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alstry (35.36)

Will Anyone Qualify to buy a Home????

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July 14, 2008 – Comments (6)

The headwinds for buyers get stronger and stronger. 

Pretty soon buying a home will be as much fun as flying commercial or getting a lower GI exam. 

For home buyers, the hurdles for buying a house are getting higher and higher.  Pretty soon, only a few may qualify to buy a home.

Mortgage insurers have been dramatically tightening their standards throughout the U.S., further squeezing potential home buyers.

Stung by growing defaults, lenders are increasingly compelling potential borrowers to purchase private mortgage insurance. Mortgage insurance, required for buyers who are unable to make a full down payment or who have insufficient credit histories, reimburses lenders in the event of a borrower default. But over the past few months, mortgage insurers have been declaring more and more of the U.S. a "declining market," raising the requirements and making such insurance harder to obtain. The result: another hurdle for home buyers, and yet another wrenching change for the struggling housing market.

http://online.wsj.com/article/SB121607937863152693.html?mod=hps_us_whats_news

 

6 Comments – Post Your Own

#1) On July 15, 2008 at 12:20 AM, awallejr (83.86) wrote:

Yes you are right, people with no money and little income can no longer qualify for 106% financing.  But if you actually have a job that generates sufficient income to pay a fair market mortgage, the deals can still be made.  And they are. 

It is going to be interesting to see how the "aging of America" is going to impact it all.  Small condos, coops and retirement centers on the rise, but if immigration doesn't grow quick enough to buy all those homes the older generation will try to sell, I dunno.

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#2) On July 15, 2008 at 12:48 AM, blade5adj (< 20) wrote:

Well said, awallejr

Alstry, I can't believe you would say that this isn't a great time to be a home buyer!  There are tons of amazing buying opportunities out there.  I've talked to a few real estate agents, and "a buyer's market" is the typical phrase they use to describe the current situation.

It is true that the easy credit that was once available no longer is. But look at how far housing prices have fallen...That more than makes up for it!!

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#3) On July 15, 2008 at 1:37 AM, DemonDoug (70.53) wrote:

lol blade.  it's always a good time to buy to a real estate agent.  Just like a car salesman - always a good time to buy a car.  Why you would trust either of them to make an informed, unbiased opinion is beyond me.

Look how far Fannie Mae stock has fallen - does that make it a good time to buy?

A truly good time to buy is when housing is equivalent to rent you would be paying per square foot, or possibly less than rent.  And also depends on your salary 3x annual salary at the most, ideally 1.5-2x annual salary, and most ideal is about equal to annual salary.

When I can buy a 1200 sq. foot 2-2 here in hollywood for 150k, i'll jump in - if that ever happens.  If not, c'est la vie, i'm banking mucho bucks per month building equity the old-fashioned way - by saving it.

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#4) On July 15, 2008 at 2:36 AM, ricoy5 (25.81) wrote:

I don't know Demon, you might find those... but I'd guess it'll be closer to 1000 sq and 175-200K...

but your point about the rent being equivalent?  It's getting there pretty quick... I have friends living in 2x2 for over $1200/m in Sherman Oaks... that's the same as 200K loan at 6.75%.  There isn't a lot available for that, but the longer this goes on, the higher rents will go too... so RE doesn't have to fall as much to 'meet'

and Alstry... with the gov stepping in to 'restore confidence'... loans that would have been rejected last week are going to be approved today. 

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#5) On July 15, 2008 at 12:15 PM, LordZ wrote:

Yes Alstry people will still be able to buy homes,

but why should someone expect guaranteed low rates for 30 to 40 years..

When people need to utilize mortgages for vast amounts over many years, they arent really buying a home as taking on a large obligation.

People need to rethink their thinking, that guy or gal who paid without any financing is a true buyer...

all others are wanna be buyers.

So when you hear all these cry baby stories about someone losing their home who have no skin in it.... wtf...

No, its actually a renter whos losing his rental place due to non payment...

How many people will get up in arms over some landlord evicting some tenant not paying his or her rent ?

 

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#6) On July 15, 2008 at 4:25 PM, blade5adj (< 20) wrote:

I should have been more clear.  They were friends that are real estate agents, conceding this in privacy.  I would trust my friend that's a real estate far more than you, I'm afraid, because that is their job.  But yes, in normal circumstances, if I randomly asked a real estate agent, of course they would say that now is a good time to buy.  Their income depends on people buying and selling houses, so of course my well being is not in their best interest.

DemonDoug, you've set some pretty abstract terms on when to buy for real estate.  I would say that if the price per square foot drops below rent, then it's a screaming buy.  That doesn't mean it isn't a buy anyways. 

To compare Fannie Mae and Freddie Mac to this is definitely not the same thing.  I'm saying there are some great opportunities out there, not that they're all great opportunities.  There are some markets, especially in southern california, where I think housing prices have a long ways to go.  You're taking what I said: "some things that have fallen in price are good buys" and making it "all things that have fallen in price are good buys".  It would be foolish to suggest that I was implying such a thing.

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