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It's actually a worse deal long term for the bank. But the reality also is that banks are reaching left and right for liquidity right now.
No doubt 20% is a good thing its just not the driving factor in the current problem. Its has little to nothing to do with why we are where we are. The quality of the lend and the unethical practices with those high risk mortgages created this storm not relaxing the % down. I realize that had these bad lends had more upfront equity things might be slightly better but it would have had next to no effect from the typical solid well written well qualified loan. That's not the issue.
Furthermore I have tons and I mean literally thousands of applicants that have 5k 10k even 20kish type money down but have awful credit. The entire point of a FICO based system is to determine lending risk value. The lower the risk the more they should extend the lending parameters.
There is nothing to gain in the big picture of lending by requiring 25k down from a well qualified buyer who scores a 730 over requiring 8k down from the same buyer.
I do think zero down is a stretch these day or any days. Some equity or money down should be required but a % exceeding 10-15% is counter productive to a good functioning market.
I do agree that we're seeing an overreaction.
It's actually a worse deal long term for the bank. But the reality also is that banks are reaching left and right for liquidity right now.
I don't have a payment calculator in front of me but the difference between 20k down and 8k down on a payment is probably less than 50 bucks. Thats not the issue with foreclosures. That equitable difference didn't drive these people to the breaking point.
The issue is you got people who make 2k a month with a starting mortgage of 600 bucks that has now skyrocketed to 1400. Or you got people who signed up for 1400 dollar payments but barely make over 2k.
Then you tack on CDS's and you got a recipe for disaster. Everyone wanted a piece of this pie.
100% agree. I know of two banks in my area right now that aren't lending at all. Not to anyone for anything. My best guess is they don't have the resources to get a loan to lend the money.
Also, no way am I signing an ARM. I don't care if I'm only going to be living in the house for 3-5 years and could sell it, and save money long-term. I'm not taking that chance... fixed rate for me.
I have purchased several foreclosure here in San Antonio, Texas. I even bought one nice home as low as 36 cents on the dollar. I rehab them and place them up for rent. Now is a great time to buy a home, but of course, it all depends on what part of the country you live in. Prices are still pretty stable here as compared to many parts of the nation.
As far as I know banks are still lending here in San Antonio. Many people I know have been able to get loans. I find large Commerical loans are more difficuly to get than rsidential loans.
Of course, I would never recommened anything but a fixed loan. All these ARMS and variable interest rate loans to people who were not qualified got us into this problem in the first place. A lot of people were at fault. The consumer who wanted more then they could afford, the loan officer, the underwriter, etc...
However, home ownership is not a right but a privilege.
Unless, of course, Obama makes us give up our homes so those that don't have can live in one for free. (Sarcasm here folks, don't get your panties in a bunch)
I've got 8.5 years left on my house loan, at 4.88%. But san antonio is screwing me over on taxes, they raise my value 10 to 15k every year.
I bet my monthly tax payment to escrow will be at or above my P&I payment before my loan is paid off.
my house payment is one payment I have never been late on. Even though times are tough now for me & mine (wifey lost job, can't get another).
Property taxes suck here, I agree. They are killing us. But at least we don't have state income tax. Sorry about your wife losing her job. These times really suck right now. By the way, you have a great rate and are much closer than most people are to owning your home out right.
And people wonder why the rich get richer as the poor lose things. It's called smart investing!
It's also called having money to invest to begin with. I know, who cares about the details?
You missed my point of people losing what they had by poor investments.
Government:
People must buy homes to kickstart the economy!
Any one with more than one house must pay a luxury tax!
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