Sorry, but buying a home right now at peak market is, well, stupid.
The purchase price will never change, while interest rates are always fluid. You can refinance down the road when rates are low. You will NEVER be able to "repurchase" the house.
Prices are going to drop 20-50% or more, so if you are patient and smart, your 10% down payment could easily be 20% or 40% or more after prices fall.
Rates near "historic lows" doesn't mean jack squat right now when a house is 5-10X income. Debt always has to be repaid.
Prices are going to drop 20-50% or more, so if you are patient and smart, your 10% down payment could easily be 20% or 40% or more after prices fall.
Once the Seattle market starts falling, how long do people expect it to hit the bottom (approx)? Is it possibly going to be more than 2-3 years? What does data from the past housing-market-busts indicate?
This is The Mother of all Housing Busts, so past data won't be a particularly good guide.
My guess is 2009 or 2010 before buying up, but that's based more a hope than anything else, because we are going to want more space by then, and my ARM adjusts in the spring of 2011.
But my plan is to watch San Diego. As soon as they see sustained YOY inflation-adjusted increases, I'll start looking.
We are 6 months to a year behind on the way down, and I'd guess it will be the same for the recovery.
Looking more closely at that graph it looks like about 6 years from zenith to nadir in the past. I can't wait that long. After 3, it will at least be a buyers market, allowing me to bargain successfully with the distressed, and most of the froth will be off the top of the beer, even if the prices continue to decline slightly for another few years.
After quite sometime, I'm starting to come across "very motivated" (desperate?) sellers on the Eastside.
- One guy is trying to flip a brand-new home. Started off asking $545K & has now reduced it to $475k after 6 months of trying to sell.
- Another family has been trying to sell a home for $510K for the past 8+ months & have now reduced the price to $460K
How do you get a HELOC as a piggyback? That Home EQUITY Line of Credit should be kinda tough to get when you are financing with an 80/20
It's not hard at all, in fact it has been standard operating procedure for 3+ years. The '20' part is nearly always a HELOC. However, the market for these seconds has contracted significantly. It is rare to see them offered to people with <660 FICO's anymore. In the first week of March 2007 they were available down to 550!
Up until a few months ago you could get a 125% LTV "no equity line of credit" through Wells Fargo. Sometime in the early spring they lowered the cap to 110%.
How I had it described to me is that their is a distinction without a difference between a true HELOC and a second you would get at time of purchase. They are priced the same; or they were 3 years ago.
Just wanted to take a moment to thanks the members of this forum. Looking back, I was pretty close to buying a home last year - but discussions on this forum (particularly this thread) changed my mind. I'm so glad that I didn't buy a home last year -- we are now happy renters.
One more month and it will be three years since we sold our house (s) and have been renting "it" ever since. The builder who bought our house (s), and the one next door, has still not got around to building on the lots we sold him.
I must admit it's not easy staying in the old neighborhood, but the rent makes it bearable. Old hood has been going downhill for the past eight years.
We almost bought in Oct. 05 but luckily another buyer had a slightly higher bid, which I did not want to counter. I see houses being listed today, bought in that same time periood, for 20% more, not sure they will sell them, but.,....
Well, we will have a substantial down payment, if we even need to take out a mortgage.
I would not get a HELOC now unless it's one where you can lock in the rate. Fed Funds rate will start move upwards again (hard to say how much or how fast) but if your HELOC rate moving upwards gives you a rash, then don't do it. The cap for a HELOC is 18%. (Forgive me if someone all ready addressed this).
Even if your rate remains low (single digits); most people begin to panic once the rate begins to trend upwards.
Also, one factor to consider whether to buy now or in 2008 may be what your loan amount is (I did not see it referenced when I was scanning the responses here). If you're in the temporary loan limits of $417,001-$567,500 for conforming or $362,950-$567,500; you may want to consider taking advantage of "conforming jumbo" or "fha jumbo"...at least check it out so you can make an informed decision.
It's possible that Congress may grant an extension beyond Dec. 31, 2008; but we don't know at this point and at what amount.
Comments
The purchase price will never change, while interest rates are always fluid. You can refinance down the road when rates are low. You will NEVER be able to "repurchase" the house.
Prices are going to drop 20-50% or more, so if you are patient and smart, your 10% down payment could easily be 20% or 40% or more after prices fall.
Rates near "historic lows" doesn't mean jack squat right now when a house is 5-10X income. Debt always has to be repaid.
My guess is 2009 or 2010 before buying up, but that's based more a hope than anything else, because we are going to want more space by then, and my ARM adjusts in the spring of 2011.
But my plan is to watch San Diego. As soon as they see sustained YOY inflation-adjusted increases, I'll start looking.
We are 6 months to a year behind on the way down, and I'd guess it will be the same for the recovery.
Keep an eye on the graph over at Pigginton:
- One guy is trying to flip a brand-new home. Started off asking $545K & has now reduced it to $475k after 6 months of trying to sell.
- Another family has been trying to sell a home for $510K for the past 8+ months & have now reduced the price to $460K
What is your second loan if it's not a HELOC? Pretty much all piggyback loans issued in the last few years were HELOCS.
How do you get a HELOC as a piggyback? That Home EQUITY Line of Credit should be kinda tough to get when you are financing with an 80/20
It's not hard at all, in fact it has been standard operating procedure for 3+ years. The '20' part is nearly always a HELOC. However, the market for these seconds has contracted significantly. It is rare to see them offered to people with <660 FICO's anymore. In the first week of March 2007 they were available down to 550!
Up until a few months ago you could get a 125% LTV "no equity line of credit" through Wells Fargo. Sometime in the early spring they lowered the cap to 110%.
http://financial.wellsfargo.com/consume ... index.html
No Equity Line of Credit
http://articles.moneycentral.msn.com/In ... rkets.aspx
I must admit it's not easy staying in the old neighborhood, but the rent makes it bearable. Old hood has been going downhill for the past eight years.
We almost bought in Oct. 05 but luckily another buyer had a slightly higher bid, which I did not want to counter. I see houses being listed today, bought in that same time periood, for 20% more, not sure they will sell them, but.,....
Well, we will have a substantial down payment, if we even need to take out a mortgage.
Even if your rate remains low (single digits); most people begin to panic once the rate begins to trend upwards.
Also, one factor to consider whether to buy now or in 2008 may be what your loan amount is (I did not see it referenced when I was scanning the responses here). If you're in the temporary loan limits of $417,001-$567,500 for conforming or $362,950-$567,500; you may want to consider taking advantage of "conforming jumbo" or "fha jumbo"...at least check it out so you can make an informed decision.
It's possible that Congress may grant an extension beyond Dec. 31, 2008; but we don't know at this point and at what amount.