Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
actually, they are buying with 0% or -2% down now that they can monetize their $8000 tax credit. How long before the Obama administration gets the genius idea to give us $10k just to buy a house?
Do you mean the $15,000 that someone is pushing now in congress for EVERYONE instead of just first timer?
FHA downpayment used to be 3%, it was increased in 2009 to 3.5% reflecting the fact that lending standards have tightened and downpayment requirements have increased. FHA also has specific housing cost to income ratio for this program. Since most loans are conventional and not FHA, your point is moot.
about 20% of loans last year were FHA, it will be more this year 30% or more. most people still do other methods, but FHA is nothing to sneeze at in terms of percentage.
If he does mean downpayment he is dead dead wrong. My friends, quite possibly the biggest realtors in essex county tell me that 95% of their closings are fha 3% down. Also a few younger couples that I know of just went fha. The whole myth that you need 20% is a farce. I actually feel that we are just setting ourselves up for another let down. No way you should be allowed to purchase a home with 3% down.
ok there are few things i dont understand, these questions are for everyone not just you:
1- why is 3% down so evil, i agree its not for everyone, but say if you can affrod the expenses of the home but have not been able to say, because you were overpaying for rent, or had a illness that ate up savings, or used the money to pay down student loan debt. if you have been responsible and you have steady job and dont want to keep renting why is 3.5% or 5%, 10% seen as pure evil?
2- everyone is talking about how prices fall to match rising rates. say you got 4.5% interest rate on a home that was 180K and you put down 20% for a mortgage of 150K for 30 years. at 6% interest rate, what would the home have to be reduced to match the same overall payments over the life of the loan.
nevermind on 2 i got wolfram alpha
4.5%
principal paid | $ 150000
total interest paid | $ 123610
total payments | $ 273610 |
the answer is around $126,500 which is a 15.67 price drop in the mortgage amount.
6%
principal paid | $ 126500
total interest paid | $ 146535
total payments | $ 273035 |
7%
a 150k mortgage would have to be 114k or 24% less
if you raise the interest rate to 7% which was considered a great rate.
principal paid | $ 114000
total interest paid | $ 159040
total payments | $ 273040 |
Last edited by jigglypuff; 06-10-2009 at 11:06 PM..
principal paid | $ 150000
total interest paid | $ 123610
total payments | $ 273610 |
the answer is around $126,500 which is a 15.67 price drop in the mortgage amount.
principal paid | $ 126500
total interest paid | $ 146535
total payments | $ 273035 |
a 150k mortgage would have to be 114k or 24% less
if you raise the interest rate to 7% which was considered a great rate.
principal paid | $ 114000
total interest paid | $ 159040
total payments | $ 273040 |
Last edited by jigglypuff; 06-10-2009 at 10:07 PM..
ok there are few things i dont understand, these questions are for everyone not just you:
1- why is 3% down so evil, i agree its not for everyone, but say if you can affrod the expenses of the home but have not been able to say, because you were overpaying for rent, or had a illness that ate up savings, or used the money to pay down student loan debt. if you have been responsible and you have steady job and dont want to keep renting why is 3.5% or 5%, 10% seen as pure evil?
It's not evil, only the clueless thinks that way. In many ways it is a better choice. As i said earlier 1) you have more cash in case of emergency 2) your loss will be much less if things do come crashing down 3) if you are investment savvy and believe you can get a better return with the money. The downside is you pay a premium to have that 3.5% loan.
It's only a problem if people who cannot afford, use the 3.5% to leverage themselves into the home, but in today's climate these type situations are very rare due to the much much tighter review process.
Quote:
2- everyone is talking about how prices fall to match rising rates. say you got 4.5% interest rate on a home that was 180K and you put down 20% for a mortgage of 150K for 30 years. at 6% interest rate, what would the home have to be reduced to match the same overall payments over the life of the loan.
Cant punch in a calculator yourself? with 144k mortgage
1) 4.5% interest = $730 monthly
2) 6% interest = $865 monthly, if i can only pay $730 monthly, that means i can no longer afford the 144k mortgage. To pay $730 monthly with 6% interest, now i can only afford a 125k mortgage. So the price needs to drop close to 20k for the same buyer to afford it.
Affordability = interest rate + house price. if one goes up, the other has to come down for the same buyer to be able to buy the same house. Cant get any simpler.
-----------------------------
Regarding the housing credit, i dont care about the amount but it's complete BS to limit it to people making 95k or less. Why should someone who works just as hard and pays more taxes not be able to take advantage of this, just because they make more than 95k a year. That's NOTHING in nyc metro area, not even upper middle class income, and with 24% tax it's not a life of luxury. If the cutoff is at 7figure salary then at least i can comprehend. In addition, this whole rebate was suppose to stimulate the real estate market, but in nyc/nj most people who CAN afford to buy those properties most likely make more than 95k, so it fails not only on the fairness part but also as in its intended function.
They should remove the income limit from the housing rebate. As to the amount or if it should exist, i dont care. But if it does exist, it needs to be fair and actually do its job.
Cant punch in a calculator yourself? with 144k mortgage
1) 4.5% interest = $730 monthly
no need to be rude, plus i was asking over the life of loan, not monthly. total amount paid, total interest paid, principle paid. clearly the home would have to cheap, i wasnt asking, if i was asking how much.
Quote:
what would the home have to be reduced to match the same overall payments over the life of the loan
plus as i mentioned earilier, i used wolfram to get my full answer.
Last edited by jigglypuff; 06-10-2009 at 11:16 PM..
We just applied for mortgage and cant do it now @ 6%. We found a house, but now it will have to be put on hold thanks to the higher rates. This will mean more homes on the market, more foreclosures, etc.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
