Anyone trying to buy a Home in Socal...Banks are Lame!!!

[plastique999]

With a little one on the way, we are looking for a home, but it is impossible to get a loan. I talked with a few different banks (Wells Fargo, Penn Fed Credit Union). Here is where Wells Fargo is at:

For a conventional loan, you need to put 20%, and on top of that you must show $300 K cash reserve!
If you want FHA (gov.) loan, you can put as little as 3.5% down (of course this is unwise because you will have no equity, and fall into this trap/mess yet again). They will, of course, add points, and it depends on which county you are in as to how much of a loan they will give you.

San Bernardino County will only loan up to $500 K.
Los Angeles County will only loan up to around $729 K.

NO ONE is doing seconds.

Cash is king!

any after thoughts?

[apk919]

Yep, we talked about this last Sunday...

FWIW, I think this is actually a good thing... the reason why real estate climbed so quickly in the last 10-20 years was because of easy credit (i.e. >=100% LTV loans, back-loaded structures, no docs, optimistic appraisals, etc), and the reason why it has fallen so quickly in the last few years is because most people couldn't actually afford the prices they were paying.

Tighter credit means lower home prices (is that really such a bad thing, if it's universal?), but also less defaults, and fewer people overextended.

[Hand_Banana]

Nor Cal is the same way. 20% down, Can't use renters income unless you have at least 30% equity in your current home and even then they will only let you claim 75% of it. With salaries breaking six figures, no debt, and $120k down, me and the gf only qualified for a mid 600's loan. Unless we unload our current places we can't get a heck of a lot of house around here...so much for that idea... there's lots of great deals out there but there's not too many people who can take advantage, especially if you already own a place. Our loan agent said they are trying to clamp down on people who bought at the height of the market, and when everything crashed bought cheaper, bigger houses and walked away from their first ones. I'm glad some people got to take advantage and screwed it up for the rest of us. Cash is definitely king right now. If you happen to have 800k burning a hole in your pocket there are some bargains to be had on places that were selling for $1.5 mil + in 2005. Too bad I don't. But whacha gonna do? The economy sucks for everyone right now.

[apk919]

Originally Posted by Hand_Banana

If you happen to have 800k burning a hole in your pocket there are some bargains to be had on places that were selling for $1.5 mil + in 2005.

The problem is, the only way for those places to be worth $1.5mil in the near future is for a wholesale return to the insane market of 2005. That's not likely to happen. So it may just be that those $800k places are actually only worth $800k... and will not appreciate any faster than inflation in the future...

[slibo]

Originally Posted by apk919

The problem is, the only way for those places to be worth $1.5mil in the near future is for a wholesale return to the insane market of 2005. That's not likely to happen. So it may just be that those $800k places are actually only worth $800k... and will not appreciate any faster than inflation in the future...

Thats exactly what I was thinking... so it probably really was never a 1.5mil. house... so even now it might not be as good of deal as one might think

[shay2nak]

it is lame. I could not buy a house with ridiculous prices and now I still can't buy a house with ridiculous loan terms.

Forget California. Vegas, baby!

[apk919]

Originally Posted by shay2nak

it is lame. I could not buy a house with ridiculous prices and now I still can't buy a house with ridiculous loan terms.

Forget California. Vegas, baby!

Hey, make a choice! Do you want:

1) Smokin' hot Exige, custom tune, etc, etc.

2) A modest home that you can afford.

Just teasin' Ara...

[Monsi]

I have done the math... and once you factor in interest(you don't get all your money back on a write off...) and property tax, and homeowners insurance, and flood insurance, etc. you come out ahead by renting a decent place...

plus if your plumbing explodes or the roof blows off its not your problem

it only made sense to get a loan when the bubble kept prices climbing.

if you can come up with enough money for 20%, just save money till you can come up with 100% and buy the damn thing... you pay for a house 5 times over on a 30 year loan(depending on interest of course) just rent a reasonable place for 6 years(not available in all parts of kalifornia) and then pay in cash

[Randy Chase]

Renting can pencil out as better, but for the long term, ownership can be an integral part of a retirement plan. I just paid off one home. Unfortunately.. plans oft go awry and the wife keeps the house. But the idea was sound.

Now I am doing it again.

[Monsi]

Originally Posted by Randy Chase

Renting can pencil out as better, but for the long term, ownership can be an integral part of a retirement plan. I just paid off one home. Unfortunately.. plans oft go awry and the wife keeps the house. But the idea was sound.

Now I am doing it again.

I hope this wasn't recent? did you have choose between the house and the cars?

I'm not saying rent forever... just rent till you can afford to actually buy a house and not get a loan on it...

thats my current plan... except the house is actually the esprit replacement

but I will keep going till I get a house

[enzowho]

I'm not saying rent forever... just rent till you can afford to actually buy a house and not get a loan on it...

That's our plan too. Just need to live like I'm still in college for 4 or 5 more years. However, housing is far cheaper here in Oregon then it is in Cali.

[John]

Unfortunately sins of the past have poisoned the wells for our generation Eddie. It would have been more beneficial to be fiscally irresponsible and jump into the market we all knew was unstable and unsustainable beforehand with less money. Our modest, conservative, and realistic fiscal tendencies have failed us due to a broken system that has been abused by so many others.

[Mr. Know]

Originally Posted by Randy Chase

Now I am doing it again.

Which one did you end up with? I'm back down to a single house again, closed my other one on June 11th.

[Elise8206]

I also too look into buying house but man those people offer way over the asking price??? That is insane...I guess if you don't have any credit problem and you got 20% down and zero payment. That should be okay... I think

[Mr. Know]

Originally Posted by Elise8206

I also too look into buying house but man those people offer way over the asking price??? That is insane...I guess if you don't have any credit problem and you got 20% down and zero payment. That should be okay... I think

Depends on which market you are in. Lower priced houses are being bought up by investors to rent out, so you are competing with people who have lots of money and a few thousand over asking is a drop in the bucket.

[shay2nak]

Some places are still high, but have been coming down. I recently looked at a 1 & 1 condo that was selling for just about $300k, now it's half that. Then another I have my eye on was 345k and now only 325. Which way too high. They have to come down at least half of the max. I would not pay more than 220 for that property and that is still asking too much. Before 2001, that place was well under 200. We just have to wait longer and as such the rest of my life will suffer because I can't spend money to save for a stupid property. If I were married, I'd have an easier time.

[plastique999]

Originally Posted by John

Unfortunately sins of the past have poisoned the wells for our generation Eddie. It would have been more beneficial to be fiscally irresponsible and jump into the market we all knew was unstable and unsustainable beforehand with less money. Our modest, conservative, and realistic fiscal tendencies have failed us due to a broken system that has been abused by so many others.

True john...how is your house hunting going? Will you be joining us in the LCS soon?

Originally Posted by enzowho

That's our plan too. Just need to live like I'm still in college for 4 or 5 more years. However, housing is far cheaper here in Oregon then it is in Cali.

I know some people say to rent these days, but I still believe it's a good time to buy in this market. There are 1.5 mil homes going for half price. They may never appreciate as they did back in 2006 but they will certainly come back some.

Originally Posted by Elise8206

I also too look into buying house but man those people offer way over the asking price??? That is insane...I guess if you don't have any credit problem and you got 20% down and zero payment. That should be okay... I think

It is a true frenzy out there....the seller's are desparate, but buyers/investors are starting to pick up homes. I have placed bids on 3 homes so far to no avail. The situation of one was such that the seller was so desparate that they took a bid price much lower than mine. But the buyer's of the lower bid were offering $300 K in cash!!! Again, cash is king. Seller's are so afraid that people can't get financing that they will take cash over loans any day. It is an insane market.
Investors from other places (including China) are picking up some killer deals with their cash in hand.

[plastique999]

4th bid on a home failed....got outbid over $100K, and I had already bid 10% over asking price

[plastique999]

Update: 5th bid on a house, and we are in escrow!

So here is the situation with the banks and housing scenario.
As some of you know, June had one of the highest new home sales at 17% - this may be falsely inflated, but good news nevertheless.

Some may question whether now is a good time to buy a home - the housing market may drop another 5% or so, but on the other hand, the interest rates are very low. So if you end up waiting a year or so, although the housing prices may drop a little, the interest rates may be higher at that time....who knows.

Regarding loans, the banks are loosening up a Little. I have been working with Wells Fargo, and there are a couple of options. They will do a first now up to about $500 K at the current 30 yr. fixed rate (around 5.25%). They will do a Trust deed for the remainder of the loan at around 5.5% - however, that loan is adjustable. Even if the interest rate went up to around 7 or 8% in a few years, the combined interest rate on the total would still be cheaper than a jumbo rate which, for me, would have been over 6%. The key to this type of loan is to have a smaller amount on the trust deed, so that you could pay this off as soon as you can before it adjusts higher.

Hope this helps some of you out there looking to buy....

[Minnis]

Congrats and goodluck. I'd contribute to the cause but I don't need any face and/or body yet...