43% Of 1st Time Homebuyers Put $0 Down

[Burtakus]

Quote from Pabst:

Don't make the mistake of extrapolating lack of affordability from those statistics. Most first time buyers are purchasing lower end homes. Cheaper homes have decidedly less downside to lenders. Hence the no down payment. With the new BK law it's not as if a 60k a year wage earner is going to be able to "walk away" from a 25% hit on his 180k mortgage.

Often the mortgage payment or out of pocket cost (ex interest deduction) is less than their previous rent payment.

I would say that most 0% down mortgages are for 1st time buyers and are generally low end homes. I for one am in that boat. I only put down 3% 4 years ago and should walk away with enough when I sell out next year to put 20% down on different house. Granted I bought low for the area and have put a good deal of sweat equity into the house.

Had I been required to put down 20% from the get go I would most likely not be in the same position I am in now. I would still be living in an apartment renting and pissing my money away.

what gets people into trouble is when the put little or nothign down on a house that has them stretched to the max just to make a monthly note. If you don't take all the money that bank will give you you are in much better shape.

 

[bruceistheone]

National Association of Realtors will never say anything about negative about the industry. They are a lobbyist group. To become a "Realtor" all you have to do is pay your union dues to NAR.
If people don't have money for down payments you can bet they don't have money for simple home repairs. In hurricane prone Florida this becomes a disaster in the making.
Housing in America is simply not affordable some areas. The banks are making up for this by offering loans that should never get approved.

 

[Vinny1]

What happens if you get foreclosed on and you owe more than the bank sells it for,assuming real estate prices went down? Does the bank get stuck with the loss or what?

 

[MoralHazard]

Quote from gnome:

In most states, a home mortgage is full recourse. Florida is one exception.

...

California would be another (non-recourse for personal residence, 1st mortgage, only). Anyone else know more?

 

[MoralHazard]

Quote from Vinny1:

What happens if you get foreclosed on and you owe more than the bank sells it for,assuming real estate prices went down? Does the bank get stuck with the loss or what?

That's the question: gnome pointed out that in most states (FL excepted), the bank can go after other assets when you are delinquent. I was under the impression that this is not true (in most states) for personal residences (assuming we're not talking about investment property) - unless you meet certain exceptions (like lying on a mortgage application).

Edit: I guess I don't mean "delinquent," rather something like "deficient," if you want to be technical....

 

[wareco]

Quote from gnome:

In most states, a home mortgage is full recourse. Florida is one exception.

Florida is not an exception. If the house sells for less than what is owed, lender can seek a deficiency judgment against borrower.

 

[gnome]

Quote from wareco:

Florida is not an exception. If the house sells for less than what is owed, lender can seek a deficiency judgment against borrower.

Sorry, yes you're right. I was thinking of bankruptcy, which is a bit different.

 

[gnome]

Quote from MoralHazard:

That's the question: gnome pointed out that in most states (FL excepted), the bank can go after other assets when you are delinquent. I was under the impression that this is not true (in most states) for personal residences (assuming we're not talking about investment property) - unless you meet certain exceptions (like lying on a mortgage application).

Edit: I guess I don't mean "delinquent," rather something like "deficient," if you want to be technical....

Then general rule is that personal residence mortgages are full-recourse. Think about the logic. If the loan is full recourse, the lender can require little or no down payment knowing you still have to make the note good with all of your other assets and income earning potential in the event of default.

If however, you can legally walk away and the bank has no recourse except to take over the property, he's going to want protection in the form of a large down payment.... as may be the case in a commercial or investment property.

 

[gnome]

Quote from Vinny1:

What happens if you get foreclosed on and you owe more than the bank sells it for,assuming real estate prices went down? Does the bank get stuck with the loss or what?

Absolutely NOT. The bank has full recource against the borrower up through and including bankruptcy.

 

[gnome]

Quote from MoralHazard:

California would be another (non-recourse for personal residence, 1st mortgage, only). Anyone else know more?

A California friend mentioned this but was unsure. However, it doesn't seem right.... unless the bank would require a large down payment to protect its interests.