Real Estate Market. Thoughts?

[Dave_L]

Keeping a mortgage under $1,000 isn't that easy these days for anything in the single family market. Yes, the market is ridiculous but even before that, a $180k loan, once you factor in property tax and insurance, you're over that. That's assuming you buy a $225,000 home and put $50,000 down.

[kidicarus13]

Do any of you have fall back plans, IF one or both household incomes were to stop?

You walk away from the house and let it go back to the bank.

Seems like a popular fall back plan.

[Great-Kazoo]

Seems like a popular fall back plan.

if one can live with them self. Even having that mentality going in to any contract is inexcusable . Oh well i'll walk away, "again" .

[Dave_L]

That would not be our plan and if not for the inflated equity in our home, we wouldn't be looking at a new house. But with the $200 PMI on my current loan, that's eating into a lot of "house" that we could have. Payment won't be changing much when all said and done. I don't know how anyone buys a home right now without equity from a currently inflated home. Using cash is a HUGE gamble.

[kwando]

That would not be our plan and if not for the inflated equity in our home, we wouldn't be looking at a new house. But with the $200 PMI on my current loan, that's eating into a lot of "house" that we could have. Payment won't be changing much when all said and done. I don't know how anyone buys a home right now without equity from a currently inflated home. Using cash is a HUGE gamble.

You can remove that without a refi... Contact the mortgage company, they will order an appraisal and if its 75%, they will remove it. I thought it was 80% also but i am in the process of removing my PMI and my paperwork says 75%.

I REALLY want to get a new place, and although i just got a good promo... Its not the right time. I'll wait a few more years

[Sawin]

You can remove that without a refi... Contact the mortgage company, they will order an appraisal and if its 75%, they will remove it. I thought it was 80% also but i am in the process of removing my PMI and my paperwork says 75%.

I REALLY want to get a new place, and although i just got a good promo... Its not the right time. I'll wait a few more years

GREAT TIP!

Do this ^^^, you don't have to refi.

[Irving]

My loan says 80%, but the fineprint says it goes off automatically at 78%. I refied and got an appraisal so mine went from $170/mo down to $30/mo and should be gone in less than a year.

EDIT: I didn't refinance at the new appraised amount, just got the appraisal and refinanced at what I owed. The closing costs were something like $3,000, and I had only bought the house the year before, so while it might seem like I just went backward, reducing the interest rate and the PMI saved me at least $100/mo in total mortgage payment and got me below $1,000/mo. Finally, I pay bi-weekly, and pay way over the minimum due so I'm already nearly back to where I was before the refi as far as total amount owed, in only a.quarter. In conclusion, that extra $100/mo goes a long way toward the principle when I continie to pay what I did before the refi.

[MrPrena]

We bought the house in the middle of crash of 2008. Financing was 10x harder and more complicated than when my mom bought a place in Long Beach area around 2001.

I decide not to finance a house again, unless they go back to how easy the financing was like 2002-2006ish. IMO , I think it is just easier to save my butt off to buy a house with cash than go through that financing hell again. (fine, I won't buy new toys, eat 89cent salad packs + boiled eggs every day+ not going out, etc regardless of how much I make).
I just don't know how people afford $800k+ homes at $250k/yr all combined salary. This is very reason we are stuck at home we live in now.

Keeping a mortgage under $1,000 isn't that easy these days for anything in the single family market. Yes, the market is ridiculous but even before that, a $180k loan, once you factor in property tax and insurance, you're over that. That's assuming you buy a $225,000 home and put $50,000 down.

Been watching this thread a bit.



I have that same question. There is one down the street from me for sale at ~$450K. These are very "middle class" homes (not what you would think of in that price range). I've done the math and don't understand how that is affordable. And if it stretches the budget then there is less opportunity to save.

We bought the smallest model in the development in 2008 and were still a bit uncomfortable with the amount, but it was affordable for us (we were well under the finance limits and had 20% down).

I just don't get why folks would do that to themselves... Being one paycheck away from disaster is no way to live. If that is what is keeping these prices up then I worry about the sustainability at that level.

What I do know is that payments on $450K @ 4% are $2,148 P&I + ~$400 escrows = $2500/month. With the math they used to use, a borrower would need ~$80K in annual income to qualify with no other obligations (debt, child support, etc).

Add in maintenance, other cost of living, etc... and you'd need $100K to be comfortable. That doesn't even include saving for retirement.

My question is. How does one pay for a $400K home? Do any of you have fall back plans, IF one or both household incomes were to stop? The idea of walking away from a loan because one cannot sell their home for what they paid for it is , insulting.
Then again the idea of paying more than $1K per month for a mortgage is strange. Shouldering a payment of $2-3K monthly unheard of. The places we're looking at (downsizing) are still in the $5-875 mth payment. Then again the spouse is close to retirement age, i'm done.

[Great-Kazoo]

We bought the house in the middle of crash of 2008. Financing was 10x harder and more complicated than when my mom bought a place in Long Beach area around 2001.

I decide not to finance a house again, unless they go back to how easy the financing was like 2002-2006ish. IMO , I think it is just easier to save my butt off to buy a house with cash than go through that financing hell again. (fine, I won't buy new toys, eat 89cent salad packs + boiled eggs every day+ not going out, etc regardless of how much I make).
I just don't know how people afford $800k+ homes at $250k/yr all combined salary. This is very reason we are stuck at home we live in now.

1st, Thanks for being responsible with your money.

2nd. people do because someone at the bank / loan office etc tells them You know with your credit you can afford a more expensive home. HOOKED & REELED IN.

Old story. we were finally splurging on a new vehicle. Loan guy says, with your credit you can afford a $600 mthly payment, sure you don't want to upgrade?
The spouse says why would we go in more debt just because "we can Afford it" This is our limit for monthly ($250) payment. Finish the paperwork or we walk. Paid that note off second year.

[MrPrena]

Well, I am guilty of buying one car which is kinda out of my means. Can I pay em off tomorrow? yes, but it is still out of our means. Financing a car was far easier than financing a house. With that said, now I see sub-prime loans are getting generated in automotive financing industries slowly.

As for financing a res/comm real estate, I give huge props to people who flip residential/commercial real estate for a living. They have to go through that long and difficult financing process every freaking month.

1st, Thanks for being responsible with your money.

2nd. people do because someone at the bank / loan office etc tells them You know with your credit you can afford a more expensive home. HOOKED & REELED IN.

Old story. we were finally splurging on a new vehicle. Loan guy says, with your credit you can afford a $600 mthly payment, sure you don't want to upgrade?
The spouse says why would we go in more debt just because "we can Afford it" This is our limit for monthly ($250) payment. Finish the paperwork or we walk. Paid that note off second year.