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Well, for all of you sitting on the sidelines waiting "for prices to drop" yuo might not get such a swell deal after all. With all of the changes going on in the mortgage industry they are tightening the ropes A LOT!!!!!!! I don't know everything going on but have been finding out bits and pieces. Personally, for us we would NOT like the new requirements they are putting on home loans.
Starting June 1st EVERYONE must have an escrow account. For those of us that CAN manage our own funds, save for our property taxes and insurance...... those are the ones going to pay for those that can't. Why would I want to pay into an escrow account all year long and let THEM get the interest off of it. NO THANKS! I'd rather save all of the funds myself in a savings account and let ME earn the interest. Might not matter for those w/ low property taxes and insurance but for those that do pay a large sum in property taxes it DOES add up over time.
One year of Home Owners Insurance must be paid at closing. This will hurt those that pay monthly and again CAN budget for such. Many insurance companies give their clients a discount for paying by automatic withdrawal on a monthly account. There goes THAT savings.
If your FICO score is below 720 now you have a whole % added to the interest rate you could get. For those that have a great credit score they can take advantage of some great lower rates. For those w/ avg credit your going to have to pay more just because. So much for some people being able to save and get ahead.
These are just a few of the new "requirements" being put into place for home mortgages. If your looking to buy and prefer NOT to have an escrow account then you better hurry up. Who knows what else they are going to do to try and "clean up" the mess created by a few. As always it is those that are NOT causing the problems that will have to pay for it.
I am a mortgage lender and I have not seen anything about requiring all borrowers to escrow. Anyone who puts 20% or more down has the option of escrowing or not.
I would bet that insurance companies give a larger discount to those that pay a full year upfront over auto paid monthly payments.
A FICO below 720 will have a 'price hit' but it will be far from a "full %" unless you are like a 620 or 640.
The median rent in my city is about $1800 a month (per CMLS 4/9/08). If somone decides to stay where they are for 2 more years, that is a tad over $43,000 out of pocket with nothing really to show from it.
Why pay $43,000 toward rent when you can pay $43,000 + on interest, Right?
Borrowers with good credit who can afford to wait should unless they come across a deal or dream house they cannot pass up.
Escrowing for taxes is nothing new. Most banks require it to get their best rates. I escrow on all my properties.
I pay my homeowner's insurance annually upfront, no big deal. If you can't afford to pay the premium, perhaps you should not be buying.
I don't know what to tell people with credit scores below 720 other than clean it up. Get those credit cards paid off or down and don't go on vacations you can't afford. Also, don't keep more than a few credit cards and pay them off every month. Also, you can work with the credit reporting agencies to clean up reporting errors.
Okay, before anyone else thinks or assumes that I/We can't afford to buy or refinance let me explain.
We were taking advantage of the really nice low interest rates being offered a month ago. Our mtg broker has known us for over 15 years and KNOWS my husband always likes to save a dollar any way he can (business minded individual that RUNS a corporation and makes sure it is financially stable AND profitable explains my husband). Got a great rate for a 15 year fixed for a house we bought 6 years ago this summer w/ a HEFTY down payment. Had not had PMI or escrow except on our first home (owned 3 primary residences in addition to lake house AND commercial property which is NOT escrowed). Hubby HATES PMI and escrow as it is someone else controlling HIS money. Hubby and I both have EXCELLENT credit and our FICO scores have NEVER been an issue. Getting credit of any kind is a cake walk, literally. Even our commercial banker skips pulling credit whenever he "needs" credit for something and it is a short term loan for whatever reason. Usually deals w/ having to buy commercial equipment or buying another collector car. Just needs that bank reference to show we are okay to get such things.
Affording the insurance premium is NOT an issue. What we pay in insurance for EVERYTHING would make most peoples head spin. We just saw where we got a break/discount and it saved us a few pennies by doing a monthly draft. Hey, I'll take that anyday. When it came to refinancing and we went over the numbers the insurance paid upfront would have added WITH interest over the life of the new loan (15 yrs) over $4000. NO THANKS!!!!!! That is $4000 I CAN USE TO PAY FOR MY KIDS COLLEGE TUITION or something. I don't and REFUSE to finance 1 years of insurance premiums even if it is for only 15 years. For those that MUST do a 30 year mtg they would be paying on that for THIRTY YEARS! THAT is money WASTED! WHY!!!! Why on earth would ANY financial savy person FINANCE 1 years worth of their homeowners insurance and for 30 years??????? NUTS! Anyone that believes that is OKAY is NOT a sound financial person at all. You don't get ahead financially by doing things like that.
As for the credit cards we only have 1 that we use for personal purchases and it is set for LIFE at 9% and we have had that one card for over 10 years. Some places don't take debit cards like car rental agencies. Found that out one year when I gave the car rental counter my debit card as we ALWAYS pay cash for our vacations that we take every year. They ONLY take credit cards. Then again after a problem on one trip we found it WAS best to use a credit card to pay for vacations and big ticket purchases. Sometimes it is WISE to use a credit card. BUT, I do NOT and REFUSE to have a credit card from every store in town. TALK about HIGH interest So our credit scores are not a problem at all.
I just feel for those that are good and for whatever reason my suffer a hiccup in the road but still are financially responsible. They are going to suffer from it even if they are not the ones causing the problems in the industry.
The median rent in my city is about $1800 a month (per CMLS 4/9/08). If somone decides to stay where they are for 2 more years, that is a tad over $43,000 out of pocket with nothing really to show from it.
Quote:
Originally Posted by jdhall1
The average 2 bedroom condo sells around $240,000. With 5% down and 6% interest rate for a 30 year fixed, you would be about $1650 a month before PMI, HOA fees (average about $150ish for a condo) and homeowners insurance.
It's cheaper to rent then, according to your own numbers.
The exception would be if the property is bought assuming a future price increase; in other words, if one speculates.
p.s. As a cash buyer, the stricter the rules, the better for me.
House prices are in deflationary spiral / unwind. This is unstoppable, the PTB can only slow this phenomena, and only for a short while.
IMO, now --- and always --- is the time to stop and think before buying anything. I don't mean investors, who seem to enjoy the thrill of risk. No average person should buy a home before they go over their finances carefully, consider their personal situation (employment, debts, health, DIY quotient, future plans, etc.) talk to some mortgage brokers/banks, and come up with a good ballpark price range -- affordable with a lot of wiggle room for unforeseen events.
Only then should someone begin searching for a home to buy. They should approach this with their feet on the ground, a practical mindset, and good advisors. When they find a home they really want at a good price, then let things take their natural course.
Personally I wouldn't buy a toaster in an emotional frame of mind, much less a house. I equally dislike both the "now's the time to buy!" and "wait for bottom to hit!" camps. We're not floor traders We're buying a home to live in, and hopefully, enjoy, possibly for years.
I personally prefer the escrow account it is one less thing to worry about,I even throw a couple extra bucks in it each month to cover rising taxes and insurance. I do think waiting is best because I do beleive home prices will continue to fall and there will be deals to be had.That is why my husband and I put the brakes on Florida for a few years.
IMO, now --- and always --- is the time to stop and think before buying anything. I don't mean investors, who seem to enjoy the thrill of risk. No average person should buy a home before they go over their finances carefully, consider their personal situation (employment, debts, health, DIY quotient, future plans, etc.) talk to some mortgage brokers/banks, and come up with a good ballpark price range -- affordable with a lot of wiggle room for unforeseen events.
Only then should someone begin searching for a home to buy. They should approach this with their feet on the ground, a practical mindset, and good advisors. When they find a home they really want at a good price, then let things take their natural course.
Personally I wouldn't buy a toaster in an emotional frame of mind, much less a house. I equally dislike both the "now's the time to buy!" and "wait for bottom to hit!" camps. We're not floor traders We're buying a home to live in, and hopefully, enjoy, possibly for years.
I'm a bit perplexed. Assuming the information that momof2dfw is correct, the pool of potential buyers will get much, much smaller. If that's the case, then prices will have to fall because the supply of homes certainly won't diminish under those circumstances.
I understand her point about the increased costs to buyers under these new guidelines, but to me the price savings would more than make up the difference. Am I missing something?
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So our credit scores are not a problem at all. 
OK, so which is it?
We're buying a home to live in, and hopefully, enjoy, possibly for years.
