Page 2 of 3 FirstFirst 123 LastLast
Results 26 to 50 of 54

Thread: Scared to Buy a house

  1. #26
    Member SiNPhuLL_Vegas's Avatar
    Joined
    Oct 2003
    Location
    Las Vegas
    Posts
    35
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re: Scared to Buy a house

    bottom line is that nobody really wants to be stuck in a shithole lil apt. their whole life.. wife, kids, etc... you need space. risks, banks, IRS, etc.. all that is bullshit, pretty much anything u do in life is gonna involve risks, banks, irs, etc.... It's gonna take you 10 years anyway, better come away with something.!

  2. #27
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Scared to Buy a house

    #1 its up to the lender if they will have you fill out an IRS form 4506. Without this, the IRS CANNOT pull your account info without a subpeana
    this was exactly my point about the new authority of the Patriot Act. One phone call from the IRS to any judge in the state will result in a warrant if the IRS wishes to keep a clean chain of evidence for a criminal case. If the IRS is happy with civil charges and collecting back taxes only, they don't even need the warrant and an IRS tax court judge can issue the subpoena.

    #2 It is up to the lender to decide how they want to season funds. Gifts, savings, money under the bed. You do not have to have the money in a traceable account for any length of time with some lenders. If you purchase or put down an amount over 10K IN CASH, you must fill out an IRS form and register the transaction. This is to prevent criminals from making large purchases with dirty cash.
    This was exactly my point to dancers who have less than 100% accurate reporting of income for the past few years. If 10,000+ in cash comes out from "under the mattress" to serve as the down payment, both the lenders and the IRS are going to want to know where all this cash came from. The lenders want to know because they fear you have taken out a second loan, thus will have monthly payments on both this loan and the mortgage which you will not be able to afford. The IRS wants to know about this money because they want to collect taxes on it if the buyer can't prove that this money was already reported as income and taxes have already been paid.

    #3 real estate is not a good investment? That is the dumbest comment I think I have ever heard. You make money when you buy real estate, so yes, if you did no research, paid over market value for a crumbling shak in the middle of a crack ghetto, then yes, you might loose value-MIGHT.
    Well, you obviously don't live and work in Texas or Washington State or Silicon Valley! All of these areas have been hard hit by bad business conditions, massive layoffs etc. such that there are now lots of sellers and very few qualified buyers = falling real estate prices. Next year when the Fed raises interest rates and when states raise property taxes to help out with their deficits there will be even more sellers (people with ARM's and people who simply can't afford a 30% increase in their property taxes), and even fewer qualified buyers (as a 2% increase in interest rates would nearly double monthly payments on the same mortgage). I agree that there are certain areas such as Florida where real estate will seemingly continue to rise forever, but in many other areas this is far from certain.

    I also have to agree with Geek that purchasing a house with or without a mortgage, in theory, should be evaluated on a time value of money basis versus alternative investments plus paying rent. If the primary reason for purchasing a house is as a long term investment, then it needs to be compared to the alternative of paying rent plus putting the down payment into a different form of investment like stocks or bonds (including not only capital gains, but expenses and taxes as well). For the past 10 years or so, real estate has indeed offered excellent returns. However, there is no guarantee that this will continue to be the case in the future.

  3. #28
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re: Scared to Buy a house

    bottom line is that nobody really wants to be stuck in a shithole lil apt. their whole life.. wife, kids, etc... you need space. risks, banks, IRS, etc.. all that is bullshit, pretty much anything u do in life is gonna involve risks, banks, irs, etc.... It's gonna take you 10 years anyway, better come away with something.!
    These are all the 100% dead-on "right" reasons to buy a house. Have a long time frame and want a place to live. Not a 3 year return. With this approach you come out fine.

  4. #29
    Featured Member scorpio's Avatar
    Joined
    Nov 2003
    Location
    Chicago
    Posts
    868
    Thanks
    0
    Thanked 3 Times in 3 Posts

    Default Re: Scared to Buy a house

    [/quote]***
    this was exactly my point about the new authority of the Patriot Act. One phone call from the IRS to any judge in the state will result in a warrant if the IRS wishes to keep a clean chain of evidence for a criminal case. If the IRS is happy with civil charges and collecting back taxes only, they don't even need the warrant and an IRS tax court judge can issue the subpoena.***[/quote]
    ***
    Unless you are buying a home for cash, dont worry about this. ***

    [/quote]This was exactly my point to dancers who have less than 100% accurate reporting of income for the past few years. If 10,000+ in cash comes out from "under the mattress" to serve as the down payment, both the lenders and the IRS are going to want to know where all this cash came from. The lenders want to know because they fear you have taken out a second loan, thus will have monthly payments on both this loan and the mortgage which you will not be able to afford. The IRS wants to know about this money because they want to collect taxes on it if the buyer can't prove that this money was already reported as income and taxes have already been paid.[/quote] ***
    ***

    The lenders know if you got the money from a loan by looking at your credit report. Its true, if you go down to your neighborhood community bank, they will want you to track your downpayment money for 2-4 months. They want proof that you have had this money and someone didnt just give it to you. But MY point was that not all banks do this. You have to educate yourself about your choices.***

    ***
    [/quote]Well, you obviously don't live and work in Texas or Washington State or Silicon Valley! All of these areas have been hard hit by bad business conditions, massive layoffs etc. such that there are now lots of sellers and very few qualified buyers = falling real estate prices. Next year when the Fed raises interest rates and when states raise property taxes to help out with their deficits there will be even more sellers (people with ARM's and people who simply can't afford a 30% increase in their property taxes), and even fewer qualified buyers (as a 2% increase in interest rates would nearly double monthly payments on the same mortgage). I agree that there are certain areas such as Florida where real estate will seemingly continue to rise forever, but in many other areas this is far from certain.[/quote]***

    ***
    It all comes down to "did you do your homework" You can find good real estate values anywhere. Yes, in some areas, there is a real estate bubble, but on the whole, even in these areas, the value will not actually decrease. It may not rise at the same rate though. You have to be objective when buying property. You cannot "fall in love" and pay more than the property is worth. That is where most people go wrong. Like I said before, you make money when you BUY real estate, not when you sell.***

    ***
    [/quote]I also have to agree with Geek that purchasing a house with or without a mortgage, in theory, should be evaluated on a time value of money basis versus alternative investments plus paying rent. If the primary reason for purchasing a house is as a long term investment, then it needs to be compared to the alternative of paying rent plus putting the down payment into a different form of investment like stocks or bonds (including not only capital gains, but expenses and taxes as well). For the past 10 years or so, real estate has indeed offered excellent returns. However, there is no guarantee that this will continue to be the case in the future. [/quote]


    If you do the time vs money calculation, real estate ownership will win over renting EVERY TIME.

    Also, Geek, No where did I mention "free Money" btw, what do you do? Your profession. You obviously arent in the Banking business (I Am) and you obviously arent a pro investor, so where, exactly, is this great advice coming from? The difference between real estate and other market investments is if the value of the home declines, you may TEMPORARILY loose some equity. This could be 1-10% (this exceedinly rarely happens) If you invest in the market, you could (and freaquently do) loose YOUR ENTIRE INVESTMENT. The only way you can do that with real estate is to destroy your home and not have insurance.

    The whole point of my original post is: Dont be afraid to buy a home. Its the best investment you could ever make. It provides security and stability like nothing else can. Just because you are a dancer, you do not have to settle for renting because you cant prove income. Educate yourself about the financing options. There most certainly are many banks out there that do no doc loans. The best advice though is watch your credit, as these loans are very hard to do and expensive if you have bad credit.

    btw, I have done many many california loans in Silicon Valley and the Bay area, and not one have run into the issue of declining property value. not one.

  5. #30
    Featured Member
    Joined
    Jun 2003
    Posts
    1,088
    Thanks
    0
    Thanked 4 Times in 2 Posts

    Default Re: Scared to Buy a house

    I have never seen property values decline in florida,new home sales are up here for the past three years,my fist home I bought 10 years ago,was a brand new ,zero lot line house,in an excellent location and neighborhood,well I paid 70,000 ,its now worth 125,000,not bad,its alsomore like a condo,it has no yard,as in zero lot line,most other housed in that area,alrger ones 1500-2000 sq. feet are going for around80-100000 more than what they paid.My second house I bought the lot and built,smartest way to go because builders charge you double for the lot,even though its aded in to the price,so I built brand new at 163,000,one year ago,actually one year sep 13,I could sell now for 190,000,not a bad return for 1 year,the house next door is actually 15 years old,I bought in a pre existing sub division,with onlt 2 lots left,most houses in here are 10-20 years ols,anyways,the people next door moved in 3 days after me,sold 8 months later,they bought for 148,000,sold for 164,900,so property here in florida goes up much more than 10% a year, the county I live in has no land left to buid on,so property is hot here and around 10,000 people move here monthly,I think it all depends on were you buy,but you should never loose money on realesate,its a good investment,if you stay in your property at least 5 yearsand if you pay 800 month to rent an apartment ,here you can pay that an own a home,pluss right off your interest,so actually your really only paying 500 a month to live in a home,because interest ,taxes and insurance are aded in,which at the 800 month apartment it is as well,though you cant right off 300 of it like you can in a home.

  6. #31
    Featured Member
    Joined
    Jun 2003
    Posts
    1,088
    Thanks
    0
    Thanked 4 Times in 2 Posts

    Default Re: Scared to Buy a house

    Sorry,I just woke up.

  7. #32
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re: Scared to Buy a house

    Scorpio wrote
    "btw, what do you do? Your profession. You obviously arent in the Banking business (I Am) and you obviously arent a pro investor, so where, exactly, is this great advice coming from?"

    If you must know I am an ABD-educated economist (from a top-10 school) who has been a professional economist for 25 years. The last 13 years I have been employed by an international consulting company with more than 500 employees. We are not bankers, we advise banks, as well as most of the Fortune 500, and more than half the state governments and many foreign governments.

    I personally have been quoted in The Wall St. Journal, USA Today, The NY Times, CBS MarketWatch, and the Washington Post and those are only the ones I know about directly and are things you would readily recognize. I did not fall off the turnip truck.

    NO investment is "the best investment you can make". That distinction is going to depend on ones circumstances and is too broad a generalization. For a large part of the population paying off 18% AR credit card debt beats a return on home hands down with no downside risk and ancillary benefits.


    Michelle, I never said real estate can't be an excellent investment. I never said real estate would go down. What I did say is that it is an asset which "can" go down in value for periods as long as 4-5 years. Real estate values are at a place and at a time, like stock prices. There are places where in the next 4-5 years, people will be underwater for a while as an investment. I said if you look at it as a 10 year investment, you would be okay. On some properties in some locations, there are better returns on the investment with greater liquidity. It is not an absolute.

  8. #33
    God/dess GoldCoastGirl's Avatar
    Joined
    Oct 2002
    Location
    ...hehehe... email me to ask me where i am ! (i dare you!)
    Posts
    11,486
    Thanks
    42
    Thanked 127 Times in 51 Posts

    Default Re: Scared to Buy a house

    If you are scared to buy a house - read "Real Estate Riches" and you will re-gain your confidence.

    It has definately helped me overcome my fear of investing in real estate. I'll be looking at it as more of a 20+ year investment.

    I want passive income hence the reason I would rather invest in real estate than in stocks. I personally have never really been that keen on stocks.



    enter: E3167322D9 for your 10% discount

  9. #34
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Scared to Buy a house

    I hate to mention this, but being a landlord can be a far cry from a "passive" investment. Besides the tenant issues, you also have to deal with maintanance, contractors, taxes etc. This is no big deal if you live at the property of course. You can also avoid these issues by investing in a Real Estate Investment Trust, where you truly are a "passive" real estate investor.

    I still feel compelled to put out a word of warning about real estate as an investment. At the latest meeting of the US Federal Reserve board, they more or less put the word out to the financial and banking community that the odds of an interest rate hike in the short term future is pretty high. Remember that the value of real estate is only dictated by the prices that buyers are willing/able to pay - and this revolves around the size of the monthly payment not the actual cost of the property.

    If mortgage interest rates rise by a single percent, all of a sudden a $1000 a month mortgage payment which used to be able to buy a $250,000 house will now only buy a $200,000 house. This will disqualify a ton of potential buyers for $250,000 houses, and any commodity which has fewer buyers including real estate can and will drop in value. Also a lot of people have Adjustable Rate Mortgages and their monthly mortgage payments will increase dramatically if interest rates rise, potentially putting many ARM homeowners in a foreclosure situation, which will dump more houses on the market and depress real estate prices.

    To make matters worse, state property taxes in some areas of the US are rising at a 20-30% rate to offset budget deficits. If increased real estate taxes embedded in monthly mortgage payments go from $200 a month to $300 a month, this disqualifies even more potential buyers and also may put some existing homeowners underwater even if they hold a fixed rate mortgage - leading to more future foreclosures and additional houses being dumped on the market which will further depress real estate values.

    To make matters even worse, both the US government and the stock market regulators are beginning to ask questions about the financial health of FNM and FRE, the two largest Government Chartered mortgage lenders. These agencies are responsible for a large majority of the "lower end" mortgage loans i.e. less than $150,000. They basically are able to write mortgages for "questionably creditworthy" home buyers, essentially substituting the good credit of the US Gov't in place of the bad credit of their "customers". However, these agencies are under big time scrutiny lately, meaning that the same easy credit terms they have been able to offer "questionably creditworthy" buyers in the past may not continue into the future. If this is the case, then a large percentage of "starter home" buyers are likely to disappear from the market. This of course means nothing if you're interested in buying million dollar beachfront property. But it could be very important if you are the owner of a low priced home (under $100,000) in an average location. In the future, most likely buyers who have the credit to buy a $100,000 house will also likely have credit to buy a $200,000 house, so they won't be very interested in yours! On the flip side, likely "questionably creditworthy" buyers who today have credit to buy a $100,000 house through FNM or FRE won't be likely to have any credit at all in the future, which might severely impact the salability of "starter homes" and their market value.

  10. #35
    Featured Member scorpio's Avatar
    Joined
    Nov 2003
    Location
    Chicago
    Posts
    868
    Thanks
    0
    Thanked 3 Times in 3 Posts

    Default Re: Scared to Buy a house

    Melonie, I'm sure you are a very astute investor, but you really need to stop giving "advice" that isn't accurate. You seem to be dead set against anyone here buying a home, and like to scare people away from their dreams of home ownership.
    #1-yes, rates will and are headed up. This is inevitable. This is not the end of the world either. Rates have averaged 7-8% during the clinton yeras (good economy) and lately have been in the 6% range under Geroge Bush (bad economy) It is only prudent to assume that rates cant stay down for long, but so what? There are so many alternatives to fixed rate financing (loanes carrying higher rates)

    #2-Your comment about people with ARM's all being in trouble of being forclosed is asanine. Most ARM's today have rate increase caps, both yearly and totally. Also, think of an ARM as like a credit card-you get a low start rate, and after a period of time, it goes up. If it goes up too much, simply get a new one (refinance) There are ARM's you can get right now in the 3% range.

    #3-Fannie Mae/Freddie Mac are in no way going out of business. These government agencies buy loans from banks and sell bonds against these loans. Loans must conform to their guidelines in order for them to be bought by them. These conforming loans are the majority of loans written today. You MUST have good credit to get them. Fannie and Freddie do not do "low income" or "credit case" loans. That is handled by FHA (not bad credit, but far more flexible) and Sub-Prime lenders. For those of you who have bad credit, there are still options. Sub-prime lenders can get you a loan, and some have rates that are competative with conforming leanders. The age of 16% loans are gone, due to "predatory Lending" laws, so most top at 10%, which is still very high, but hey, if you don't pay your bills, why do you deserve a good rate?

    #4-Your comments on being a landlord are right on. It can be alot of work, and should never be attempted without some education. Most investors lose their ass not on the actual real estate, but on the real estate management, so be careful.

    Melonie, please don't take this as an attack on you, but I just cant stand seeing peoples hopes and dreams being downed by negative, falshoods. I say, If want to own a home, you need to educate yourself on the process. If you do, you will 9 times out of ten end up in a more secure, stable , rewarding place.

  11. #36
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re: Scared to Buy a house

    This time I have to agree more with Scorpio than you Melonie.

    According to the usual term structure of interest rates (yield curve), the 10 year bond which is the rate mortgages are based on tends to move by only about a third of the amount that the Federal Funds rate changes. These are quarterly averages, not extremes like the June 15th very low point of rates. So to get a 30 year mortgage rate to rise form 6-7 would take a short rate move of 3 percentage points and 7% mortgages are hardly a disaster when income, confidence and employment are all likely to be positive.

    As for taxes $200-300 is a 50% increase and would not be politically acceptable in most places. Here in Taxachusetts 44% of the voters voted to repeal the income tax when the legislature raised the rate from 6.3 to 6.6%.

    The F organization got in trouble for bureaucratic arrogance and hubris combined with some slipshod accounting. The worst impact of the F's losing implicit guarantee would be an eighth of a percentage points on mortgages.

    Homes are only locally bonkers in price in a few places, national medians are not more than a few percentage points above where they historically would be given mortgage rates near 40 year lows. Home ownership hit an all time high in the third quarter but only a quarter of the young age cohort owns a home. There is a vast pool of potential new starter home owners if the job market improves as expected.

    The monthly payment on a 250K loan at 6%(current commitment rate) for 30 years is $1500, at 5% it is $1342(june low), at 7% $1663. These are fully loaded APR's and I used the calculator at a newspaper so I cannot vouch for their accuracy. Since the difference is all interest rates that is $120 per month between 6% and 7% or twice an average months cable bill--not enough to cause a sharp decline. ARM rates will move more than this but are currently about 4.5% and will cause more of a shift to fixed rates as the gap narrows. These are not disastrous conditions for housing.

    Recent gains in prices are not sustainable at the same pace, but no systemic collapse is appropriate or reasonably to be expected. More likely is a 3-4 year flat market and a nice place to live.

  12. #37
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Scared to Buy a house

    #1 - if interest rates go up, monthly mortgage payments on the same purchase price go up - $163/month in the $250k example above for a 1% interest rate move. People with X dollars of monthly income who can't afford the extra $163 per month become disqualified as $250k house buyers! Less qualified buyers/demand = lower prices for former $250k homes.

    #2 - refinancing an ARM is possible NOW, but if fixed mortgage rates rise from current 6% levels to 7% or 8% levels a large number of ARM mortgage holders are not going to qualify for refinancing based on their incomes (and particularly if they don't have much/any equity in their homes based on future property values!). Much higher ARM monthly payments + same income = foreclosures, at least in a certain number of cases. Foreclosures put more houses on the market, sending real estate prices down.

    #3 - I never said that FNM and FRE were going to go out of business. However, if the issue of gov't guarantees is put to the test as it was during the Savings and Loan crisis, the rock bottom "gov't quality debt" low interest rates these agencies are currently able to sell their bonds at is going to rise. If these agencies must pay out higher interest rates to sell bonds competitively, those higher interest rates will be passed on to future mortgage holders ALONG WITH tighter criteria for approval, again contributing to #1.

    In regard to rising property taxes, the example about voters turning down a state INCOME tax increase is exactly why steep increases in property taxes are likely! Localities all have federal and state mandated costs which they MUST pay, and if these cannot be funded by shares of state income taxes or sales taxes (which people who are NOT property owners will vote down!) then the only tax option left to localities is to raise property taxes. I don't know about your area but in my area increases of 25% plus are being approved, and still leaving a local budget deficit which virtually guarantees another similar increase next year i.e. a 50% aggregate increase in property taxes. This contributes to #1 as well, and is even more insidious since homeowners are all hit with the increase blindly at the same moment (meaning that many properties may hit the market all at once when some owners decide they can't handle the increased taxes and must sell).

  13. #38
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re: Scared to Buy a house

    Mel, all the things you say are correct to some extent, but your perception of their significance is probably a bit on the over reaction side. These are all matters of degree that reasonable people can disagree on.

    In the $1500 payment example with 200 each for insurance and real estate taxes there is a 1900 per month payment. At the traditional banking rule that cost be less than 28% of income it takes an $80K income to qualify. If standards had slipped to allowing people to borrow so everything was constrained to 33% of income--qualifying income was $65K income.

    An extreme $200 change in the required payment is only 4%-5% of that remaining 67% to 72%. The vast majority of such folks finances are more flexible than that. It could disqualify some people-absolutely correct. But the numbers are low. Also true is that there is an adverse effect on real estate values when rates rise, but even a 2% general inflation rate raises the bar by $5000 each year on the example 250K value.

    Rates and taxes have risen as much or more in the last 60 years more than a ten times without the consequences you forsee. i do not anticipate a general meltdown.

    Melonie we just interpret the consequences differently.
    PS glad your euro denominated funds are looking good. If the rate rises you forsee transpire you would want to shift them back at the low 1.20's on euro values/dollar.

  14. #39
    God/dess VenusGoddess's Avatar
    Joined
    Oct 2003
    Location
    Home
    Posts
    13,598
    Thanks
    0
    Thanked 28 Times in 23 Posts

    Default Re: Scared to Buy a house

    Hey, Monty...can you answer this for me??

    Why do banks base their pre-quals and ability to finance terms on Gross pay and not Net pay? The difference can be astounding after taxes!! It just seems stupid to say that since somone MAKES $80,000 per year can afford a house payment of $3,000 per month since after taxes they only bring home $54,400 (based on 32% taxes...of course this is all hypothetical). It just doesn't make sense...why not pre-qual people on how much they "actually" bring home (after taxes)?

  15. #40
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re: Scared to Buy a house

    Vg If the tax rate were the same for everyone the result would be the same, just the percentage would be different.

    Since the tax rate goes up as income goes up, taxes go up but the amount considered "discretionary income" also goes up. This about balances out so the rule of thumb still seems to work out. Things like food and electricity go up with income, just less than 1 for 1 in percentage terms.

    Other than that, like a lot of things it is just custom. The world is full of arcane silly customs.

    add If the tax rate was real steep like 75-90% marginal rates, and at really low incomes, this rule would not work as well

  16. #41
    Featured Member
    Joined
    Jun 2003
    Posts
    1,088
    Thanks
    0
    Thanked 4 Times in 2 Posts

    Default Re: Scared to Buy a house

    Venus,I have two current morgages and they pre qualified me on my net income,I have never heard of banks or morgage lenders using gross income,if that were true I would have been able to buy a house for 2 times the price.

  17. #42
    God/dess VenusGoddess's Avatar
    Joined
    Oct 2003
    Location
    Home
    Posts
    13,598
    Thanks
    0
    Thanked 28 Times in 23 Posts

    Default Re: Scared to Buy a house

    Venus,I have two current morgages and they pre qualified me on my net income,I have never heard of banks or morgage lenders using gross income,if that were true I would have been able to buy a house for 2 times the price.
    No, you are wrong (I work with Mortgages) and they pre-qual/give loans on GROSS income...before taxes. And, you must have been given loans based on your "stated gross income" because otherwise you would have gotten much bigger homes. All-in-all...I think that is why there are so many people in foreclosure and bankruptcy (I used to work with a bankruptcy lawyer scheduling evictions...which is why I finally quit). Well, that and the fact that people rely on buying everything on borrowed money...and borrow too much and then cannot make ends meet.

  18. #43
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Scared to Buy a house

    Well, that and the fact that people rely on buying everything on borrowed money...and borrow too much and then cannot make ends meet.
    This is exactly the basis of my pessimistic view of future real estate values, particularly homes in the lower priced categories. If a buyer has pretty well maxed themselves out already in regard to the size of their monthly mortgage payments, they will very well NOT be in a position to easily absorb an extra $100 per month in property tax escrow plus another extra $200 per month as the interest rate on their ARM ratechets higher.

  19. #44
    Featured Member
    Joined
    Jun 2003
    Posts
    1,088
    Thanks
    0
    Thanked 4 Times in 2 Posts

    Default Re: Scared to Buy a house

    Venus,I just got out my paper work on my most current morgage and you are wrong,they went by my net income,I even had to add my 10,000 in child support to qualify and would not have gotten the loan if my next tax return,which I filed early because the 2000 return was too low,they didnt use it ,they compiled my 2001 &2002 together,he told me what my net had to be for me to qualify and be able to close the loan.

  20. #45
    Featured Member
    Joined
    Jun 2003
    Posts
    1,088
    Thanks
    0
    Thanked 4 Times in 2 Posts

    Default Re: Scared to Buy a house

    I wonder if this is because Iam self employed?If I had a paycheck would they do it that way?I will call and ask my mortgage broker tomarrow,then post back.

  21. #46
    God/dess Emily's Avatar
    Joined
    Feb 2003
    Location
    Las Vegas
    Posts
    11,302
    Thanks
    4
    Thanked 143 Times in 72 Posts

    Default Re: Scared to Buy a house

    When I bought my house, it was based on gross income, but back then I was a salaried worker. Who knows? What does it matter?

    Lenders know the difference between net and gross and approve you according to what they think you can afford.

  22. #47
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re: Scared to Buy a house

    I wonder if this is because Iam self employed?If I had a paycheck would they do it that way?I will call and ask my mortgage broker tomarrow,then post back.
    This would not surprise me that they would have 2 standards one for net and one for gross. A self employed person pays both sides of FICA (social security) and they are probably taking that into account. The standards are comparable, just different for each concept of income.

    Since they have your returns it really does not matter because they have both sets of data. There is stuff which will not show as income on the taxes they will also take into account.

    I did not pay attention the last time I bought a house because I easily qualified.

  23. #48
    God/dess VenusGoddess's Avatar
    Joined
    Oct 2003
    Location
    Home
    Posts
    13,598
    Thanks
    0
    Thanked 28 Times in 23 Posts

    Default Re: Scared to Buy a house

    monty and michelle, you are right, self employed or investors must use the net income. the reason for this is that the people who make 100K and think they are so smart by writing everything off, will find that they cant get a conforming loan because the bank will look at their net returns. this is why most self employed people go to stated income, which means you do not have to prove to the bank that you make what you say. the downside to this is you pay a higher rate.

  24. #49
    Featured Member
    Joined
    Jun 2003
    Posts
    1,088
    Thanks
    0
    Thanked 4 Times in 2 Posts

    Default Re: Scared to Buy a house

    Yes venus,I was thinking that,I was maybe going to go non stated but I wanted to get a really low rate,Iam wierd like that because I wanted my payment to be a certain amount but I remembered when I got my first loan,the broker kept on about a paycheck and I was like I dont get a paycheck,so before I said you were wrong I figured I had better check myself because morgages can be quite confusing and easily misunderstood.

  25. #50
    God/dess VenusGoddess's Avatar
    Joined
    Oct 2003
    Location
    Home
    Posts
    13,598
    Thanks
    0
    Thanked 28 Times in 23 Posts

    Default Re: Scared to Buy a house

    michelle, if you dont declare enough money so that your debt to income ratio is low enough to qualify for a conforming loan, you have to go stated income. debt to income is what you make divided by all of your monthly debt payments, plus your mortage, taxes, and insurance. You must be under 40%. BTW, sometimes its just easier to go stated, that way you dont have to give the lender taxes or paystubs. you must still verify assets (bank statements, etc) if you dont want to do that, then you must go NO DOC, which means that you get a loan based on your credit and appraisal. stated loans are usually only .250% higher rate than conforming, so its not a big deal.

Page 2 of 3 FirstFirst 123 LastLast

Similar Threads

  1. Let's Say I Want to Buy a House..
    By Camateur in forum Dollar Den
    Replies: 31
    Last Post: 04-26-2011, 02:50 PM
  2. How much does it really cost to buy a house?
    By Yekhefah in forum Dollar Den
    Replies: 34
    Last Post: 09-23-2008, 01:22 PM
  3. A house NOT to buy
    By Deogol in forum Dollar Den
    Replies: 5
    Last Post: 10-08-2006, 10:09 PM
  4. If you could buy a house anywhere.......
    By stripperMBA in forum Dollar Den
    Replies: 31
    Last Post: 10-03-2006, 11:09 AM
  5. how to buy a house
    By brandys in forum Dollar Den
    Replies: 22
    Last Post: 07-16-2004, 09:01 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •