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So, we are looking to upgrade from our house. We can well afford the payment if we took out a $650K loan on a $650K house. All of our equity is lost in current home, so while we have have a very good take home income, when we sell this house, we will have no cash left for a new downpayment.
Do you think it will be possible to get this type of loan in California? We both have over 750 credit score. We could wait to save up a down payment, but that would take too long and we want to move now.
A year ago you probably could have gotten that, but no bank in their right mind is going to write that loan today. It's not a matter of you being able to make the payments and having excellent credit- it's more a matter of the house likely losing value the minute you buy it (especially in CA right now), and the bank being upside down from day one. What happens if you lose your job- you've got nothing invested in the house, so the bank gets left holding an upside down asset in a crappy market.
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Depending on what county you are in you may be able to utilize a FHA Jumbo mortgage. The 3% minimum borrower contribution can still come from a gift or a down payment assistance program, and you are still allowed 6% seller contributions. The rate will be a bit higher than a normal FHA loan or a conventional loan, and you will need 2 FHA appraisals done to support the value. The FHA loan limit in most CA metro areas is just over $729K right now.
Depending on what county you are in you may be able to utilize a FHA Jumbo mortgage. The 3% minimum borrower contribution can still come from a gift or a down payment assistance program, and you are still allowed 6% seller contributions. The rate will be a bit higher than a normal FHA loan or a conventional loan, and you will need 2 FHA appraisals done to support the value. The FHA loan limit in most CA metro areas is just over $729K right now.
What are the chances of it staying at that limit by years end? i heard it was going to shrink back down to something in the region of 300k?? And if interest rates start going back up again, will that spell doom and gloom for the housing market?? thanks
the old limit was 362k, and they may lower at the years end.
Nobody knows how much it will change or when it will.
Everyone is predicting at the years end
Quote:
Originally Posted by GracieJJ
What are the chances of it staying at that limit by years end? i heard it was going to shrink back down to something in the region of 300k?? And if interest rates start going back up again, will that spell doom and gloom for the housing market?? thanks
Bobs right. No lender is going to do a 100% loan when homes continue to lose value. We have a lot more deteriorating value before anything changes. It's going to be another 5 years so hold on to your hats and your wallets.
3% down on $650k is a pathetic $19,500. I mean if you can't come up with that and you claim to have sufficient income to cover the nut, where is the money going?
Here's the thing. If you need a 100% loan, that tells me that you've got some issues. After all, if you both make good salaries and you can't scrape together SOMETHING, then that tells me you either can't budget or you blow every dime you make. Either way, you'd be a fool to be owing this much money on a house with no savings to show for it.
This is especially true with the possibility of a recession. What happens if one of you loses your job? What happens if house prices continue to drop in California? That's a distinct possibility because of the exodus of professionals from that state. Suddenly, you're holding a $650K note on a house that might be only worth $425K once the housing bubble out there is finally done.
Finally, I think you should go back to the old rule of thumb. That means your house payment should not be one dime higher than 25% of your salary.
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Do it FHA
