You tell me. I know many people that won't buy a home because that would ruin their chance of leasing another Benz when their current lease is up. I rented until my credit was good enough to be able to buy a home. Of course I don't live where a starter home is $400k.
cost per thousand: P&I @ $100,000 7% $6.65 $665 8% $7.34 $734 9% $8.05 $805 10% $8.78 $878 11% $9.52 $952 As you can see it can only be "tens of thousands more" if you let the mortgage carry out the full term. Even when you have low FICO scores, if you are in a position to purchase a home, you are MUCH better off than if you are renting. When you rent, how much of your monthly payment pays off the principle of your loan??? Absolutely nothing. How much does the value of your property appreciate in value??? Absolutely nothing. Renting makes someone else's mortgage. Renting increases the value of someone else's property. RENTING IS ALWAYS A LOSING PROPOSITION FOR THE RENTER. Though,unfortunately, sometimes there is no option. fla-tan
Because not everyone can grow a money tree and save for a deposit, some people don't want to just put the bare minimum down. Some people have bad credit and can only get approvedd for an apartment. Some people just don't want to deal with the hassles of owning a home. Some people think owning a home is so much more a month than renting. Shall I go on?
The down payment is what causes most folks to buy a home for somebody else instead of for themselves. =========================Icall it the Rent Race:
A lot of people think they will rent until they can save up the down payment. This is tougher than they realize because It's hard enough to pay for one home let alone 2 of them at the same time.
1*This is not where the big or extra loss is!Most folkes loose this never realizing they ever lost it. 2* Granted but they are still loosing money they could have if it weren't for them getting fleeced by the FICO shell game. 3*This is correct. 4*The downpayment is what causes folks to fall into the trap I call the rent race.
Thank you for your input. What would you say are the 2 leading reason of the 5 you gave that prevents folks from owning their own home? BTW EVERYBODY is buying a home.
Actually, for once I agree with Ibrown59(and that is rare indeed...lol) If you don't need to put more than 20% down then don't(with one exception). Increase in the value of the property mostly comes from the appreciation, not from paying down/off the mortgage. Also, the only part of a mortgage that is tax deductable is the interest paid, so if you can, why not get the most advantageous loan possible. That, by the way is actually an interest only loan(unless you plan to stay in the property for over 10 years). You get the full advantage of the tax deduction and have additional money to invest, like in additional real estate, or stocks, or whatever you can get a good return on. In fact that is what more and more savy investers/home owners are doing. Both the COFI and Interest Only loans are becoming more and more popular. Some of you may want to look into them. One caveat though, you have to have good credit, generally at least 650, to qualify for them. fla-tan
2) The "FICO SHELL GAME" as you call it. Is one of the tools that lenders use to determine risk tolerance. Without this tool, those who have to turn to the sub-prime lenders would in reality have no option to get a loan and would forever be stuck in RENTER'S HELL. Would you suggest that lenders ignore a person's past credit? How would you suggest that a lender gauge their risk tolerance? lbown59 what is YOUR solution? And please try to see it from both sides. fla-tan
1*This is a myth: Fico gages profitability not credit worth. 2*It's a tool all right-just like a 38 is a for a bank robber! 2*A*So every one got out of here when they came up with FICO. 3*Basicaly they already are thanks to FICO. 4*Look at the applicants tract record.That tells the story not the score! 5*Get rid of scoring! it's doing more harm than good and not just on the consumer front.I have and I don't like what Fico shows. The industry has done quite a snow job on the consumer and the public in general. Myths die hard.
At this point I don't really care what the interest rate is, I have it in writing that I can refinance in a year at prime rate if all payments are made on time. Plus, the interest you pay can be taken off your taxes, I have done the calculators online and we are way ahead, even though we are paying such a high interest rate. A home is a home, depends on how bad you want it, and I want it enough to accept almost anything. I can afford the payments, so what is the problem? People with our scores don't have a lot of options. I am going to take the loan and suck up that interest rate for the next year.
Most adjustable rate mortgages allow you to switch within 2 years to a fixed rate without additional closing costs.If you are getting a fixed rate with a "promise" of refinancing to a better rate make sure you won't have to pay closing costs and points all over again.That would wipe any "savings" out.
Make sure that the terms (and costs that will be involved) of refinancing are defined in writing, also. They should also define "prime rates" in writing as related in a specific manner to a specific interest rate standard. If they only put in writing that you "can" refinance, then make it unreasonably expensive to refinance, then you could still end up stuck. -ingenue
Fico is the problem. if it wasn't for scoring your rate most likely would not be as high. Is the information in all three of your credit reports accurate and complete.? If not you can bet your bottom dollar That your score is wrong!
There are several lenders that will lend in the sub-prime/non conforming market. These lenders usually have a diferent set of requirements. fla-tan
My scores are fairly close to yours. I went with FHA financing...you only have to put 3 percent down and part of that can be closing costs. I went with a first time homebuyer bond program that was available in my county/state. It gave me 4 percent towards closing costs and down payment and I ended up getting an interest rate at 6.97 percent through the bond program. If I would have went with FHA without the bond program, my rate would have been around 7 percent. The mortgage company said I could qualify for traditional financing, but don't know the terms. I went through Countrywide. Their website is at http://www.countrywide.com Check them out!
