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As a person who is trying to sell one home and then buy another, it is a downpayment issue for us. Our salary has more than doubled since we moved into our current home and we are trying to buy a much more expensive home. The problem is that my home I currently live in is worth less than what I bought it for so I may walk out of there with $50,000 profit. That is after spending $100,000 on improvements. None of that money will I see come back to me. $50,000 is not even close to the amount I need for a 20% down payment so coming up with that extra money is hard. If we would even get a 90% LTV, that would be outstanding. So the rate is not as important to us as the downpayment issue is. We have near perfect credit, have no debt besides our home and 1 car, have never been late ever for any payement and banks won't budge.
Enabling people to buy/refi without regards to financial/ethical ability to repay the terms of the loan, is what got us into this mess.
The "hair of the dog" thing rolls the risk forward and does nothing to promote responsibile home ownership and reduce foreclosures to normal levels.
Areas in the U.S., most prone to historical housing bubbles took time, sometimes as much as a decade of flatlined prices, once the bottomed,, to work out. It tok Japan 15 years to begin to see appreciation, once they hit their bottom. And yet, most people in the U.S. seem to expect a V-shaped recovery.
Government -"supported" loans are pooled and guaranteed by FNMA/FHLMC/GNMA and securitized and sold as investments to institutional investors.
Who is going to buy, what in effect would be 2.5% fixed rate paper, with 30 year maturities, with unkown pre-payment cash flows, backed by mortgages?
IMHO this could be a fed loan program.. Not insured, not securitized.... The government would own the loan for the term... Maybe with a re stated interest rate say 10 years down the road...
100% LTV for a fair market price purchase (not refi) for a qualified buyer....
Lets use 200 billion to stimulate some home "buying"....
I wish the "tax credit" wasn't for just first time home buyers. I wouldn't mind a $7500 loan from the government, but since this isn't my first house... nada.
When we were 1st time buyers back in 01, we got a buy down rate of 5.0%-7.0%, it helped ease us into home ownership then.
We had the CHAFA program, borrowed 12K for down payment...
Silly, we refinanced 2 years later and paid off CHAFA loans, and sold a year later for 200K more than we bought for 2 years prior...
The lady who bought our house had no business buying it, now the house is bank owned,and for sale (shadow inventory) for almost the price we paid back in 2001...
We moved on and bought two homes, never borrowed on them, but still a little underwater for now.
How about if houses weren't so farking expensive? They shouldn't cost 300K when the average person only earns 30K/yr.
Very true.....and thats what has happened In CA and other places....the average income didn't keep up with the way the home prices rising. I don't see how people afforded homes in CA. We moved in 1980 out of there and even then the prices were ridiculous.
Very true.....and thats what has happened In CA and other places....the average income didn't keep up with the way the home prices rising. I don't see how people afforded homes in CA. We moved in 1980 out of there and even then the prices were ridiculous.
Yeah, that's what I really don't get, too... Work three jobs to live in paradise? Sure, but then you never can enjoy it!
But then, I would hardly call California "paradise" any longer. The Californians aren't the problem, either, it's all the transplants. lol
The government should offer 30 year loans fixed at 3% to anyone who "purchases" a home in the next 6 months......
Just bored watching my Dolphins get their butts kicked - again....
Any thoughts
This would only make the problem worse. Anybody who purchases a home during this 6-month period would immediately be underwater when this period was over and free market interest rates once again took hold. Think about it... in 6 months time we'll be right back where we started except worse b/c we'll have a whole new crop of 'homeowners' who overpaid for their homes and can only sell them for a loss.
It is not the governments job to keep home prices artificially high. The law of supply and demand will dictate what a home is worth.
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