. 80/20's are still very much available in the conforming market and some 90% and 95%'s are still available in sub prime, just not for borrowers such as stated or low credit scores and they have upped the requirements such as higher credit scores and lower DTI's. In my opinion this is a good thing. Gets rid of those predatory lenders and insures people CAN make there mortgage payments which means less foreclosure, that is a good thing.

Thanks as always for your views and insight, no worry about agreeing or disagreeing, only God knows the future, the rest of us just guess at it ;-)

I don't mean to be so negative on housing, I love housing and real estate in general, especially view properties I was just trying to share some of my experiences with what is happening outside of TN in housing/lending and what I think COULD happen in TN with housing and lending.

I'm a buyer for TN and think that there is a great future there, just in the short term, there may soon be some pain.

I was in NC this last weekend, I still need to stop by your office and say hello, I owe you a cup of coffee and maybe even a lunch for all of your help.

Take care and keep up the hard work, I know you put in a lot of free time into this site and are extremely helpful in all situations.

Tony

[Bob Hamilton]

Originally Posted by sliverbox

"we're in no hurry to move but are purchasing land now before the prices skyrocket. "

Please don't let this be the reason you buy land now. If you read the results of monthly housing reports, you'll see that TN right along with most other states are actually having a decline in sales. In fact, TN is 11th in the country for having the most foreclosures. That should say something right there. In fact, did you know that in Memphis, there were 19,738 homes sold in 2006, and there were 18,155 residential foreclosures last year? That is A LOT.

I think what many people here are totally forgetting is that the US has just gotten through the biggest housing bubble in it's history. The prices everywhere are totally out of whack with economics. It is only natural that people are shell shocked and having a knee-jerk reaction from more expensive states to buy up land like crazy in cheaper ones. But the bottom line is that the housing bubble has now burst from an unnaturally freakish level. Heck- Florida is already having some areas with 100k cuts on the prices.

In my opinion, anyone buying right now will more than likely be paying more than the land will be worth in a few years, even if the land is seemingly cheap. Just keep an eye on the prices and buy when you really need to, not because you think it will go up. Remember- TN is not FL or CA. Don't expect a massive rush from buyers like happened in FL. The speculative element is now gone.

Sorry to sound nasty. Just trying to throw in a word off caution.

Question ? 1. Has land or homes ever lost there value ? 2. What cds will pay you anything like realestate? 3. Knoxville Tn is 57th in the nation to buy and retire because of taxes and location. Food for today !!!

[Tony1790]

Originally Posted by Bob Hamilton

Question ? 1. Has land or homes ever lost there value ? 2. What cds will pay you anything like realestate? 3. Knoxville Tn is 57th in the nation to buy and retire because of taxes and location. Food for today !!!

1. Yes property values do decline, they are in the process of declining right now in many parts of the US, I was in California after their last housing decline and wish I had bought then, not now though. Heck even in FL, there are parts of FL that have still not reached their high from the bubble of 29, that's 1929, that bubble was one of the reasons for the stock bubble that created the great depression. Now it's in reverse, equity from the decline of 2000 went into housing which is leading now a decline in the financial market.

2. CD's are paying 5%, many properties in FL are DOWN 20% year over year, I'd say that's a 25% difference.

3. I agree with you there, Knoxville does seem like a good place to live and retire, that's why we are all moving there

I'm a History major, graduating this spring, I love talking housing, buying, selling, taxes, investment and even decline and defensive positions. I love the thought of moving to TN, hope to see you there. However, everything is NOT rosy in the current declining peak we find ourselves in.

Take care.

Tony

[mbmouse]

Hi fritzichic,
If I understand your reasoning behind doing the 100% loan (80/20): Not depleting reserve cash on hand to insure you can cover both mortgage payments until you house is sold?
Then yes, I would say you did the right thing especially if you plan on paying off the second (the 20%) as soon as possible. That will put you in an 20% equity in the house situation, that will be very good come time to refinance. As for the first (80%) that is an interest only. I am assuming this is a 30 year fixed with a 10 year interest only period? If so after you sell the first house and pay off the second, continue to pay the interest only portion to the lender but put the difference (principle and escrows) into a high yield savings account, then when you refinance, which should be before the 10 year mark, place some of that savings down (if you need to depending on the value of the home at that time), that will put you at approximately less than 60% Loan to Value. This will insure you the bottom rates and a small mortgage payment, yet still have liquid savings.
If you are disciplined enough financial to save the difference between the interest only payment and fully amortized payment, then ignore the above and refinance into a 30 year fixed as soon as you sell the first house.

Originally Posted by fritzichic

So what do you all think about the loan that I just did this week?

100% financing
80% loan for $200,000 I/O (10 year i/o payment)
20% loan for $50,000

We had to do full documentation and plan to pay the $50000 off within the next 18 months.

We only went with 100% financing because we have to move quickly and we haven't sold our first home yet. We did buy a house that was lower in our price range in case we had to keep paying two mortgages but we really doubt we will.

I would love to refinance in a few years to a traditional loan, but if we don't we plan on paying an additional $200-400 a month towards the principal on the interest only loan.

We did make sure that we bought an all brick home(above average build quality) on a large lot in an established neighborhood (only house for sale in it). It is not in danger of being near a commercial zone. We hope that this helps keep our home value more stable than others.

I guess I want to hear that I am taking a good approach to this home purchase. I have hated how easy it was for people who shouldn't have qualified to get a loan but now I find myself doing a nontraditional route as well, ugh. I just want to make sure that I am being smart about it.

Thanks!

[fritzichic]

Tony,

Thanks for the info. We are very prepared to rent the home if necessary in case it doesn't sell. We are also prepared to sell the home for less if necessary as well. Our real estate agent said that as long as we are willing to entertain all offers than we won't have a problem.

Right now our home in Tennessee is not going to be our home for longer than 5 years. If we like Tennessee enough to live there longer than that than we may upgrade to a bigger home with more land or refinance on that home.

We actually haven't closed on the loan, but we have felt that we can be financially disciplined enough to pay the 20% off quickly and then continue to put the second mortgage payment into savings.

[daniellefort]

"buy land now before it goes up" is what I stated. Well i just came from TN this week after looking at 32 properties. the lot next to the one we bid on increased $50,000 in 7 months. We happened to see the first owner who bought it, he turned around to sell it 6 months later and made $30,000 profit on it and not doing a thing to it. Now a new owner has it up for sale for $20,000 more and it probably will sell. Other lots in this same area go as high as $136,000 which began at a much lower price. So yeah, i'd say by now before the prices go any higher and you can't afford it and before all the good lots with views are taken as well because there's only so many mountain tops out there. Yeah you can wait for the price to go down but your not going to find a cheap mountain view piece of land. Those will only increase in value the more scarce they get.

[mbmouse]

What part of TN is this in? Is it in a development? Just curious.

Originally Posted by daniellefort

"buy land now before it goes up" is what I stated. Well i just came from TN this week after looking at 32 properties. the lot next to the one we bid on increased $50,000 in 7 months. We happened to see the first owner who bought it, he turned around to sell it 6 months later and made $30,000 profit on it and not doing a thing to it. Now a new owner has it up for sale for $20,000 more and it probably will sell. Other lots in this same area go as high as $136,000 which began at a much lower price. So yeah, i'd say by now before the prices go any higher and you can't afford it and before all the good lots with views are taken as well because there's only so many mountain tops out there. Yeah you can wait for the price to go down but your not going to find a cheap mountain view piece of land. Those will only increase in value the more scarce they get.

[Tony1790]

Originally Posted by daniellefort

"buy land now before it goes up" is what I stated. Well i just came from TN this week after looking at 32 properties. the lot next to the one we bid on increased $50,000 in 7 months. We happened to see the first owner who bought it, he turned around to sell it 6 months later and made $30,000 profit on it and not doing a thing to it. Now a new owner has it up for sale for $20,000 more and it probably will sell. Other lots in this same area go as high as $136,000 which began at a much lower price. So yeah, i'd say by now before the prices go any higher and you can't afford it and before all the good lots with views are taken as well because there's only so many mountain tops out there. Yeah you can wait for the price to go down but your not going to find a cheap mountain view piece of land. Those will only increase in value the more scarce they get.

Same thing happened here in WA, in 2004 land was going for about $10,000 per acre, within 18 months (mid 2006) land had jumped to $100,000 an acre, about a 1000% increase. These prices will come down, but they will take a while to do it, so yes if you plan on building and find a piece of land that you really want, there is nothing wrong with buying it, especially if it is view property. If I'd had known that land was going to shoot up so much here, I would have bought as much as possible and I'd be a millionaire

Good luck with your future plans, I hope that all goes well.

Tony

[sliverbox]

Question ? 1. Has land or homes ever lost there value ? 2. What cds will pay you anything like realestate? 3. Knoxville Tn is 57th in the nation to buy and retire because of taxes and location. Food for today !!!


Answer for question 1: Yes. In fact, many cities across the country, along with entire states have lost double-digit percentages on their values. Take Texas in the 80's for example with the Oil bust in Dallas. Or LA in the late 80's with the loss of the aerospace defense industry where homes plummeted over 30% in less than 3 years and stayed down for over 10. TN is no different. When you buy, you are in fact buying into a degree of risk. People that have had to use creative financing are taking even more risk since their loans will only assure ownership of their house if the value goes up, and they can refinance. To assume that property value only goes up is when basing a choice in buying a home is foolish, and even more so if you don't really have the money in the first place.


[i]"buy land now before it goes up" is what I stated. Well i just came from TN this week after looking at 32 properties. the lot next to the one we bid on increased $50,000 in 7 months. We happened to see the first owner who bought it, he turned around to sell it 6 months later and made $30,000 profit...


- Again, don't act on assumption. Just because the Jonses across the street bought and got X amount of resale dollars doesn't mean you do too. In fact, Many states have gotten into trouble when too many people have this kind of attitude.. "b-b-b-but... I have to buy NOW before I get priced out!" No you won't. As we can see in the headlines, supply is at an all-time high, and even in states like TN, NC, AL, and GA. Prices are also down in many cities throughout the Southeast. Do not use anecdotal personal evidence to make a decision.I saw this kind of behavior all over California.It is bad news. Read the MLS. Lookup the sales reports. Read the paper. Base your decision on facts. Do not let fear force you to buy. If everyone thinks like that, then you will get a bubble, which means prices might or might not go up, but more than likely they will come down, and perhaps even lower than the amount you paid.

As far as having CD's and savings... Well what I have in the bank is guaranteed. What a home is worth is only that until I sell it. End of story

Answer to question no. 3. So Knoxville is No 57 to buy? Is that good or bad? Doesn't make me roll around with excitement.

[hiknapster]

Yeah. Just because the guy is standing on the lot next door and offering to put in your driveway and saying that his lot went sky high and Disney is coming so you better get in now...

But it is in Cocke County, a notoriously creepy place, out in the middle of nowhere and one hour away from Knoxville...

Well, it all seems kind of hinky to me.