Re: Re: I'm A Homeowner Now!!!!!! Am I missing something here? Did you actually finance 100% of the LTV? Was the house appraised at $200k or was the appraisal higher or lower? Too much, You are a negative person. You're also mean. Why would this person buying this home make you mad? Are you jealous?
Re: Re: I'm A Homeowner Now!!!!!! There is NO reason to come on here and bash what YOU feel is a bad move. We ALL make our OWN decisions for better or worse and I am sure the OP is a big boy or girl and has decided this is what they feel is right for them. Bashing them is not going to change the fact and it only makes you look like an old grumpy poster who needs to put down others to make himself feel better (not saying this is true but this is how it looks by your posts)
Re: Re: I'm A Homeowner Now!!!!!! gc, too much is being misleading and I really hope you ignore him. Note that there is a difference between (for a new purchase) financing 100% LTV (which is a smart move if you can do it) and financing at 100% of APPRAISAL value (which is ALWAYS a very bad idea, so don't do it). So that, if you can buy a home for $200,000 and the home's fair market value and appraisal are $240,000, and you have financed the full $200,000, then you have just done a 100% LTV for new purchases. Yet you still have > 16% equity. That is a GOOD move. But do not finance a $240,000 home that appraises at $240,000 and will sell for $240,000 or less unless you plan to own that house for a very long time. Now... Financing a 100% loan (provided that it is at a decent interest rate and in a decent location) is an excellent choice: 1. If you finance 100%, you do not have to live in the house long enough to ensure that you "make back" your downpayment when you sell, because any profit from the sell is pure profit. Now it is true that people who have made downpayments will get their downpayment back and any appreciation over and above that when they sell at fair market value, but for both groups, when the net-profit sheet is finalized, there really is no advantage to having made a downpayment first. The risk - however - is that people who have made downpayments may forget that they have done so and, when agreeing to a purchase price in the contract, forget that they need to recover that down payment or if they are desparate to sell, will agree to a lower purchase price. They'll lose money in that scenario. People who have not made a down payment are aware from the get go what they need to sell for to see a true profit, and even if they need to sell desperately, then they lose money by writing a check for the difference at closing. So - in short - both groups run the risk of losing money if things go south. It's just a matter of whether a person wants to risk losing money by giving it up at the beginning of the loan or if the person wants to risk losing money at the payoff of the loan. I will admit that, if you have to lose money, it is better to lose it at the beginning of the loan (via downpayment) since most who have to sell in a hurry need their cash, and people are more amenabel to losing money that they can't "see". But with this said, the probability of losing money in a home is low as long as the person has bought in the right neighborhood and for the right price!!!!!!! 2. Not only will you get better tax breaks with a 100% loan in the initial years, but you have the ability to earn more money using the cash that you would have used for a down payment in a different investment vehicle rather than real estate. So that, most people who go in 100% LTV pay a percentage point or two above market value for the benefit of the risk free loan. They can take that money erstwhile used for a downpayment and earn WAY more than 1% or 2% per year by putting that money in a mutual fund of some other stock vehicle at 10% or more. The main reasons downpayments exist are: 1. To demonstrate to the lender that the borrower is morally/ethically "responsible" and serious about homeownership enough to have saved money to pay for it. Think of this as a responsibility litmus test much like organic chemistry is for med school. Does the person have the ethical chops to do what it takes to stay in and take care of a house? 2. To reduce the lender's risk so that in the event the lender has to sell (i.e foreclosure), the LENDER doesn't lose money - if perchance the house sells for less than financed amount (highly unlikely in most neighborhoods, unless the house is trashed). Now, what the consumer gains by paying the downpayment (if it matters to them) is a lower interest rate and faster equity appreciation over the life of the loan. But it seems gc took care of that problem with his excellent program choice. In short - it is up to the consumer to choose how and where he or she wants his money to be held during the ownership of the home and there is no real disadvantage to doing a 100% LTV if the person buys for the right price and in the right neighborhood. It is wrong to make it a black and white good decision/bad decision issue. gc - in no uncertain terms, you've made one of the smartest decisions I've seen. too much - it's okay to admit that you're jealous of gc. I'm a bit jealous, as well. But I congratulate gc on a job well done. Enjoy your home, dude...
TooMuch, I don't get this fixation you have on GC being forced to sell his/her home in the next few years. Do you have the direct connect to MissCleo that is predicting a forced home sale for GC in the next few years? And why isn't it a good idea for GC to finance 100% of the home? GC already stated in her initial post that for one reason or another there is no PMI. With the cost of borrowing money at historical lows, it is NOT such a bad idea to finance the loan. GC is getting a GREAT interest rate of 5.5%. For GC to lose out on the home a few things would have to happen: 1) the real estate market drops where GC is at AND 2) GC HAS TO SELL BOTH of these things have to happen. But more than likely, IF there is a devaluing in the real estate market where GC is at...it will be CYCLICAL. So frigging what if the market DOES DROP, as long as GC doesn't sell, he/she will likely come out smelling like a rose. Why??? Because the real estate market is CYCLICAL. GC can ride out the wave of a negative fluctuation in price, create equity in her home, and have locked in a killer interest rate. Short-term is hard to predict, but in the long run, GC will probably do very well. Regarding your claims that "most" people don't get to take advantage of the tax breaks, I don't buy it.
Re: Re: Re: I'm A Homeowner Now!!!!!! Oh, go ahead. It will make you feel better. There's another old saying: If you don't have anything good to say, say it about Too Much.....
Re: Re: I'm A Homeowner Now!!!!!! Hmmm, what happens if they lose their income and cannot make the payments? Forgot about that one, huh? I guess we shouldn't worry...since they 'own" the house, they can just tell the bank to go away... Over 70% of American homeowners do not pay enough in interest and taxes to offset the standard tax deduction on a 1040. The reason it's hards for you to believe that is because Americans are constantly beaten over the head with the "mortgages are good for your tax situation" BS that real estate agents and mortgage brokers feed us 24/7. Go to your local bank and ask to speak to a loan officer. Find one who's over 40 years old. Ask them what they think of a 100% mortgage. They'll tell you why it's a bad idea. You see, our current economy is based mostly on pulling equity out of our overpriced homes. We are encouraged to give up the ownership of our homes in return for having the things we "need" right now... a new SUV, vacation, etc. Americans are being set up for one heck of wake up call if houses don't continue to increase in value 15% each and every year... and that isn't going to happen.
Re: Re: Re: Re: I'm A Homeowner Now!!!!!! You're pretty used to people not liking you aren't you? Though I don't find it at all surprising being that with respect to your brief history on this board, you're either always negative, or busy defending your negativity.
Re: Re: I'm A Homeowner Now!!!!!! Ok TooMuch. You are RIGHT. I see the light and now your attitude has overcome me. I am right now heading down to the nearest bridge to jump off. We are all going to lose our jobs and end up in foreclosures. Oh foolish us in our silly hopes of being HOMEOWNERS. We are just puppets of the mortgage industry. JUST GIVE UP.....rent forever, you will never make it. YOU WIN!
Re: Re: Re: I'm A Homeowner Now!!!!!! Oh noo.. Too Much is too good and too smart to tell us to rent forever. According to his wonderful advise a few months back, he just wants us to rent until we save up enough money to pay for our house with COLD HARD CASH! Just like he did (yep according to him, his saved up enough money to pay 100% cash for his current home). So gc's best bet was to have saved up $200,000 to pay for the house rather than financing it. But since she didn't do that, she's going to end up in bankruptcy and foreclosure in 5 years *sigh* should've listened to the amazingly intelligent, wise, and most revered psychic "Too Much".
Re: Re: Re: I'm A Homeowner Now!!!!!! The way I was tought to figure LTV is this: L (loan)= $200k T (to)= V (value meaning appraisal VALUE)= $240k LTV = 83.33% I don't understand your figures.
Re: Re: Re: Re: I'm A Homeowner Now!!!!!! 100% - 83.8% = 16.67% equity, hence my ">16% equity" statement. For new purchases, if the person doesn't put any money down, that is considered a 100% LTV loan (meaning 100% financed value to loan amount given), even if the house has a lot of equity. There's a difference between a new purchase and a refinance in which the LTV is definitely based on the appraisal.
Re: Re: Re: Re: Re: I'm A Homeowner Now!!!!!! You have absolutely no idea what you're talking about. Value = Appraised Value of the Property The "Value" is always based on the appraised value, not what the buyer paid for the place. Too bad you're not right.... lots of people wouldn't have to throw away money on PMI.
Re: Re: Re: Re: I'm A Homeowner Now!!!!!! You obviously don't have the cognitive skills to understand what I was explaining. It is a bad financial move to leverage 100% of your home's value with a loan. Those who do so are exposing themselves to a risk that they simply do no understand. Yes, people DO need to be patient and save up a 20% down-payment (preferably more) before they "buy" a home. Of course, most Americans are too impatient and uneducated to do so. Instead, they rush out and buy the most expensive house they can possibly make the payments on. Like I've said before: If you want someone to pat you on the back for making bad financial moves, you'll find plenty of comfort here. However, if you want to make good financial decisions, and get yourself out of debt, stop listening to the mindless cheerleaders here and start building wealth patiently and intelligently. You cannot live beyond your means forever, and you cannot borrow your way out of debt. Too many "experts" here are trying to tell you that you can. That's why this board has plenty of return business.
Re: Re: Re: Re: Re: I'm A Homeowner Now!!!!!! You have absolutely no idea what you're talking about. You can understand a risk perfectly and weigh it against the potential benefits and decide to take the risk. Not "too much" risk averse, are you ? The world does not work as deterministically as you apparently believe it does. Read up on your Heisenberg.
Re: Re: Re: Re: Re: Re: I'm A Homeowner Now!!!!!! Are you trying to say that the average 100% LTV homebuyer understands the risks involved with such a loan? Are you trying to say that the original poster even understands that they don't "own" the house they make payments on? Do you think the average forclosure is the result of a 60% mortgage or a 80%+ mortgage? If I had a 100% LTV mtg, I'd be a lot more worried about studying Occam than Heisenberg in this real estate environment....
Re: Re: Re: I'm A Homeowner Now!!!!!! Good point...let me take out my big screen tv box out of the basement and live in it...you never know when you loose a job.. might as well live in a cardboard box and be ready for the worst... You are a dumbass...get a life and stop being such a jealous prick. to the original poster... congrats! There is nothing better than owning a home.
Re: Re: Re: Re: Re: Re: Re: I'm A Homeowner Now!!!!!! OK, let's do some cutting with Occam's Razor then: I think you know exactly what I said and are trying to digress. You said nothing about "average". Let's broaden the scope of my quotation and get a little more context: You said, 1) You have no credible basis to know what a particular (potential or actual) debtor's level of knowledge of the risk is. 2) The value a given individual places on the potential benefits of taking the risk is beyond your ken. You also don't have a clue on how that individual values the potential negative consequences. It's called a value judgment. Only the individual themselves can assess that accurately. You can only assess it for yourself accurately. Therefore, on both the value of leveraging 100% of you home's value with a loan and the knowledge level of this hypothetical individual, you have absolutely no idea what you're talking about. Q.E. friggen D. Simple enough ?
Re: Re: Re: Re: I'm A Homeowner Now!!!!!! TooMuch, You really are TOO MUCH of a stubborn mule. Which wouldn't be a bad thing, except that you are WRONG! The only leg you have to stand on is your crystal ball theory that GC will be forced to sell her home in the short term AND her home will also have devalued in price. But what about the long-term? What if, AGAINST ALL ODDS, GC doesn't experience some life catastrophe and sells her home in 30 years and makes $350,000 from the sale??? What will you say then....how unfair life is because in the world of TooMuch's Karma and checks and balances, GC deserved to lose her home as a lesson for not putting down 20%??? Please don't go back to your PMI thoughts either, GC has already stated there is no PMI....for one reason or another.
Re: Re: Re: Re: I'm A Homeowner Now!!!!!! Why do you even bother trying to explain anything to that eternally negative and bitter person. There really is no point doing that..
