1-in-4 O.C. homebuyers borrow 96% of sale price

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Anonymous_IHB

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<A href="http://mortgage.freedomblogging.com/2009/06/03/oc-homebuyers-put-36-down-with-federal-help/11449/">http://mortgage.freedomblogging.com/2009/06/03/oc-homebuyers-put-36-down-with-federal-help/11449/</A>
 
Don't you mean 105% to 110% of sales price given coming price slides?



People in that price range don't have...check that...never had down payments. FHA financing is the only game in town.



I recently had buyer put on a $350k listing a $375 offer and was beat out by 36 other offers to finally get seller acceptance at $425k. This, for a crappy 3-2 in Mission Viejo's worst neighborhood. In 120 days that $425% will be $400k given the additional foreclosures coming.



My 02c



Soylent Green Is People
 
[quote author="Soylent Green Is People" date=1244070275]Don't you mean 105% to 110% of sales price given coming price slides?



People in that price range don't have...check that...never had down payments. FHA financing is the only game in town.



I recently had buyer put on a $350k listing a $375 offer and was beat out by 36 other offers to finally get seller acceptance at $425k. This, for a crappy 3-2 in Mission Viejo's worst neighborhood. In 120 days that $425% will be $400k given the additional foreclosures coming.



My 02c



Soylent Green Is People</blockquote>
That is happening more and more. I don't get the craziness, don't these people read? I mean that are more foreclosures coming. Oh wait, prices can't go down anymore so they had to buy now. My question is if the appraised values will limit some of this stupidity?
 
The headline (of the linked article and this thread) is misleading. It should say "1-in-4 O.C. homebuyers <strong>who have an FHA loan</strong> borrow 96% of sale price". Of course they do. If you have more than 3.5% down, you will get a conventional loan, because fees and rates are lower. The only situation where I can see somebody put more than 3.5% down on a FHA loan is if somebody has more than 3.5% but less than 20% and can't find a conventional loan with 10% down or something. Even if they have 10% down with a FHA, it probably makes the most sense in most cases to just put 3.5% down and use the other 6.5% on closing costs or repairs or furniture or save it for later.
 
No the headline is correct.



1 in 4 homebuyers use FHA then the people who took out these loans averaged a 3.6% down payment. Now that is an average so but since the minimum down is 3.5% it doesn't appear that many are making much more of a down.
 
It's not uncommon for first time buyers to put less than 10% down. FHA has some pretty hefty fees, so if you are going to go with one, it's probably wisest to only put 3.5% down and leave any other money in reserves. Really, the only reason I can think of to pay the FHA fees is if you can't or really don't want to put 10% down or more. Ideally, you want to put 20% and go conventional without PMI. Next to that 10% down non FHA is likely a better loan.
 
[quote author="trrenter" date=1244078755]No the headline is correct.



1 in 4 homebuyers use FHA then the people who took out these loans averaged a 3.6% down payment. Now that is an average so but since the minimum down is 3.5% it doesn't appear that many are making much more of a down.</blockquote>


Oh, ok. That's right.
 
I disagree with FHA costing more. In some limited scenarios it will, but more often than not FHA is a better way to buy.



https://calculators.emagic.com/Calculators/



This is a link to compare an FHA to a Private Mortgage insurance loan. If you assume -0- appreciation and a 7 year purchase window, you come out way ahead. If you assume 2-3% appreciation and a 5 year window your still ahead. They don't have an option for negative appreciation but if -0- appreciation you come out ahead, I'm guessing -1 on your in better shape.



My .02c



Soylent Green Is People.
 
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