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Wamu had a 5/1 ARM @ 5.5%. Need 20% down and 680+ mid.
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Applying for a mortgage prequal question
- Thread starter robr
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Wamu had a 5/1 ARM @ 5.5%. Need 20% down and 680+ mid.
Great, but doesn't help me at all. I don't have $60K+ hanging around for a down payment. I'm looking for a 3% down payment.
robr,
I am not going to claim I know anything about your overall financial situation but be careful with 3% down.
You can easily end up upside down on your loan in just a period of a few months.
In fact if I had to make the choice I would bet your home will end up upside down if you plan on buying in the next 3-6 months with 3% down, and that's assuming that doesn't include closing costs. My macro data suggests the housing market will not bottom for at least another 12 months, potentially up to another 24 months. That's the nationwide average and local areas differ, but the saying "the rising tide usually uplifts all boats" goes both ways.
If getting more than a 3% downpayment together is the least bit troublesome so will that 3% on the other side if things go wrong, usually much harder.
Good luck with your home purchase and being cautious will continue to pay off.
I am not going to claim I know anything about your overall financial situation but be careful with 3% down.
You can easily end up upside down on your loan in just a period of a few months.
In fact if I had to make the choice I would bet your home will end up upside down if you plan on buying in the next 3-6 months with 3% down, and that's assuming that doesn't include closing costs. My macro data suggests the housing market will not bottom for at least another 12 months, potentially up to another 24 months. That's the nationwide average and local areas differ, but the saying "the rising tide usually uplifts all boats" goes both ways.
If getting more than a 3% downpayment together is the least bit troublesome so will that 3% on the other side if things go wrong, usually much harder.
Good luck with your home purchase and being cautious will continue to pay off.
Thanks, I'm not trying to overextend myself or get into a house I can't afford. It's simply I'm paying almost $2K a month in rent I'd rather be putting into something I own. I'm 40 years old with a wife and two toddlers and renting seems ridiculous. But it's also ridiculous that with my salary (about 3x the national average) that I can't afford a friggin' house in this area. It would take me FOREVER to save 20% down. Some of you know about my legal troubles a while back that cost me all my savings, investments, 401K and I had to file bankruptcy after running up $250K in legal bills and liquidating everything to pay about half of that. I was doing pretty well until until then.
Anyway, I'm hoping houses in this area will come back to the $250K range for something decent, but that's probably crazy. Prices have gone up 2-2.5x around here in the past 8 years, and while they've declined somewhat, to get back into that range, they'd still have to lose another 25-30% in value. That figure is way beyond the adjustment figures I've seen for any area in the US.
Regardless, 3% is what I have in cash right now (with a few grand left over for closing costs, etc). Maybe in another year I could have 5% (or 6% if prices continue to drop). 20% will never happen if things in my life stay status quo. It's my goal to see that it doesn't, but I have to plan as if my salary won't change substantially.
Anyway, I'm hoping houses in this area will come back to the $250K range for something decent, but that's probably crazy. Prices have gone up 2-2.5x around here in the past 8 years, and while they've declined somewhat, to get back into that range, they'd still have to lose another 25-30% in value. That figure is way beyond the adjustment figures I've seen for any area in the US.
Regardless, 3% is what I have in cash right now (with a few grand left over for closing costs, etc). Maybe in another year I could have 5% (or 6% if prices continue to drop). 20% will never happen if things in my life stay status quo. It's my goal to see that it doesn't, but I have to plan as if my salary won't change substantially.
I'd heard a few times if you couldn't afford 5 - 10 % down you should hold off and keep saving. The problem I saw with that was houses I was looking at were going up about $35k - $40k a year. By the time I'd scraped enough toghether, I wouldn't be able to afford the house 
Plus my rent was over a grand a month, and that money was just getting thrown away.
I went with an 80 / 20 fixed rate to avoid the mortgage insurance (two years ago) and it worked out very well for me. I'm not dealing with a required refinancing or any of the other ARM quirks. The house has gone up about 12% a year, I'm not wasting money on rent, and its deductable to boot!
My girlfriend's condo has been going up 50% or better a year. Doubled in price since she bought it. Wait too long around here to buy and you fast can't afford the neighborhood you were saving up for!
Plus my rent was over a grand a month, and that money was just getting thrown away.I went with an 80 / 20 fixed rate to avoid the mortgage insurance (two years ago) and it worked out very well for me. I'm not dealing with a required refinancing or any of the other ARM quirks. The house has gone up about 12% a year, I'm not wasting money on rent, and its deductable to boot!
My girlfriend's condo has been going up 50% or better a year. Doubled in price since she bought it. Wait too long around here to buy and you fast can't afford the neighborhood you were saving up for!
I'd heard a few times if you couldn't afford 5 - 10 % down you should hold off and keep saving. The problem I saw with that was houses I was looking at were going up about $35k - $40k a year. By the time I'd scraped enough toghether, I wouldn't be able to afford the house
I went with an 80 / 20 fixed rate to avoid the mortgage insurance (two years ago) and it worked out very well for me. I'm not dealing with a required refinancing or any of the other ARM quirks. The house has gone up about 12% a year, I'm not wasting money on rent, and its deductable to boot!
My girlfriend's condo has been going up 50% or better a year. Doubled in price since she bought it. Wait too long around here to buy and you fast can't afford the neighborhood you were saving up for!
I personally feel that's an outdated requirement. 5-20% was great back when houses were $100K, and while it doesn't seem to me like that was all that long ago, there are no $100K houses anymore in my area... or even $200K houses for that matter, and even $300K doesn't exist unless you're a fixer-upper.
Well if a stand alone home is not in your budget and you hate throwing 2k/mo in rent, look for a condo/townhome, then at least you own and the price may not be as high as a home.If you do decide to finance 95-100 % and live there for say 15 yrs on a 30 year mortgage and want to sell you will still have a significant chunk of the principle due ,and will have paid out what the house is worth in interrest only already.So that is what the other guys are hinting at.Little down loans are'nt a bad idea when you are in a hot market and you don't plan on living there too long.When you look at the amortization scheduals of 30 yr fixed loans it is amazing to see you are paying mostly interrest for 12 yrs:frown:
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This is a huge point of contention, and many will disagree, but I think properties could easily fall 25-30% over the next 2-3 years. It's no more crazy than the bubble appreciation that occurred over the past 5-7 years. I track RE prices on a near-daily basis in my neck of the woods. What I look at are selling prices compared to last-sold prices. Recently I've been starting to see prices below 2003 selling prices.
Properties have already begun to fall quite severely, but the data lags. It won't be long before the average 'joe' realizes this.
This is a sensitive subject, especially to those who made great amounts of wealth in the real estate business. It reminds of 1999. Everyone in the markets thought they were geniuses when in reality they were good traders in an extremely favorable environment. The track to 5k on the nasdaq is like the run from 200k to 500k in many parts of the country over the last decade. It's not sustainable and it normally would have already corrected itself but due to unordinary lending standards, easy credit, etc. it was prolonged artifically. I hesitate to post this too much because people like robr are more or less 'screwed' if this occurs and I don't have a solution so I don't bring it up. I'd say "hopefully it doesn't happen and all is well", but rule #1, #2, and #3 regarding anything having to do with money is "Hope is not a strategy", so I cannot.
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And it killed me when people who had put no money down on their homes would ask me why I was "throwing away" money on rent. i just shook my head.
I actually have never thought of it that way. It's interesting to look at the amortization.
For a $250K house at 6.5% with nothing down, it would take about 12 years before you own 20% of the house.
For a $250K house at 6.5% with $50K down, in 12 years you own 36% of the house.
With nothing down, it would take 18 years to own 36%.
I guess the big question is, can one save up 20% in 12 years. Yeah, I could pull that off. I guess common sense says keep waiting and see what happens to values.
For a $250K house at 6.5% with nothing down, it would take about 12 years before you own 20% of the house.
For a $250K house at 6.5% with $50K down, in 12 years you own 36% of the house.
With nothing down, it would take 18 years to own 36%.
I guess the big question is, can one save up 20% in 12 years. Yeah, I could pull that off. I guess common sense says keep waiting and see what happens to values.
robr combine those somewhat depressing/enlightening figures with the fact that your loan could easily go upside down and you'll start to get the 'jist' of what I'm trying to get across as to the potential downside.
I have a 'jaded' perspective as when I turned 18 and left for college my parents owned about 10-12% of the house, up to that point, that I grew up in all those years.
I only know this because after they divorced I ended up going through all their finances in detailed. A couple refi's and low mortgage payments are a long, steady way to go broke.
I have a 'jaded' perspective as when I turned 18 and left for college my parents owned about 10-12% of the house, up to that point, that I grew up in all those years.
I only know this because after they divorced I ended up going through all their finances in detailed. A couple refi's and low mortgage payments are a long, steady way to go broke.
