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Old 08-21-2009, 12:32 PM
 
3,599 posts, read 6,763,848 times
Reputation: 1461

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Quote:
Originally Posted by VictorBurek View Post
I havent read all posts but the title to this post is ridiculous and is no where near being true or accurate.
One of the main issues that has lead us into this housing mess is people putting very little cash down. It's a dangerous game people play when they purchase a home with very little cash down.

Yeah, most people plan on staying in a home for a while; however long you define "awhile" could be 2 years, could be 5 years or forever.

But things change in life. You can get married, divorced, get sick, lose your job etc.

That's why when the bubble imploded, the people who put very little down were in big trouble.

As for other people say, "don't sellers help pay for closing costs these days" Well yes, but that's today's market and it won't last forever. The traditional selling market, usually the buyers/sellers split most of the cost (with exception of new constructions where the buyers end up paying the majority of the costs). I am talking about normal real estate time (not 2008-2009 current conditions)

Americans just don't get it. They never save for a rainy day. I am not talking about 3 months of cash reserves. I am talking about 12-24 months of cash reserves here.

You lose your job, how are you going to maintain your home? You can't and that's why you need a significant downpayment in order to unload your home in a hurry.

Some people may say they need to make low downpayments (say 3-5%) and make the excuse that they need cash reserves. I see it another way it and say these people aren't ready to afford a home yet.

People need to be financially strong with the most important purchase of their lives. They need to put a significant downpayment, because if things change such as death, divorce, injury, job loss, they need to be able to sell their home quickly. The only way to do it, is to prepare for the worst when purchasing and have at least 10% downpayment.
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Old 08-21-2009, 12:45 PM
 
Location: Mid-Atlantic
12,529 posts, read 17,463,580 times
Reputation: 10629
Quote:
Originally Posted by Mightyqueen801 View Post
I am one of the people you are referring to. I don't feel particularly entitled. I just want somewhere to live where the rent doesn't get thrown out the window every month without some tax relief. I am 51 years old and I have never been in a position to buy anything before, but I'm now approved for an FHA loan.

I've been paying $2200 a month in RENT for a house so I could stay in the town where my daughter was in school. Single, divorced mom who works in Manhattan, commutes about 30 miles from NJ. It was worth it to me to not to have to abandon my kid all day in a town where she had no family or friends while I'm over a river in another state relying on public transportation.

.
First off, sounds like you're a great Mom. And living in Pgh, I can't imagine paying 22 Hundred for an apartment. Around here, that would be at least 2 houses. Hell, my mortgage payment is half that.

Not everyone has the luxury of a 20% down payment. Those that are responsible won't default on a loan if given the chance to purchase a home.

My 2 cents, make that .6 cents.
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Old 08-21-2009, 05:46 PM
 
161 posts, read 497,702 times
Reputation: 85
Quote:
Originally Posted by Schousse View Post
Actually, as an FHA approved appraiser, I can tell you that it is unethical as well as illegal for ANY appraiser to value a property anything but in an objective manner.

In fact, UNDERvaluing (being "conservative") is just as bad as OVERvaluing and any appraiser who does either one of these ought to return his/her license back to the state.

And the only time we consider REOs and short sales is if this is the market for the Subject. In other words, if there is a small percentage of foreclosures in a Subject are this does not automatically mean this is the market trend and probably should not be used.
I agree with your assessment although, I know for a fact, that FHA appraisers ARE in fact undervaluing appraisals. They DO figure into account short sales sold and listed, into their calculations even though it is a retail listing. I KNOW THIS FOR A FACT! Many deals are falling through because of FHA appraisals.
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Old 08-21-2009, 06:03 PM
 
Location: Mid-Atlantic
12,529 posts, read 17,463,580 times
Reputation: 10629
Quote:
Originally Posted by fumanchu41 View Post
I agree with your assessment although, I know for a fact, that FHA appraisers ARE in fact undervaluing appraisals. They DO figure into account short sales sold and listed, into their calculations even though it is a retail listing. I KNOW THIS FOR A FACT! Many deals are falling through because of FHA appraisals.

Are you an appraiser or in the lending biz? In my experience the deals fall through when agents tack on 5K or more of closings costs to the sales price. If the sales price is higher than the listing price, you don't have to be in the biz to know something ain't right.
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Old 08-21-2009, 09:15 PM
 
Location: Elsewhere
88,139 posts, read 84,005,514 times
Reputation: 114435
Quote:
Originally Posted by COPANUT View Post
First off, sounds like you're a great Mom. And living in Pgh, I can't imagine paying 22 Hundred for an apartment. Around here, that would be at least 2 houses. Hell, my mortgage payment is half that.

Not everyone has the luxury of a 20% down payment. Those that are responsible won't default on a loan if given the chance to purchase a home.

My 2 cents, make that .6 cents.
Thanks for the compliment. She turned out pretty well. No problems whatsoever during the teenage years, and she enters college for a pre-med program in two weeks.

Just to clarify, it was $2200 for a three-bedroom SF house.
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Old 08-21-2009, 09:47 PM
 
161 posts, read 497,702 times
Reputation: 85
Quote:
Originally Posted by COPANUT View Post
Are you an appraiser or in the lending biz? In my experience the deals fall through when agents tack on 5K or more of closings costs to the sales price. If the sales price is higher than the listing price, you don't have to be in the biz to know something ain't right.
That's not necessarily true. It all depends on the actual pricing strategy. We've had homes sell for 35k-45k over list. The strategy is to price it right. The market will take care of itself.
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Old 08-21-2009, 10:02 PM
 
Location: Mid-Atlantic
12,529 posts, read 17,463,580 times
Reputation: 10629
Quote:
Originally Posted by fumanchu41 View Post
That's not necessarily true. It all depends on the actual pricing strategy. We've had homes sell for 35k-45k over list. The strategy is to price it right. The market will take care of itself.

If that's the case, I'd say the agents that listed the property are incompetent.
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Old 08-21-2009, 11:36 PM
 
220 posts, read 1,026,702 times
Reputation: 170
As soon as you drive a new car off the lot, it loses 1/2 its value. Does that mean you should walk away? What if you buy stock and the stock goes down? How about your new TV set? Don't buy something if you can't afford it. Your ability to sell it for profit should not matter.
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Old 08-22-2009, 08:22 AM
 
3,599 posts, read 6,763,848 times
Reputation: 1461
Quote:
Originally Posted by glenn_1000 View Post
As soon as you drive a new car off the lot, it loses 1/2 its value. Does that mean you should walk away? What if you buy stock and the stock goes down? How about your new TV set? Don't buy something if you can't afford it. Your ability to sell it for profit should not matter.
There is a big difference between buying a home as opposed to stocks. For the most part (with the exception of buying on margin) people actually have to have money to get into the stock market. If they are losing money, they can sell and get out quickly. Stocks are liquid assets.

A car purchase is much much lower than a home purchase. Cars lose value over time. People have been trained that a car depreciates over time. They accept that.

However most of the public has not been taught that a home can and obviously has lost value. The public needs to be aware if they need to sell, how can they get it of the home? Suppose you are a stable job and put down 3.5%.

What happens in 12 months when your employer asks you to move to another state and they are only giving you $5k in moving expenses. You can accept the job transfer or lose your job or try to find another job in the area. Those are you options.

So you:

1. Better have lots of cash reserves in order get out of the home because chances are housing prices are not going to go up for the next 3-5 years and when they go up any price appreciation will be neutralize by inflation.

2. Continue paying for your home in one state shills living in another state

3. Maybe find a renter for your home.

4. Try to find another job in the area but it may or may not be able to pay a similar salary to your current one.

As I have said previously, most people buy home to live in. Gettig a profit is just an added bonus. But what happens if that property depreciates (what's happening these days). We wouldn't have this problem if people would have put real 10 percent downpayments. I am not even advocating 20% down. I think everyone should put 20% down but they need to put at least 10% down just to prepare for any future sales costs.

And yes when I purchase anything I do my calculations how much I can afford and what type of loss I can take and still get out.

I read a lot of money blog sites. There's an informative site called http://www.mymoneyblog.com/ . I like it a lot. The site's author includes in his calculation of his real estate worth how much his home is worth (after real estate selling comissions/costs). That's what people need to consider BEFORE purchasing the property. So many people are just concerned with the bottom line, monthly payment but don't take into account future transaction costs.

Currently the foreclosure rate in the US is at 4%; an additional 9% of people are late on their mortgages. (according to reports that came out yesterday)

What % of people are in foreclosure and or currently in short sells who actually put downpayments of at least 10% and paid into the principal each month? I wish the government or media or even the banks themselves would release this type of data. Everyone would know the answer to my question. I am betting over 90% of
foreclosure are from people who put very little down and or did not pay into the principal.

I know the government just doesn't want to release this type of data because they know the answer. Real downpayments prevent foreclosures, and underwater mortgages. Maybe the National Association of Realtors doesn't want to promote/demand people put down real downpayments for fear that the real estate market will tank even more. That's the real reason why there aren't data on foreclosure rates from people who put down signficant down-payments on their homes even during the peak 2005-2006 years.

Owning a home is a privilege. Everyone should strive for this goal. It's just that the days of easy credit are over. People thinking about real estate need to put more skin into the game

Last edited by aneftp; 08-22-2009 at 08:33 AM..
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Old 08-22-2009, 09:28 AM
 
Location: Baltimore
1,802 posts, read 8,145,275 times
Reputation: 1975
You cannot make broad generalizations about things like this. For some people, buying a house with little or no money down is not a smart move. But that doesn't apply to everyone. As for myself (and I'm sure I'm not alone), I was a state government employee who already had 15 years of service in my position. The possibility of my getting relocated was practically nil (the State of MD does not have offices in other states), there was little chance that I'd be fired (15 years of service and outstanding job performance ratings), laid-off (I was in a revenue-producing position and fairly well insulated from any type of budget issues), had tons of sick leave as well as membership in the leave bank that would continue to pay me in the event of a serious illness, and was at that time in a rental and paying more in rent than what my mortgage payment (including escrow) ended up being.

Buying was a very smart move, and I was glad there were programs that allowed me to buy with no money down. I had no family member to give me the money like a lot of people do, I had no partner or spouse to help out, and although I had no debt other than a car payment, I did not make enough money to be able to save for a down payment. But I am a responsible person who deserved the opportunity to be able to be a home owner instead of making some landlord rich for the last 16 years.
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