Is The Housing Bubble Going To Pop???

crazylilkelly · May 10, 2006

Thanks!

crazylilkelly · May 10, 2006

You would have to have exceptional credit with a FICO score probably above the 750 mark. The 20% is a point where lenders can judge your worth. Can they or can't they come up with 20%? That tells them alot about your stability.

So if I didn't put down a hefty down payment & still qualified for a home loan how much would I be paying in PMI??? Is it like a percentage or a fixed fee???? Thanks

happygrad06 · May 10, 2006

thanks, I'll definitely check out that site! We don't plan on moving out there for 2-3 years so hopefully that's enough time for the market to turn in buyers favor.

Well, I hope I'm wrong. But...I don't think so -- I doubt you'll ever every see a decent home (HOME not apt/condo) for under 400 to 500K in Calif again..ever. I was there over 12 years ago and they were already way up. Many years ago when i was a kid..prices shot up and then, the bottom fell out and people actually lost money on their real estate. But, it steadily went up and up and up and up...and has continued for over like 20 years now I think,...I think or at least it seems that way. Look..you have 1/2 the nation wanting to live there due to temperate weather. Where there is demand.... and you see price will not drop b/c that demand doesn't drop ANd all the space to build is taken...so prices will hang tough I believe. Tough luck for those of us who long for decent weather. Thems the breaks kiddo! ;)

happygrad06 · May 10, 2006

We hear rumblings about it here in San Diego. I . We bought our first house at the bottom of one such crash. It was the only way we ever could've afforded to buy here, so these crashes do have a plus side.

All right..if it crashes again, please email me immediately at thirddaygrl777 at aol !! :idea:

battpos · May 10, 2006

Reports of falling sales and investors stuck with properties they can't sell are just the beginning. Property owners should worry; so should their lenders.

http://moneycentral.msn.com/content/P149596.asp?Printer

happygrad06 · May 10, 2006

How much does PMI tend to be????
Thanks for this info!!!

PMI is a percentage of the loan. You know, if you buy a home in cheaper areas of the USA you can qualify for Fannie Mae/Freddie MAc/ ALT and no/low down mortgages that are not interest only. They are govt backed. BUT they have max loan amounts of around 230K. They have strict debt/income ratios,..but then so do most lenders. You have to be under like 28/36 (28 percent is the max of your income the mortgage PLUS tax and insurance and all that can be and then 36 is that debt plus all other debt credit like care...bills etc). Someone asked about a 100K combined income...you need to go to a 'compute mortgage" on the google...you can find one... it'll tell you principle and interest only. Then you have to add homeowners insurance plus your local taxes (I have no idea what annual taxes in calif are....they will vary I'm sure). You add that to the amount it comes up with for you principle and interest at X rate with X down. THEN you compute all that and see if it's less than 26 to 28 percent of your gross income. That's how you know. But my guess is... if you want to buy a 600K home on a 100K income..it isn't gonna fly. Just off the top of my head.... that is. W/out a calc.... maybe ya better wait for that big crash and then grab a repo. The thing about a crash.... it's like...you have to realize that there are tons and tons of people waiting to grab those same deals. It's almost like you have to be there....kinda hard long distance unless you can fly down and hunt with a realtor spur of the moment. But remember... you need to be prequalified first and... that takes time and most prequals only last about 30 days. And to top it off..if you shop your credit again in that 30 day period..it drops your credit score about 1 to 3 points...is my understanding. Every 30 days... it gives you between 14 days and 30 days... and it won't drop them if you shop lenders... but after that..it starts a new cycle and then drops again. And when it comes to credit..every point counts to that interest rate. Remember though..you can buy down rates...but it's not cheap. It rolls into your loan and usually is like 1 to 2 percent of you total loan cost as a fee. You can buy it down a percent or more though..which can make a big difference.

Sheri257 · May 10, 2006

So if I didn't put down a hefty down payment & still qualified for a home loan how much would I be paying in PMI??? Is it like a percentage or a fixed fee???? Thanks

PMI is no big deal. And, IMHO, it's not worth putting 20 percent down or doing a piggy back loan either. On a $400,000 mortgage PMI runs about $30, maybe $40 a month.

http://www.goodmortgage.com/Calc_PMI.htm

It's not much to worry about. Property taxes and homeowner's insurance is going to cost you a lot more than PMI. That's the costs you should be worrying about.

On a $400,000 house, for example, property tax can be as high as $5,000 a year. Property tax in California runs about .0125 percent of the purchase price of the home. Property taxes are deductible, which eases the pain a bit but, it can be a big factor in your monthly payment, depending on how much you pay for the house.

:typing

Sheri257 · May 10, 2006

But remember... you need to be prequalified first and... that takes time and most prequals only last about 30 days. And to top it off..if you shop your credit again in that 30 day period..it drops your credit score about 1 to 3 points...is my understanding. Every 30 days... it gives you between 14 days and 30 days... and it won't drop them if you shop lenders... but after that..it starts a new cycle and then drops again. And when it comes to credit..every point counts to that interest rate. Remember though..you can buy down rates...but it's not cheap. It rolls into your loan and usually is like 1 to 2 percent of you total loan cost as a fee. You can buy it down a percent or more though..which can make a big difference.

It is true that subsequent credit inquiries will drop your credit score. But, after you buy the house and make the payments on time for six months ... your credit score goes up. I didn't believe my mortgage broker when he told us this but, sure enough, our credit scores went up significantly six months after we bought our house.

:typing

Sheri257 · May 10, 2006

Well, I hope I'm wrong. But...I don't think so -- I doubt you'll ever every see a decent home (HOME not apt/condo) for under 400 to 500K in Calif again..ever.

Ever ??? If you're talking coastal areas, then yeah. Although I wouldn't be surprized if those prices drop $100K, maybe even $200K eventually, depending on how expensive the area is and how high interest rates go.

But you can buy a house for less than $400K now if you're willing to move further inland. You're not taking into account the inland boom towns where development has been pushing farther out into the cheaper areas. I do think those prices will drop also with higher interest rates and gas prices, although probably not as much as the expensive coastal areas.

It all depends on where you're talking about in California. You can't make blanket statements about prices because it's a very big state where prices vary widely. How expensive or cheap the area is depends on transportation access, good paying jobs within commuting distance and whether the town has good development prospects ... or not.

:typing

Sheri257 · May 10, 2006

Do you have to put 20% down??? I know the advantage is that you lower your monthly payments but does it qualify for really good loans or something? We've never bought a house so I know nothing of this stuff. thanks

Usually the only time you have to put 20 percent down is if your credit really sucks. Otherwise, 20 percent down doesn't always make sense.

Yeah, it does reduce your payment. But you also have to figure ... what else could I do with that money?

If your home interest rate is 6.5 percent but, with the home interest tax deduction, your real interest rate is actually lower ... like 4.5 percent ... you have to ask: could I invest (let's say just as an example) an $80,000 down payment somewhere else to make and/or save more money?

If you can get 12 percent by investing the $80,000 then you actually make $4,000-$5,000 or more a year than if you used that same $80,000 as a down payment to save 4.5 percent interest on your mortgage.

Or ... on the flip side ... let's say you're carrying a car note at 8-9 percent interest or credit card debt at 15 percent or more with no deductions. It makes more sense to use that money to pay down higher interest rate debt which is costing you a lot more than the much cheaper debt on the house.

It depends on a lot of factors, namely: your home loan interest rate, your tax bracket and deductions, the cost of other debt you may be carrying and what other investments are out there but ... it's something you may want to take a look at before you make such a large down payment on the house.

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TheCommuter, BSN, RN · May 10, 2006

PMI is no big deal. And, IMHO, it's not worth putting 20 percent down or doing a piggy back loan either. On a $400,000 mortgage PMI runs about $30, maybe $40 a month.

My credit score was 772 when I purchased my first home in Bakersfield. On a $130,000 mortgage I was paying $110 per month in PMI. It might not sound like much to some people, but for me it was a pretty penny to spare each month. My property taxes were only $1,800 per year.

My former boss had a credit score of 400 (read: terrible credit) and had to pay a $500 monthly PMI payment because she was such a high default risk. In addition, she only had $2,000 set aside for a down payment. Essentially, PMI is credit-based. People who have bad credit tend to pay steep PMI rates because the likelihood of nonpayment is substantially higher with these individuals.

TheCommuter, BSN, RN · May 10, 2006

But you can buy a house for less than $400K now if you're willing to move further inland. You're not taking into account the inland boom towns where development has been pushing farther out into the cheaper areas. I do think those prices will drop also with higher interest rates and gas prices, although probably not as much as the expensive coastal areas.

People can buy nice houses in Fresno, Bakersfield, Victorville, Barstow, Delano, Porterville, and other rapidly developing cities for under $300,000. The job market in these cities might not be up to par. In addition, the summer weather is brutally hot in the aforementioned places (which further reduces the desirability).