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Topic Started: Sep 10 2017, 03:19 PM (129 Views)
George K
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Finally
Talking with a real-estate attorney the other day, and she told me that she's worried about the next housing bubble. It seems that she's seeing more and more people apply for mortgages with only a 3% downpayment.

Three percent?

Wow.
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Jolly
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Veni, vidi, vici
No bank should lend money with a miniscule down payment such as that.

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mrenaud
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Middle Aged Carp
3% means that you can buy a 3.3 million home with just 100k of downpayment; are people not realizing that the bank will eventually want to see the other 97% as well (I assume that in return for such a low downpayment, interest will be higher)?

Over here, you're not going to get a mortgage with less than 20% downpayment (which is why many people rent rather than buy until they've got children, and some not even then). Seems more reasonable to me.
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Axtremus
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HOLY CARP!!!
First thing that came to mind was the FHA loan: https://portal.hud.gov/hudportal/HUD?src=/buying/loans

But even that requires at least 3.5% down payment.
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Steve Miller
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Pisa-Carp
VA loans are low down as well. The real trick is to verify income before making the loan - something they didn't do last time.

Thanks for the tip. I'll look in to it tomorrow .
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Steve Miller
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Pisa-Carp
I had lunch with my lender today.

She said to keep watching but it's not time to head for the exits just yet. They are making 97% LTV loans but they always have - FHA loans - and with the FHA max topping out at $650K in the OC they're popular. What's changed is conventional financing with 3% down.

But she said it's not like the old days. These loans are not easy to get. There are strict income verification requirements now - no more liars loans. They want to see a long time on the job. You can still get stated income loans but you need some $750K in the bank to get one. You need a good FICO score too, but they don't give those much weight these days.

She also told me that business is a bit slow because housing inventory is very low. There aren't enough houses for sale to satisfy demand. Prices are rising, mostly as the result of an influx of all-cash buyers from Asia. They always win in multiple bid situations and they don't need to get a loan.

No worries about Toyota moving out of Torrance. There are plenty of people standing in line to buy those houses. The biggest problem for the Toyota people is that once you leave you almost can't come back - at least not to the neighborhood you left.
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