I read this thread yesterday and figured,"ahh what the heck, let's see what is required to build my dream home." I called a realtor friend of mine and this is what i got. I have to be qualify to make the payments on my current house and the payments on the construction loan (knew that part) and then he told me that I would have to come up with a whopping 30% down, based on the price of the property and the house for the construction loan. Assuming that the property and house could be built for $300k, that means $30k down plus making two mortgage payments. Soooooo......gonna keep the shack I been paying on for the past 7 years, unless I hit the lottery. Quite frankly it sucks the way things are going right now, for everyone except the ones gettin a break on their mortgage cuz they made a crappy decision.
We are pretty conservative financially so home purchases have always been approached with extreme caution. Our #1 rule has always been to live within what one income can support. Rule #2 for many years was that we both kept jobs in different industries to further protect the income stream. Rule #3 was (and still is) don't be greedy or stupid. We have refinanced our house several times. Each time seeing a reduction in interest. Finally got things down to 5.25 fixed 30 years. The last round was at the height of the craziness and it was quite a battle with the bank to convince them that we wanted a fixed rate loan, and no...we don't want to take any money out. California real estate has always been cyclical. I'm old enough to remember a few of these so I always expect both troughs and peaks. Hopefully everyone will be able to ride out this particular period.
Thanks hoover...good input for home buying. I'm buying my place alone....(I'm not technically alone)...but I qualified on my income. They put you at a 43% debt to income ratio and they want to see every single detail....and they add in your PMI and HOA to qualify you. I purchased less than I could afford. I found something that made sense to me....and somewhere I could put my money (instead of being tempted to build more bikes). The only reason I chose FHA was because of the 3% down....it enables me to put some cash into the place without draining me of every dime. One thing people don't consider in a down payment are the closing costs....which will be anywhere between 8k and up....and depending on your purchase price they can equal your down payment!! Not only did I stick within my means...I requested the seller to pay my closing costs...(and they are) and also provide a home warranty for a year (and they are). It took me ten offers to find myself in this situation....I literally started this MONTHS ago. All of the repo's are selling for list price or 10-50k above it...and there are 10 people in line for each of them. I almost gave up...but what is suppose to be will be right?
Funny... when I read your post I saw that 43% number and freaked out! In the "old days" that used to use a 30% number. Lately I've heard of numbers over 50%. I don't think I could be comfortable with anyting over a 25% or 30% number but that is just me Buying down is the smartest move anyone can make now. Sounds like your bank did you a favor and made sure you COULD afford your home. Before we moved back to SoCal we used to joke that we could make the house payment by taking a job at McDonalds. It would have to be the night manager but we probably could have done it. When we moved back to Seal Beach this was our 4th purchase. First a Condo, then a house in TN and then a house in GA. None had mortgages over $100K and then suddenly we were looking at over 3X that. Pretty scary for two self employed folks. In the end it worked out OK. I remember my father (he bought a house in Placentia in 1963) saying that the house payment was 50% of his take home pay each month. They still live in the same place. The real key is making sacrifices to get what you need. I remember eating rice and cheap meat when I was growing up. Afterall, Dad had to feed & clothe us with the second 50% of his pay! He never, ever bought something for himself. Personally, I've worked 2 jobs at times, survived on bean and cheese burritos and water for 6 months. You just do what you can and hope for the best.
Woooohooo, we get our keys today at about 2 oclock!!!!!!! Wait...Damnit that means its time for moving, I hate moving
I'm headed back to Massachusetts to buy my first home in '09. We have it all set up to buy a house from family. 3 bedroom, 1 bath, detached garage, 1/2 acre yard, surrounded by nothing but trees....130K!!! Now that's something you can't get in SoCal!
Yeh....and I consider when the boom was going...stated income stated asset loans meant that ratio was in the toilet (it was all phony). I worked for a broker who only did A++ paper loans...and the families were in GREAT shape so our refi's were of benefit. We made money off the rebates only... and we did no purchases. I think they consider in CA if they don't give you at least 43% you won't be able to buy anything unless you're pulling in over 100k a year. I applaud those that are...but thats not all of us.
That is true, you trade it for earthquakes, yearly forest fires and a lack of variety! To each their own though, it's all what you're used to.
I've gotten used to wearing shorts in December myself. I bought my house 10 years ago. I did a refi once 5 years into it. I ended up with better intrest, about the same payment, 5 years less (fixed 20 year loan) and a little cash to spuce up the kitchen. I always thought the people that pulled money out for things like big money boats / sand cars and what ever toy were just stupid. I have lots of stupid friends I guess. Now they're broke but roll a nice truck on big rubber. lol
My Condo seems to be dropping 10k a week...Its 100% paid for but the darn short sales going off around me are killing me. The next vulture that lowballs me 100k under comparables will be the proverbial straw...rents in Newport seem to be holding just fine...I will just become a land lord.
I just bought my house in August, I found a killer deal where the woman who owned it, inherited it outright. No mortgage on it and she needed monthly income. I am in the insurance industry and have several friends in the mortgage/real estate industry one of which I had work out mortgage schedule. The owner agreed to act as the bank and my closing costs were about $1500. Everything else was pretty much a standard transaction minus the bank carrying the paper. It was much easier than going to a bank to apply. I did however just write my check to uncle sam for the property taxes plus the assessment which was an additional $1300. That felt like my feet came off the pedals and I landed on the top tube after a 10ft drop to flat. Ouch. I got lucky though, the place never even went on the market. Also for those of you on here who do own your homes pm me if you are interested on insuring them properly or if you don't understand some of your coverages etc. I can review it for you and make sure you are properly covered.
In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. However....as a buyer....you find your dream house....its a short sale. To the bank it's a file. You make an offer on this fantastic house at WOW such a great price!!! So you start to wait....and what your realtor tells you after you badger him enough (if you didn't know going in) is that it takes 2 or more offers before the home is assigned an asset manager. This person dragging feet and chewing gum...(my mental pic)....pulls the file. They then proceed to find out what is going on...how much is owed...what they THINK it's worth and comparisons in the neighborhood. Fast forward MONTHS.....ok the property price has changed!!! ...the asset manager decided it's worth 10-100k over what was listed originally...and in that time there are 10 offers on the place. When shopping for a short sale...you have to do your homework and then wait. Most won't pan out...and the (bad) Realtors suck in people with these low prices hoping to get the house in the asset managers hands. Ex: one down the street from my work is 245k beauuuuutiful Victorian home. One next to it is 700k. Really not fair if you ask me.
Well it depends how much you're willing to wait...and how much you care. If you're not really serious....and have months....then you might squeak by and into one. I refused to look at them, once I figured out the game. I wanted to buy before the end of the year...and it's very emotional to put your life on hold for a home.
Damnit, I swear I hate the Fuggin real estate business. Why the hell is it so damn complicated to just crunch the number, and have them be the same, and why is it so damn hard to be able to provide what you promise, or even better, Dont promise what you cant gaurantee. If you cannot guess, the escrow company missed the deadline for recording with the county, so again for the third time, I have to tell my wife we are not moving yet. So if anyone is wanting to get into realestate, take this advise, dont ever promise a close time, prepare people that it will probably be late. Dont ever let them get there hopes up untill you actually have keys in hand
This is the emotional and hard to put your life on hold for a home thing I was talking about...sorry Mike. We'll keep our fingers crossed for you.
