100% loans are gone...What will this do to San Diego? (Lompoc: lease, insurance) - California (CA) - Page 2 - City-Data Forum

shannon94 · 08-12-2007, 02:41 PM

Quote:

Originally Posted by wanttoteach

Why not wait? Because I have absolutely no patience. I never have. I hate that aspect about myself. Also, we are currently renting an hour away from my job, and the commute is horrible. Of course, my job hasn't technically started yet so I have only commuted there a few times but I suspect that it will grow very annoying. Or maybe I will just get used to it like all of the other San Diegans.

I heard that for home auctions you need 100 percent in cash.

Why wait? Because prices are still dropping. Save more money for a down payment while prices are dropping and in the end you'll be happier you were more "patient". Rent in San Diego until that time comes.

Listen to your step father...with age comes wisdom. I learned that one a long time ago!!

wanttoteach · 08-12-2007, 09:23 PM

Quote:

Originally Posted by shannon94

Why wait? Because prices are still dropping. Save more money for a down payment while prices are dropping and in the end you'll be happier you were more "patient". Rent in San Diego until that time comes.

Listen to your step father...with age comes wisdom. I learned that one a long time ago!!

yes...yes...yes...I really do understand...I hate to admit that with age comes wisdom

novs · 08-12-2007, 10:22 PM

What about with brand new construction? Do you think that it's not a good idea to purchase at this time?

mossomo · 08-12-2007, 11:28 PM

Everyone with an adjustible rate mortage would be best served to refinance and get a fixed rate. There's less moneys available for credit, interest rates will be rising. Supply and demand, your credit will start to cost more...

CaliBoy · 08-12-2007, 11:43 PM

Because 100% loans are less available, they are not completely gone by any stretch of the imagination. It's just that having 'real' great legitimate credit and a successful payment history will be more of a factor now. The banks are tightening up on who they will lend. We recently obtained full funding at full doc. I doubt that stated income is gonna fly with 100% mortgage companies or banks, at least in the short run. If you have great credit and a good job with history, you should be in good graces with the lenders. It's just that less are offering 100%. But they are out there, and interest rates are not terrible either.

As for buying versus renting, just do some quick and dirty calculations on what you expect to pay on rent and what you think your mortgage payment will end up being. Then factor in your tax bracket and see how much of the interest you'll get back at the end of the year through a refund (or a deduction of your tax basis). Roughly, if you're spending 1500 hundred for rent as opposed to, say, 3000 a month in mortgage payments (of which, say 2700 of that is interest, taxes, etc that can be written off), if you're in the 25% tax bracket, you might get back about 675 a month making your cost for owning (sans upkeep) about 2325 per month. If the home that you rent is the same as the home you buy in, pretty much, all aspects, then in this 'very crude' scenario, it's better to rent when you're dealing with a declining market.

Mind you, that was a rough and very crude scenario. Your accountant or tax adviser can clue you into more details depending on your scenario. My point being is that you only get a portion of the tax benefit back. The rest is sort of the same as renting, except you name and responsibility, and risk, is on the title for the long haul until you sell it. Renting. Well, in a declining market, may not be a bad idea. And more profitable.

wanttoteach · 08-13-2007, 12:17 AM

We are making some really low offers. If one gets accepted, then we will be thrilled. If not, then we will continue to watch the market fall. It is my opinion that the market will continue to fall, but if you buy right now, just expect that, and know that you will have to keep the property for a long time. I have heard so many opinions, but at this point, if I can get a great price, then I will be fine with having my property fall in value while I wait it out for 5 years or so. I love being a homeowner. I work hard, and I love putting that hard earned money into my own home. By the way, we do need 100 Percent loan and my husband is stated income (because of his business). We found only 2 companies who are willing to do that, and those loans may go away next week.

socketz · 08-13-2007, 06:15 AM

On a daily basis, I monitor listings in 3 popular communities to the north. These communities were one of the first to skyrocket in value when the boom began and are the precursor of what's to come on the decline.

Trust me when I say that there was never a better time to rent in San Diego.

Also, if you 100% finance, all you've really gained is a tax write off. It will be a while before you see any solid appreciation on the home, you may even lose money over the next year and a half. I'm thinking that Q408 or early 09 will be the best time to jump back into the market. But even then, there will be 3-4 years before your back to making money on the home (very slow appreciation as current appreciation needs to be digested).

Remember, success in Real Estate is all about patience.

If you really want to buy now, try a lease to own arrangement. You will pay more in rent under one of these contracts, but you will also have an out in a few years if the market continues to tank.

austin-steve · 08-13-2007, 08:48 AM

Quote:

Also, if you 100% finance, all you've really gained is a tax write off.

Actually, you only gain the incremental writeoff that exceeds your standard deduction.

I think many areas of the US are still inflated with loan froth. That is, the buyers who created the price run-ups would never have existed without the loan products that enabled the purchases.

Now that it's time for many to abandon ship, there are not enough life boats and many owners/homes will continue to go under as there are simply not enough loan products available to sustain a next wave of buyers.

Steve

NewToCA · 08-13-2007, 08:54 AM

Seems the doom and gloom folks dominate much of the discussion on economics no matter what the starting topic.

Going back to the original question, a lease/purchase contract may be established to help build up the down payment via your rental payment period. You can get partial credit for the rent, and this helps establish the down payment you are seeking. It is worth a look if you find a property of interest.

Best of luck. Ignore all those folks posting economic comments and insights while living in mom's garage...

austin-steve · 08-13-2007, 09:24 AM

Quote:

Seems the doom and gloom folks dominate much of the discussion ...

Perhaps the opposite could be said about those who spread sunshine and good cheer in the face of very sobering facts and data. The real estate loan industry is in big trouble and that's having serious consequences for sellers and the buyers they hope to sell to.

Many people should never have purchased the home they now own. Twice the number of ARM interest rate resets will occur in the first quarter of 2008 as in the entire year of 2007. The wave hasn't crested yet. Ignore it if you will.

For a financially sound person with good credit and the intention to live in a home for 10+ years, I don't think it's important to try to "time" a market. Get the best deal you can at any given time and move on.

For buyers on the edge, I don't think zero-down buyers should ever buy a home in any kind of market, ever. That's just my personal opinion.

Steve