Housing market

[BCClone]

A lot of credit unions and some banks have been doing 90/10 mortgages for quite some time now. I completely disagree with that type of financing but it sure opens up a market to homebuyers that save no money for a down payment but can cash flow the payment.

We appraise more USDA/VA backed loans (generally that are 1-5% down) than typical 20% down payments. Even sadder is that there is still some that are trying to do closing costs kickbacks of 1-6% down, so technically, they may be footing a couple hundred bucks when it’s all down. Maybe not even that if they get paid the estimated property taxes due.

 

[trevn]

I would Love to hear the rationale for an ARM right now.

Credit Unions and some banks will do a 90% first mortgage and 10% second mortgage usually on a 10/1 ARM or some variant of that. Get in to a house with no money down with a variable rate trade off. Nothing could go wrong there. Right?

 

[trevn]

We appraise more USDA/VA backed loans (generally that are 1-5% down) than typical 20% down payments. Even sadder is that there is still some that are trying to do closing costs kickbacks of 1-6% down, so technically, they may be footing a couple hundred bucks when it’s all down. Maybe not even that if they get paid the estimated property taxes due.

Crazy isn't it? I get a first time homebuyer not having 20% down but I would never think to buy a home with no money down or somehow get money back at closing.

 

[CloneGuy8]

I would Love to hear the rationale for an ARM right now.

If you're someone that knows you are going to move within the next 5-7 years, it makes sense since the initial rate is lower. Other than that, its pretty silly to get one right now.

 

[DeereClone]

If you're someone that knows you are going to move within the next 5-7 years, it makes sense since the initial rate is lower. Other than that, its pretty silly to get one right now.

Mortgage Purchase and Refinance Rates | Lending

View our 15-year and 30-year mortgage loan rates for new purchases and refinancing. Get prequalified for a mortgage loan with Veridian today.

www.veridiancu.org

Initial rates aren’t lower and haven’t been for quite some time. 95+% of the time people get ARMs because they don’t meet the credit standards of the secondary market.

 

[83cy]

Mortgage Purchase and Refinance Rates | Lending

View our 15-year and 30-year mortgage loan rates for new purchases and refinancing. Get prequalified for a mortgage loan with Veridian today.

www.veridiancu.org

Initial rates aren’t lower and haven’t been for quite some time. 95+% of the time people get ARMs because they don’t meet the credit standards of the secondary market.

One year ago a 5 yr arm had lower rates than fixed (at least what my bank was offering), so I got an Arm. But I plan on paying off my mortgage within 5 years. I also had 70% +- equity.

 

[BCClone]

Mortgage Purchase and Refinance Rates | Lending

View our 15-year and 30-year mortgage loan rates for new purchases and refinancing. Get prequalified for a mortgage loan with Veridian today.

www.veridiancu.org

Initial rates aren’t lower and haven’t been for quite some time. 95+% of the time people get ARMs because they don’t meet the credit standards of the secondary market.

Small loans (30k type homes) will quite often go through a local bank (they will keep them and not sell them) and local banks don’t offer 15 or 20 year fixed rates. Most will stop at 5 or 7. They will generally have lower closing costs also.

 

[RotatingColumn]

We were looking to sell, our house is currently worth 4X what we paid for it 20 years ago after I restored it. Problem is everything we've looked at is overpriced big time. So we just decided to stay but refinance our current home at the lower rate. It's taking forever though, we're going on 2 months with this.

 

[Mtowncyclone13]

We were looking to sell, our house is currently worth 4X what we paid for it 20 years ago after I restored it. Problem is everything we've looked at is overpriced big time. So we just decided to stay but refinance our current home at the lower rate. It's taking forever though, we're going on 2 months with this.

Is your house overpriced?

 

[RotatingColumn]

Is your house overpriced?

Probably. I would say it's actually worth about double what we paid for it during a normal market.
Houses we were looking to buy seemed to be about 4x what they're worth, in my opinion.

 

[simply1]

A lot of credit unions and some banks have been doing 90/10 mortgages for quite some time now. I completely disagree with that type of financing but it sure opens up a market to homebuyers that save no money for a down payment but can cash flow the payment.

I've seen a lot of 80/20 mortgages for first time homebuyers advertised as well. Not sure what the interest rate comes in at.

 

[NWICY]

A relative is a real estate agent. Said there is no law saying the cash offer had to be accepted

However, she did say the agent should be paid. The agent found a willing buyer and should get commission.

I'm guessing that an additional buyer would pay more than the cash offer in the scenario discussed, but an additional wrinkle

She's a agent of course she thinks the agent should be paid. LOL. I'm guessing a reduced fee is what should happen here.

 

[KnappShack]

We were looking to sell, our house is currently worth 4X what we paid for it 20 years ago after I restored it. Problem is everything we've looked at is overpriced big time. So we just decided to stay but refinance our current home at the lower rate. It's taking forever though, we're going on 2 months with this.

The refi is taking 2 months?

 

[Tri4Cy]

A lot of credit unions and some banks have been doing 90/10 mortgages for quite some time now. I completely disagree with that type of financing but it sure opens up a market to homebuyers that save no money for a down payment but can cash flow the payment.

I've been working with my lender on seeing if this would be an option for me. They stopped all 80/20 90/10 loans last March and haven't opened it back up yet. Defaults had a slight tick up las spring which triggered them to tighten their standards.

I was hopping to retain a **** ton of cash in reserve and float that 2nd mortgage at a crazy low rate. I get the security of cash and a 2nd note that I could pay off anytime I wish after 12 months. Going into a new construction home it also would allow me to have plenty of cash on hand for all the things we know we are not thinking about. After we settle in over the next 2 years we pay it off. That was the plan anyway but the market eliminated that option.

 

[trevn]

I've been working with my lender on seeing if this would be an option for me. They stopped all 80/20 90/10 loans last March and haven't opened it back up yet. Defaults had a slight tick up las spring which triggered them to tighten their standards.

I was hopping to retain a **** ton of cash in reserve and float that 2nd mortgage at a crazy low rate. I get the security of cash and a 2nd note that I could pay off anytime I wish after 12 months. Going into a new construction home it also would allow me to have plenty of cash on hand for all the things we know we are not thinking about. After we settle in over the next 2 years we pay it off. That was the plan anyway but the market eliminated that option.

Truthfully, everyone's situation is unique to their circumstances, which you point out here. How long you think you're going to live in the home, how comfortable you are with payments, how stable your job is, etc. all play a role. There are some instances where 100% financing may be a workable idea, but it usually revolves around having some cash reserves in lieu of equity in a home which is tougher to access if you need it. Generally speaking though, the trend I'm seeing in home financing is if you aren't rolling equity in from an existing home, people usually don't have a ton of cash to put down on the home, have little to no savings, but have good earnings to show they can cash flow the monthly payment. They're looking at the mortgage payment in relation to what they're paying for rent, and as long as it makes sense to them, they are comfortable. As long as property values continue to increase and they don't have to sell the property relatively soon after purchasing it, and they don't incur some unexpected large expenses shortly after purchasing the home, they will be ok. It does make me nervous though they are generally banking on nothing crazy happening in their life that requires a significant amount of cash and that property values will continue to rise.

 

[CascadeClone]

This is literally a supply and demand issue. Pure capitalism. There doesn’t appear to be some precipitous cliff coming. as new housing stock rises more urban and existing suburban housing stock will come available and the balance will be there. Sometimes the balance gets out of whack. It happens. No need for everyone to freak out.

I agree with your point, this is fundamentally price signalling that society wants more housing. Of course, the market (society) nearly always overreacts a bit. That's why the stock market looks like a seismograph up close but a line over time.

However one quibble. Supply and demand is economics, not capitalism. Capitalism is how society responds to supply and demand. Yes, I am a lot of fun at parties.

 

[CascadeClone]

I would Love to hear the rationale for an ARM right now.

Well, I will play devil's advocate on this for fun.
1 - maybe you can't qualify for a conventional loan (down pmt?) or you are getting a lower rate on the ARM initially
2 - if the adjustments are limited to maybe 2% max over 5 or 7 years, so you have a worst case ceiling rate known that wasn't terrible
3 - you want to move quickly because of market rising, or just personal timing

Yeah, that's pretty tortured logic, and I agree with you its not a good idea. But I could see in a FEW cases it might not be financial malpractice. Very few.


I just wish I could lock in a 20 year loan on our business property loan right now... Commercial is almost always a 5 year balloon to protect the bank from rate risk. But I'd love to lock in 20 years at like 6-7%. I'm afraid when we we re-up it might be 10% by then.

 

[cyfan92]

Well, I will play devil's advocate on this for fun.
1 - maybe you can't qualify for a conventional loan (down pmt?) or you are getting a lower rate on the ARM initially
2 - if the adjustments are limited to maybe 2% max over 5 or 7 years, so you have a worst case ceiling rate known that wasn't terrible
3 - you want to move quickly because of market rising, or just personal timing

Yeah, that's pretty tortured logic, and I agree with you its not a good idea. But I could see in a FEW cases it might not be financial malpractice. Very few.


I just wish I could lock in a 20 year loan on our business property loan right now... Commercial is almost always a 5 year balloon to protect the bank from rate risk. But I'd love to lock in 20 years at like 6-7%. I'm afraid when we we re-up it might be 10% by then.

A lot of ARM loans remain on the lenders balance sheet. Especially at Credit Unions and Banks. Tons of people still seem to care about having their mortgage sold off. They want their local shop to service the loan

 

[iahawks]

Crazy isn't it? I get a first time homebuyer not having 20% down but I would never think to buy a home with no money down or somehow get money back at closing.

If you are using a VA loan and don't have to worry about PMI and can afford the payments, why would you put any money down on a house with rates below 3?

 

[trevn]

If you are using a VA loan and don't have to worry about PMI and can afford the payments, why would you put any money down on a house with rates below 3?

Assuming you have cash reserves it's a viable option. I'm speaking more about the more common situation I see which is no money down and very little in the form of savings.