Banks now want more money down on homes

[Whelan]

So we had a nice setup where the bank was going to give us our $300k loan for our home (first-time buyers), with 5% down. We had 30K to put down actually. But now the bank suddenly told us it wants 15% down. That equates to $45k and we just don't have the additional money. Why are banks squeezing the buyers just as much as the sellers, we just jumped out of a deal where we offered $330K but the bank sat on ours and other offers for over 7 weeks and still have not decided. I just don't get it.So we had a house that was $359 we are goin to look at tonight, I am really worried about us being squeezed too much. But you literally cannot find anything that is remotely ok to live in in our area for under 300K. It just doesn't exist. Guess it's time to pack up and move to North Carolina.

[NibCrom]

I'm guessing they are doing that because of all the recent foreclosures.

[kevera]

That's different because here in Toronto,they are offering 0 down at most banks.There are lots of incentives for people buying homes here these days.

[WD0AFQ]

I think every prospective home buyer should be required to put 10% down. Keeps folks from walking out. 15% is a little steep. Move to Missouri and just pay cash for a nice home. 100 grand will get you a very nice place. Our regular gasoline is 3.60 right now. Way too high but low compared to some areas.Dan

[lovemyraffe]

I think that every situation is different. I think it is smart to save up for a good down payment on a house. I'm glad that banks are actually being smart about who they are giving money to. Just because you are breathing and work part time at McDonald's does not mean you can afford a $500,000 mortgage.

[harryyiii]

Nationwide, houses have dropped about 15% in the last year. Most of the drop was in places with highly inflated prices due to the bubble, such as the coasts. If you bought a house with 5 percent down a year ago, you could be 10% underwater now. Easy lending standards created the bubble. Tough lending standards will burst it.

[zionzr2]

Sorry to hear your about bank issues. Its really a bummer when you are told one thing and then told again its gonna need to be 3 times that.I need to step on my soap box a bit here, and I dont mean to offend anyone with this or put down anyone here. Its my view of where our society seems to be going off the track, at least in reguards to this issue. The easy lending practices should never have been instated in the first place. The Lenders got way to gready to turn a commision. I personally believe that you should put no less than 20% down on a home loan reguarless if the lender offers a lower down payment. There is way too much of this society living outside their means including our government. If you are not ready to put 20% down yet, then keep saving untill that day arrives. Even if that means eating pork and beans with ramen noodles. Clarify needs and wants. No One NEEDS the Latest and greatest X-Station. No One NEEDS a $50,000+ Automobile. There are several used cars you can blow through to get you to and from a job or 2 for $500 to $1000.I also belive that if owning housing is too expesive for you in your area, there are options. Move, Rent, take additional jobs. Live with something less than desirable for the short term. You Need a Roof over your head, not a mansion.Delayed gratification is something of a lost concept in this country.I better stop I'm starting to sound like Dave Ramsey.I once again appologize, I do not meant to offend any one here with what i have said.Its a very emmotional and personal issue in terms of personal finance. I also am in no way saying that government should or shouldnt get involved. I simply wish that proper personal finance should be something that is taught and the earlier the better. It was kind of the whole point to kids getting an allowence. When I grew up it was something I had to work to get and there were guidlies on what I could do with it. It was NOT nor should it ever be a Hand-out.

[Whelan]

Points all taken but in my case we are in the right setup. We both have credit scores that are high. We have currently 30K to put down. I will address the points made, but don't take offense to my opinions:Moving is not an option, I am working on a really good promotion at my job and my fiance is a teacher and looking to get into administration so she is comfortable where she is. This gives us a certain area to live in being that my current commute cannot increase, it's already 45-1 hour in traffic each way with a 50 mile roundtrip.We are looking at renting instead. Something we can afford on our current salaries and do not touch the money in the bank and even contribute to it monthly and with the money from the wedding. Then wait till we can afford the house we want when the market starts to get better in a little bit.Additional job I had, but I had to quit because I am getting my promotion soon which means another 10k a year plus bonus plus a raise come December. So I need to devote time here and not elsewhere. I quit my most recent side job of barbacking. My fiance teaches summer school and makes a good amount of extra income from that, plus we both occasionally dog and house sit for others. And I detail cars here and there.Less desirable, short term. The scary thing here is that you get yourself into a mortgage on something smaller that still needs work. I won't get into that a house in the 200-250k range in my area in CT is pretty much a 800-1000 square foot cottage that needs updating and work. Good houses in that range just do not exist. Maybe in other parts where cost of living is cheaper ( I realize it's all relative), but our 30k down could get us a nice house in Raleigh, NC. But that's not happening. We don't exactly live in an easy are for first time young owners. Back on point, I was trying to mention the fact that years ago buying a house was a no brainer, build up equity and what not. But now with the market as it is, who knows if you will really ever be able to recover that money in the short term, if at all.On a side note, CT is in somewhat of a crisis right now, loads of old money and older people that have driven the pricing up so much that companies cannot afford to stay open here, let alone pay people out of college enough to support themselves. Together me and my fiance pull in just under 100k a year. And with two of us, we are having a hard time finding a home, and we are pretty stable on the chart of young adults in my state.If I needed a mansion over my head, I would go buy Fifty's mansion in Litchfield. Or move in next to Martha Stewart down in Greenwich. Fairfield County extends from the NY border with White Plains/Westchester up to Stratford on the Housatonic River next to my town of Milford. It has held the title for the wealthiest county in the US for many years, not that I am a part of it. To give an example, the mil rates on homes in these areas is at the low end 30 for starters and goes up from there. It's not an easy state to live in, especially in this area where both of our jobs are.

[Sputnik]

Quote, originally posted by kevera »That's different because here in Toronto,they are offering 0 down at most banks.There are lots of incentives for people buying homes here these days.We always put at least 25% down to avoid the CMHC insurance that gets tacked on if you put less than 25% down. I think the more you can put down, the better, although I know that not everyone can do it, but still want to own their own home. I just don't want to be house poor.

[Whelan]

Well as it goes here now, they want 20% to avoid the PMI which is a total joke. What blows my mind is that people who have CHAFFA loans in the US have to make no more than 93K a year. We are over that. Now here is the kicker, they are eligible for up to a $590,000 loan!!!!?!?!?!?!?!How is that even possible, we combined make a little over that and could never in our wildest think to afford that much house. Someone in the calc engine department really miffed that one up.

[lovemyraffe]

I'm sorry for all your troubles...I know what you are going through. My wife and I want to buy a house, but with me being out of work, we are just eating our savings up. I hope it all works out for you.

[engineertwin2]

Whelan...you can bend over backwards to find a loan, but at the end of the day, if you can't make it work and make sense to you don't go through with it. You're still way young and its ok to not own yet.I own a house and there are times I wish I didn't. I would never suggest to people that they find a house their salary will "grow" into because its a bunch of BS. I didn't do it, but I don't want others falling into that trap either.

[Bikerscum]

Whelan, Whatever you do, don't get in over your head. Now, that being said... You need to get into the "system". You're missing out on the biggest government subsidy of all time.... mortgage interest deduction. Most people's first home isn't their dream home.... mine sure wasn't. But it got me into the system. All of a sudden the IRS wasn't taking 40% of my paycheck. The house appreciated, I sold it, moved up. It's just how it's done. Waiting & paying rent is throwing money away you'll never get back. Good luck.

[Kari]

Quote, originally posted by Bikerscum »Whelan, Waiting & paying rent is throwing money away you'll never get back.I disagree. We don't have to pay property taxes or perform our own maintenance, and the only thing we have to insure is our belongings. No liability insurance for things that happen on our property. I recently used a mortgage calculator to find total cost per month on a $104,000 loan and it was over $800 a month -- much, much more than we are currently paying for rent on an apartment of the same square footage. Plus we get a pool that we don't have to maintain.

[jake75]

I thought these low down payment mortgages had disappeared but I have a closing Monday (I represent the seller) where the buyer has a FHA mortgage. Sale price is $115,900. Cash from buyer is a little less than $6,000 which mostly covered the closing costs. 5.5% interest, 1.5% PMI, and 1 point. Bank fees were $900.

[jake75]

Quote, originally posted by Kari »I disagree. We don't have to pay property taxes or perform our own maintenance, and the only thing we have to insure is our belongings. No liability insurance for things that happen on our property. I recently used a mortgage calculator to find total cost per month on a $104,000 loan and it was over $800 a month -- much, much more than we are currently paying for rent on an apartment of the same square footage. Plus we get a pool that we don't have to maintain. I see a lot of retired elderly people. Those who have a paid for home usually do o.k. even with little retirement income. Those who still have to pay monthly rent are generally the ones having a tough time making ends meet. One lady lived in an apartment for perhaps 40 years. It was $150 a month when she first moved in - now it is $725 a month. Rent seems to increase every year.

[ColonelPanic]

I don't think we'll be staying in an apt forever. The money just isn't there yet for a house so we're working on that and will move on when the time comes. Tis good to not jump in when you're not ready, methinks that's what got this mortgage crisis started in the first place - well, that and banks giving fat sums of cash to folks they shouldn't have...

[Bikerscum]

Quote, originally posted by Kari »I disagree. We don't have to pay property taxes or perform our own maintenance, and the only thing we have to insure is our belongings. No liability insurance for things that happen on our property. I recently used a mortgage calculator to find total cost per month on a $104,000 loan and it was over $800 a month -- much, much more than we are currently paying for rent on an apartment of the same square footage. Plus we get a pool that we don't have to maintain. Over 800 a month... let's say 10 grand a year. Add that to what you paid in state & local income taxes last year, & deduct the sum from your last year's gross income. Now redo last year's taxes, state & federal. You'll be surprised.

[jake75]

Quote, originally posted by Bikerscum »Over 800 a month... let's say 10 grand a year. Add that to what you paid in state & local income taxes last year, & deduct the sum from your last year's gross income. Now redo last year's taxes, state & federal. You'll be surprised. That's the best way to accurately see what the tax savings is. What i see a lot of is that the standard deduction is now so high that often even with mortgage interest and real estate taxes the tax savings isn't that much. Without a mortgage all one might have to deduct is $5,000 in state/local income taxes and charitable contributions. So the couple obviously takes the $11,000 standard deduction. With the mortgage and real estate taxes the total itemized deductions are $14,000 so you take that. But you only saved taxes on the $3,000 above the standard deduction amount.

[Bikerscum]

Yeah, I tend to forget sometimes that the economics are not the same everywhere. Here in the SF Bay area where the average price of a single family home is over half a million dollars, the numbers come out quite a bit different.

[scott_h]

We didn't put a penny down when we bought our house 4 years ago. And we didn't have to get PMI insurance, because we have two mortgages (80%/20%). Heck, we didn't even pay closing costs - we paid a bit extra with the stipulation that the seller covered closing costs. I'm sure things have tightened a bit since then, but there are ways to get things done.And to anyone that can save that much for a down payment, my hat's off to you. We make a decent household income, and while I'll admit we could definitely tighten the purse strings, it would take us one hell of a long time to save $30k+. I honestly don't know how people do it...

[futureviber]

My Fiance and I are looking at houses. Hes a 2nd year teacher and I'm 'self employed' so we dont make a whole lot. We just realized that round here, its cheaper by a lot to own rather than rent. I fount some really nice houses for 40,000-80,000. Thats affordable for us. And we both are pretty good about not spending money were good at saving and cutting back... so I think that we would be ok. I'd love to make close to 100,000/year that would be amazing. there just arent jobs like that around here though. Around here now is a good time to buy just because home prices are fairly low because no one wants to buy.I've always wanted to move to conneticut but i think i dont want to go there now. I feel for ya. Starting a new life with someone is a big thing and adding to that stress could hurt your relationship. You will get it all figured out. Really, you'll find the house you are meant to be in and it will all work itself out.

[Blueridge9]

Have you considered looking for a house with a apartment rental unit in it? My Uncle does this. If you do the numbers you'll find that you benefit. It has a separate entrance and bathroom and small kitchen which he rents to a Teacher who is gone every summer. His mortgage is $1800 a month and he gets $800 rent from the Teacher so it reduces his payment to $1000 while building equity in the house. Someday he might be able to put that equity in another house.