Posted on 12/10/2014 7:21:18 AM PST by TurboZamboni
WASHINGTON (AP) — Some Americans will soon be able to buy a home with a down payment as low as 3 percent, compared with the current minimum of 5 percent, the mortgage giants Fannie Mae and Freddie Mac say.
The new lending guidelines announced by the companies Monday are designed to help more low-income and first-time buyers afford homes. Millions of Americans lost their savings or no longer had the income needed to set aside money for a home in the aftermath of the 2008 financial crisis and the Great Recession. That has held down the sales of houses and condominiums and slowed the economic recovery.
The guidelines are designed to prevent the kind of reckless lending that fueled a housing bubble and eventually triggered the recession. Borrowers must have enough income to repay loans on a monthly basis for homes that would be their main residence. This guideline would be intended to limit financial speculation.
(Excerpt) Read more at twincities.com ...
On the other hand you get the people who think they're smart enough to game the system. They want to borrow all of the money they can because they can borrow it for 4% and they can make 5 1/2% leaving their money in the market. And they want to buy the biggest house they can, even if it means an interest only loan. Because they're gonna make 50k in the next 2 years on that house. To smart to be dumb. Just plain stupid.
How to Asset Strip a Nation:
Offer home loans to people that cannot afford it, require little or nothing down so they think they can. Do this over and over until the foreclosures are too much and it crashes the housing market. The taxpayers Bail out ALL the Banks and Wall Street for the Bad Loans, and now the Banks and Wall Street own the Property for FREE. Resell the property and make 100% Profit.
I have rent houses. Had those when I was working in the oil and gas business. Retired from oil and gas and acquired real estate license. I personally think buying rental property, or buying a home and selling it and being the mortgage company.... this is the best way to invest during retirement. Provides diversification from the obammy market, and you own real assets, or have a real asset behind your investment.
I do work a lot with investors who are buying rental property.
Banks aren’t stupid. They know the government will bail them out every time. “Too big to fail”.
You get more of what you subsidize. If you subsidize risky behavior, as the government did by bailing out all the foolish banks, you will get more foolishness.
This is no surprise.
After 30 years in the Mortgage industry let me assure you these cycles never stop. And they never will. The No Docs will be returning also. Count on it. :-)
What could possibly go wrong with liberalizing those silly uptight mortgage rules?
3% makes me gasp. I just bought a small condo (after renting and living on rice and beans for 20+ years) but I put 40% down. Hopefully I can pay the rest of the mortgage off fairly soon and in th meantime, I didn’t want a crazy montly payment that will kill me.
I’m feeling old. 20% used to be the standard.
And the definition of insanity is.....
I bought my home with zero amount down. (VA backed loan) The 30 year mortgage was paid off in 20 years.
It is not the amount of down payment as much as the ability to make the payments. Since my home was not an investment but a place to live, I did not use it as a ATM and so when the housing market took a nose dive, I lost money on paper, but I did not lose my home. I do not care how much my home is worth, only that I maintain it, pay my taxes, and never, ever borrow against it.
This will become 1% and then zero after enough reports come out indicating that not enough “people of color” are getting mortgages.
The way you did it makes sense. It is smart and you thought about smart. Unfortunately, you’re in the minority. Really, it highlights the difference between a conservative and a non-conservative. A conservative buys the house like you did, pays it off early, owns it, maintains it, pays the taxes... and treats it and thinks of it like a HOME.
” After 30 years in the Mortgage industry let me assure you these cycles never stop. And they never will. The No Docs will be returning also. Count on it. :-)”
Here come the NEW NINJAS.............................
(same as the old NINJAS : )
When I sold RE in the 70s and early 80s, one didn’t even think about buying without having 20% down.
Most conventional is still going to want 20% down. Its the government backed loans that get people in who often have no business buying a house.
As a realtor,kjam22... may I ask you a question? It use to be 20% down. When did the lower down payment begin? Do some of the buyers still abide by the 20% rule?
Of course financial situation is primary reason my leads drop out
We don’t show until financing clear
Best wishes
Yeah... we pre-approve them too. But people with no real money, can be pre-approved for an FHA loan. As long as someone is going to gift them 3% or so.
Designed to help more low-income and first-time buyers afford homes.
Just another part of Obama’s amnesty plan.
To get a conventional loan from a lender like Country Wide or someone, they will want 20% down. But the government will encourage these same mortgage companies to loan to people with much less money down. They encourage it by providing the "insurance" to the lender. So the mortgage company may loan for 3% down to someone with not so good credentials, because the government tells the lender "if they default on the loan, we will pay you the balance of the loan." Then when that happens the government ends up owning the house. "HUD Home". They eventually sell it.
Right now there is at least a decade of HUD homes that aren't even being put on the market. Government is holding these and releasing them slowly so the market does not crash.
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