So much for the 99%

[BornReady]

Jumping before you're ready runs the risk of losing it all over a relatively small hitch in the plans, then you lose the house and don't have enough for a security deposit on an apartment.

I don't think that's how it works. When a bank forecloses on your house you are normally allowed to live there mortgage free. Amazingly the foreclosure process often takes from 1 to 2 years. Which should give you plenty of time to save for an apartment security deposit. Some times the bank will allow you to short sell and will not come after you for the amount you still owe. Go figure!

I think the down payment is for the banks protection, not the home owners. Don't get me wrong. I think banks should require a 20% down payment. But, financially speaking, the home owner should be more concerned about whether he's getting the house for a good price and whether he can afford the monthly payment (which includes pmi), utilities, etc. The bank should be concerned about the down payment.

 

[Accountable]

We live in different cultures. It would never occur to me to include depending on the largesse of a profit-making company as part of my contingency plan.

 

[Joe the meek]

I think the down payment is for the banks protection, not the home owners. Don't get me wrong. I think banks should require a 20% down payment. But, financially speaking, the home owner should be more concerned about whether he's getting the house for a good price and whether he can afford the monthly payment (which includes pmi), utilities, etc. The bank should be concerned about the down payment.

The bank can require the 20% down for "protection", but doesn't have to.

When it comes to credit, the lower the standards, generally the more business.

Right or wrong, my parents instilled in me that if I couldn't afford 20% out of my savings, the home was too much. Right or wrong, I believe it's a good standard to judge if you can afford what you're buying.

Then again, my parents have no credit card debt. Dad paid off his new car 5 year loan off in 2.5 years, and other than taxes and housekeep, no bills. Actually having money to pay for things is becoming a thing of the past I believe.

 

[Johnfromokc]

http://www.youtube.com/watch?v=QzE76nUSjL8&feature=related

 

[Accountable]

Then again, my parents have no credit card debt. Dad paid off his new car 5 year loan off in 2.5 years, and other than taxes and housekeep, no bills. Actually having money to pay for things is becoming a thing of the past I believe.

That's me. Debt free. Pay off credit cards every month. I pay cash for my cars and drive them till they're ready for the junk yard. We live frugally and only buy when we can pay for it, but we always buy quality. One of the drawback is that I get tired of my electronics long before they break.

 

[Joe the meek]

That's me. Debt free. Pay off credit cards every month. I pay cash for my cars and drive them till they're ready for the junk yard. We live frugally and only buy when we can pay for it, but we always buy quality. One of the drawback is that I get tired of my electronics long before they break.

When dad bought his first and only house after 25 years in the service, he bought the house for 30k and had a $300 a month payment. In defense of today's market, don't think you'll ever come that close to those kind of payments LOL

 

[BornReady]

We live in different cultures. It would never occur to me to include depending on the largesse of a profit-making company as part of my contingency plan.

No we don't. I, like you, am debt free. I was just trying to explain who the down payment protects.

 

[Alien Allen]

That 20% down payment is not very realistic. Sure you could save over 10 years but then under normal circumstances the value of homes outpaced that.

My first house bought in the mid 70's cost $32k

Sold in in early 80's for $66k

5 years ago at the top value it would have sold for $160k.

Even with the depressed market today that home which would be a starter home would cost around $100k

How many people are able to save up $20k

10% would seem to be more attainable

This was a small starter home in a normal area in the burbs of Detroit. Nothing special. Had the housing market not crashed I wonder how the heck any young couple would ever be able to buy a home if things had kept at that pace

 

[Accountable]

It wasn't supposed to keep that pace. That pace was a fake. That's what the bubble was. Prices can't outstrip demand, not when the market is permitted to work. If the price of a starter home gets too high for the people who buy starter homes to buy, then none will sell. Since no sane person would stubbornly sit on an empty house until the right offer comes along, prices would naturally adjust to fit demand. That's the invisible hand. We need to get gov't out of the market and untie that invisible hand.