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Buying a house with no money down is asking to be potentially underwater, did we not learn anything from 2008?
Many in 2008 went underwater when their neighbors, who never should have qualified for any mortgage, figured out they couldn't pay it and loaded up Uhauls in the night. I know that is what happened to us. When we saw people moving in during '05-07 making $30,000-40,000 and getting keys to a $250,000 new house, we knew something was not right.
All the houses short-sold or went in to foreclosure and each one took our home's value down more- even the down payment was gone.
The VA loan program was designed to assist those that served to buy a home... no other program in the United States has helped more people to the path of Homeownership...
This program still exists... it's just that those that choose not to serve now complain on how hard it is to buy a home or how easy it was before.
As a sidebar, so does the military Tuition Program... these are EARNED benefits.
What's wrong with buying with no money down if you mortgage is less or the same as the rent you pay??? At least you will have some predictability in your future housing costs as opposed to most that rent.
"Being Underwater" has nothing to do with walking away from you obligations...
The moment a person buys a new car on time... they are "Underwater"... same when people buy Furniture or Appliances... or just about anything on time.
Human nature is often short sighted... just pay you mortgage each month as agreed and you will be fine.
In the mid 2000's I bought a home that lost 40% of it's paper value by 2009... things is it was still the same home that gave me shelter, a place to park my car and a place to rest my head...
Fast forward to 2015 and my home has regained all that was lost on paper and now I am 6 years closer to having it paid off.
My neighbor panicked... he walked away and new neighbors bought the house in foreclosure and 21 months later sold it for a 40% profit!!!
Real Estate is cyclical... always has been and always will be... the key is to keep your wits about you and not panic.
Wrong -- I have ALWAYS pointed out college costs TIED TO THE MINIMUM WAGE AT THE TIME. I don't care if college costs $1 if people aren't making anything at all. I don't care if college costs $1 million per year if people are making $1 million plus $1.
It's always the same thing with the boomers on this thread:
They shriek like scalded babies: "We had to deal with 15% interest rates." Fine, but it was also the best time to be a wage earner based on purchasing power, the price of a college education, and the cost of a house. Boo-freakin'-hoo.
They shriek like scalded babies: "We only made $1.50 per hour." Fine, but tuition at the University of New Hampshire was $800 per year and a brand new Dodge Dart cost $2,200.
Now would you please take the time to read this article before once again complaining how freakin' bad you had it? Because I lived through gas lines and odd-and-even license plates, too. And I'm glad I did compared to today. We had it EASY. EASY. EASY. EASY.
You take ONE economic metric, to the exclusion of all other factors, and use it as a springboard for The Victimization of Millennials - The Movie. Written and directed by You. And, per usual, there will be alteration of the facts to make it a more interesting story.
YOU had it EASY. You see nothing outside your little world and desperately want to be a vicarious victim.
I'm so glad that my Millennial children are not whiners like you and your ilk.
Care to comment on the article I linked? Didn't think so.
We (people my age and older) had it easy because the system was set up for us to make it in life. We had access to great public schools, great universities, we could pay for it by working a minimum wage job. And even the people who didn't attend college could get a minimum wage job and start and support a family. They could buy a house, pay their bills on time, and watch their house go up in value fifteen-fold before they hit middle age. Not a bad life.
Bootstrapping back then worked. Bootstrapping today doesn't work nearly as well. How about you read that article and address those points?
EDIT -- And seriously, how is "We had it easy compared to millennials starting out today" a victim mentality? That's like me dropping into a thread about life in the south during segregation and suggesting that white people had it better at the time than minorities did. All I have done is staked out a very easy to defend position.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Some of the millennials, like one of our kids, managed to take advantage of the opportunity to buy in the early years after the recession and have been able to enjoy good equity since. None of the 3 found the recession to be any problem, they all had and kept good jobs. In fact, they were better off during those years than we (boomers) were.
Recessions are known as buy opportunities... I have been through 3 significant Real Estate busts... where property in my city dropped more than 20%...
Believing the deck is stacked against you will be a self fulfilling prophecy for most.
People live longer today, are healthier and have greater social nets than ever before... who ever heard of 2+ years of unemployment... well I have a tenant that did just that... and in his 2+ years off, got married, had a child and spent her entire first year with her and then got called back to work... meanwhile, he was getting a check for $1800 each month at age 28...
Plus now he gets help with daycare... something my parents never did...
I've noticed a huge shift to the American psyche... seldom does anyone ever speak of opening their own business, patenting an invention... etc... there will always be those that succeed and those that don't... it's just easier now for those that don't...
About the only thing boomers have over me is they get full social security at age 65 and I will have to wait a couple of years extra for me to qualify...
Care to comment on the article I linked? Didn't think so.
We (people my age and older) had it easy because the system was set up for us to make it in life. We had access to great public schools, great universities, we could pay for it by working a minimum wage job. And even the people who didn't attend college could get a minimum wage job and start and support a family. They could buy a house, pay their bills on time, and watch their house go up in value fifteen-fold before they hit middle age. Not a bad life.
Bootstrapping back then worked. Bootstrapping today doesn't work nearly as well. How about you read that article and address those points?
EDIT -- And seriously, how is "We had it easy compared to millennials starting out today" a victim mentality? That's like me dropping into a thread about life in the south during segregation and suggesting that white people had it better at the time than minorities did. All I have done is staked out a very easy to defend position.
First of all, I post relevant information with links that back up my assertions from reliable sources all the time and when it does not fit your world view, you ignore. This has played out in every discussion that we have ever had. Now, you post some article that doesn't even conflict with anything I've said, and I am supposed to drop everything and make an about face.
Not only that, you did not to school in 1970; you went in the late eighties. You had scholarships. And, yes, college, even in the late eighties was cheaper than it is now when adjusted for inflation. No one is saying different.
Here are the issues that I and others are having problems with what you and a small shrill minority of millennials are saying in this thread:
You cannot graduate from a quality university without six-figure debt. Your co-workers whine about it, so it must be true.
You play down the economic climate that existed during the late seventies/early eighties.
You play up the ease of life in the late seventies/early eighties. By and large, minimum wage employees could not buy a house. And if they did, they better have stellar credit and 20% down. That recession was awful, awful, awful. It was not a blip. I was trying to support one child with three minimum wage jobs and I was barely making it. And when we give you examples to the contrary, keeping true to form, you just ignore it.
And it was a HELL OF A LOT EASIER TO DO EVERYTHING IF YOU WERE A WHITE MALE. You know, like you.
You are the king of cherry pickers, false dichotomies, strawman, and goalpost moving. You have it down it down to an art. Those are great diversionary tactics when you are in a verbal discussion, but when everything is written down, it's much harder to get away it.
You ignore the fact that although you continually cite your own anecdote of YOUR college experience, when I and others use anecdotes in the same way to show that a determined student can graduate with little or no debt, you completely ignore and dismiss. Ignore and dismiss. Ignore and dismiss.
You play up the ease of life in the late seventies/early eighties. By and large, minimum wage employees could not buy a house. And if they did, they better have stellar credit and 20% down. That recession was awful, awful, awful. It was not a blip. I was trying to support one child with three minimum wage jobs and I was barely making it. And when we give you examples to the contrary, keeping true to form, you just ignore it.
And it was a HELL OF A LOT EASIER TO DO EVERYTHING IF YOU WERE A WHITE MALE. You know, like you.
As expected, you did not address a word of that article I linked. Not. One. Word.
I show, again and again, that a student at ANY TIME DURING THE 1960s through 1980s could attend a great university and pay for it with the kind of minimum wage jobs available to students at that time.
You had a kid and life was tough for you. That has absolutely no bearing on the economic landscape that you grew up in compared to the economic landscape today. Would you rather be a single parent during any period of time between the 1960 and 1989 or 2015? Single mothers making minimum wage NEVER have it easy. But there are degrees of difficulty -- and which is harder? Any year between 1960 and 1989? Or 2015? Pick one and defend it. I'd pick 1968 if I was you -- that's the year with the best minimum wage to consumer price index ratio.
A student working through school doesn't have it easy. It's quite a bit of work to pay one's way through school and attend classes. I'd pick ANY year between 1960 and 1989 rather than 2015. I have shown in detail WHY I would pick any year between 1960 and 1989. I'd pick 1974 over 2015 in a heartbeat. Boo hoo about gas rationing. I'll live on campus and ride a bicycle. Even if I end up attending school in Alaska. I'll pick 1970 over 2015 -- I could make enough from my campus job to attend Harvard. No problems. I'll pick 1980 over 2015. Day 377 of the Hostage Crisis and counting -- I could still attend a top-ranked state university and pay in full working at the campus coffee shop.
Every single year the Boomers hold up as an example of why they had it so hard and Millennials have it so easy, I have shown that the numbers don't back up their claim. The closer we come to today, the fewer options the working student has. The working student gets less and less and pays more and more as the years drag on. (And not just the working student. The working single mother and the working family and everyone else. 2015 is a pleasant year to be wealthy. It's not a great time to be just starting out or poor.)
Pick any "Boomer year" and compare it to today, and it's easier to make financial numbers work for the person just starting out. I think you're never going to see this. You're too stuck on "woe is me."
The VA loan program was designed to assist those that served to buy a home... no other program in the United States has helped more people to the path of Homeownership...
You are still thinking that letting people who have no money buy a house is a good thing. I guess those who don't understand history are doomed to repeat it.
This program still exists... it's just that those that choose not to serve now complain on how hard it is to buy a home or how easy it was before.
As a sidebar, so does the military Tuition Program... these are EARNED benefits.
What's wrong with buying with no money down if you mortgage is less or the same as the rent you pay??? At least you will have some predictability in your future housing costs as opposed to most that rent.
The problem is called negative equity. If you buy a house with no down payment, then you will be underwater from day one because of real estate commissions. Why is this so hard to understand?
Quote:
Originally Posted by Ultrarunner
"Being Underwater" has nothing to do with walking away from you obligations...
The moment a person buys a new car on time... they are "Underwater"... same when people buy Furniture or Appliances... or just about anything on time.
Yeah, buying furniture or a car with no money down is also a bad idea (unless you have the money but get a no- or very low-interest deal, as for instance when you keep your money in a money market and use it to pay off a 0% furniture finance.)
Quote:
Originally Posted by Ultrarunner
Human nature is often short sighted... just pay you mortgage each month as agreed and you will be fine.
And what if you need to move and can't sell the house? Then what?
Quote:
Originally Posted by Ultrarunner
In the mid 2000's I bought a home that lost 40% of it's paper value by 2009... things is it was still the same home that gave me shelter, a place to park my car and a place to rest my head...
Fast forward to 2015 and my home has regained all that was lost on paper and now I am 6 years closer to having it paid off.
You lucked out. What if your job forced you to relocate in 2009 and you could not sell your house?
Quote:
Originally Posted by Ultrarunner
My neighbor panicked... he walked away and new neighbors bought the house in foreclosure and 21 months later sold it for a 40% profit!!!
Real Estate is cyclical... always has been and always will be... the key is to keep your wits about you and not panic.
Assuming you can.
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