[Seminole]

Originally Posted by damadama

no wonder we bubble and burst

I'm not saying I would, but the normal person would think like that. His idea would make more sense if it was reversed, or even left at 20% for both. That way it deters people from buying a house that is more than they need.

[Kensta335]

It's so bad that illegal immigrants are trying to sneak back to their own country to live.

No joke.

[josephr25]

My parents lost everything they gained in stocks, mutual funds, etc... so now they can't retire. Probably not as much as some people here, but to me it was quite a bit when my mom told me. She was supposed to retire last year. My dad also might lose his job. Fortunately for them, they have no trouble paying for their properties; at least what they told me.

I've lost around 17-20% in 401(K) and another 20% in stocks as of now. It's a good thing this shit happened when I've been only working for two years, so it is not as bad as people who've been around a lot longer than me.

[DFW_M]

Originally Posted by ideliver

16% unemployment in my county and climbing....

~14% unemployment in the USA, but the Gov't admits to "only" 8.1% as of today...and climbing...

[DFW_M]

Originally Posted by Kensta335

It's so bad that illegal immigrants are trying to sneak back to their own country to live.

No joke.

Exactly, I read somewhere 2 months ago that 1.2M illegals left the USA and went back to own countries...

[DFW_M]

Originally Posted by Seminole

You do realize that is that is the same amount of money down on each house in your senario... $120,000 each. Why wouldn't someone just go get the $600,000 instead.

WHAT???
What do you think, why WOULD someone do that????

[akira42]

My company has laid off more the 25% of it's work force around the world. Everybody took a paycut, depending on what they make, between 3%-8%, the execs taking 10%. At first they would do batches of layoffs, on payday fridays. Now they hand pick people throughout the week. Sometimes it's n00bs. Other times it's somebody who's been here for 15 years. So everyone is a little dense.

I think more then the economy, I have noticed peoples moods have changed. I think the gravity of the situation is starting to set in.


Although, according to monster and theladders, Network engineering is an in demand profession. So hopefully i have that as a safety net should things take a worse for the worst.

[FStop7]

It really depends on where you live and what you do for a living.

For example the LA Times did a story on a 56 year old printing press technician who's been unemployed for months.

That is a bad, bad position to be in. His career is in a field that is fading. He is at the age where he cannot easily change careers and he probably has some pretty heavy responsibilities, such as kids in college.

There are a lot of people in similar positions, they're trapped.

[shift330]

Yeah, it blows. I got laid off from a government job and hired on with a contract company but only about 20hrs a week. If my wife didn't make good money we'd be sunk. I dread getting the quarterly Edward Jones statements in the mail.

[BMW2006]

It's probably not as bad as the media is making it out to be. I just can't read the news anymore, you'd think that the US was heading to being a 3rd world country if you listen to them too much.

Although in the last year, 3 members of my family have been laid off from their jobs (one has found a new job, making $20,000 less a year). Another one who is recovering from a long illness and now needs to re-enter the work force has about zero chance of finding employment until things turn the corner, and another is locked down in a job that pays less and less, but can't pivot into something new, since there are so few jobs available.

These are educated, hard working people. I would never have thought they would be the ones cut from their jobs. Sometimes it's not how hard you work or what people think of you, but how much you cost and what your position is.

It's not terrible... but it's pretty bad right now.

There are going to be layoffs at my place of employment as well. Everyone's holding their breath as they don't know how many or where they will be cut.

People will get by. Gas is relatively cheaper than it has been, most people still have food on their table. I don't walk around every day thinking the world is ending, but we have just begun to feel the effects of 2 million people losing their jobs in the last 4 months. It's going to take awhile for people to feel optimistic about the economy again.


-BMW2006

[Seminole]

Originally Posted by dr325i

WHAT???
What do you think, why WOULD someone do that????

The whole point of requiring a down payment should be to deter people from buying more home than they need. Say I have $120,000, and with my job I could easily pay the monthly mortgage payment on either house, but I only really need the $300,000 house, what is the deterrent to me getting the $600,000 one? If I can afford it without over extending myself, why not? But if the percentages were reversed, then I would only have to put down $60,000 on the $300,000 one but then I'd have to put $240,000 on the $600,000 one. Even leaving the percentages at 20% across the board lowers the down payment to $60,000 on $300,000 house while leaving the down payment for the $600,000 at $120,000. Either of those two situations would deter people from getting the larger house. The way damadama described down payments be required is a regressive scale, when it should either progressive or flat.

[johnnymu]

Originally Posted by cars4lyfe

OMG, first of all, like others have said,why would a responsible person get the 600k house? They're still going to have a higher payment. Secondly, I suggest this concept to create a sort of barrier on the lower priced homes so people don't go around flipping them like hamburgers every month and artificially inflate their prices.

Besides, it's just an idea, I didn't sit down and actually think about all the details. I was simply just trying to make a point.

I totally understand your assessment but like above example shows there will be people ending up choosing the bigger house just cause and with larger monthly payment and end up in the same scenario as today.

[number335]

Not many people have that much money for a down payment for a home in the first place. Most people I know have less than $20k to put down. For them to save up 20% on a home that costs $300-400k would take years for them. It looks like a lot of lenders now are requiring the 20%. If this becomes the norm, not many of the middle class population will be able to afford homes, at least not where i live.

[johnnymu]

Originally Posted by number335

Not many people have that much money for a down payment for a home in the first place. Most people I know have less than $20k to put down. For them to save up 20% on a home that costs $300-400k would take years for them. It looks like a lot of lenders now are requiring the 20%. If this becomes the norm, not many of the middle class population will be able to afford homes, at least not where i live.

This is why you hear the quote "the rich are getting richer".

[Takumi587]

Originally Posted by Kensta335

It's so bad that illegal immigrants are trying to sneak back to their own country to live.

No joke.

You must have misread that somewhere because in Mexico especially people are trying to get the hell out of that country and into America. The LA gangs that were deported back and other cliques have almost complete control over the mexican government. The U.S. has even considered recently to use the military to keep our borders secure because of the problems border patrol has been having. Mexico is in dire need of help because even their police officials are killed by ambush and innocent civilians are simply getting involved with the gangs because they want security and need money. The whole cycle is all fucked up and most Americans don't know how troubling our deportation system has caused gangs to become transnational. And if America was not so damn drug addicted then we would not have any of these problems.

Let's be serious for a moment, America is not as bad as other countries still. America will rise back up it is just going to take some time (years). We may finally lose American car companies but it is survival of the fittest in business. However, as i have seen and read in history America always finds a way to pick herself up and become a great power over and over again... Kind of like Rome, but I seriously think we are way more advanced than Rome. Rome is just a reminder of what not to do with your citizens..

[DFW_M]

Originally Posted by Seminole

The whole point of requiring a down payment should be to deter people from buying more home than they need. Say I have $120,000, and with my job I could easily pay the monthly mortgage payment on either house, but I only really need the $300,000 house, what is the deterrent to me getting the $600,000 one? If I can afford it without over extending myself, why not? But if the percentages were reversed, then I would only have to put down $60,000 on the $300,000 one but then I'd have to put $240,000 on the $600,000 one. Even leaving the percentages at 20% across the board lowers the down payment to $60,000 on $300,000 house while leaving the down payment for the $600,000 at $120,000. Either of those two situations would deter people from getting the larger house. The way damadama described down payments be required is a regressive scale, when it should either progressive or flat.

That is the dumbest explanation I read on this board in a while...
Are you still living with your (rich) parents? Because you trully don't understand the concept of money...

[Seminole]

Originally Posted by dr325i

That is the dumbest explanation I read on this board in a while...
Are you still living with your (rich) parents? Because you trully don't understand the concept of money...

Actually I have lived on my own and supported myself for the last 4 years.

What about it is so dumb to you? I gave you an example where someone WOULD go for the more expensive house. It is a very simple explanation about the way the majority of Americans think, since I think it has been proven most are not responsible. If someone had $120,000 in the bank and had more then enough financial ability to pay for everything they need and then have some left over, what deterrent, besides a higher monthly payment is there to stop someone from getting the more expensive house? It doesn't matter that they don't need the larger house (this is assuming the only difference between the two houses is size, not things like location, etc.) because people in this country buy more than they need all the time. Did we all NEED BMWs? No, a Civic or Accord could have sufficed just fine as a car, but we bought something more expensive because we WANTED it. Some might call that a financially irresponsible action. So all I was doing was saying that all things equal, if someone had the financial ability to pay the higher monthly payment and both down payments were equal and they WANTED the larger house but did not NEED it what is the deterrent.

I don't think it is a bad idea to require some type of money down, I agree with cars4lyfe. I think it should be a progressive amount though to deter people from over extending themselves.

[johnnymu]

Originally Posted by Seminole

Actually I have lived on my own and supported myself for the last 4 years.

What about it is so dumb to you? I gave you an example where someone WOULD go for the more expensive house. It is a very simple explanation about the way the majority of Americans think, since I think it has been proven most are not responsible. If someone had $120,000 in the bank and had more then enough financial ability to pay for everything they need and then have some left over, what deterrent, besides a higher monthly payment is there to stop someone from getting the more expensive house? It doesn't matter that they don't need the larger house (this is assuming the only difference between the two houses is size, not things like location, etc.) because people in this country buy more than they need all the time. Did we all NEED BMWs? No, a Civic or Accord could have sufficed just fine as a car, but we bought something more expensive because we WANTED it. Some might call that a financially irresponsible action. So all I was doing was saying that all things equal, if someone had the financial ability to pay the higher monthly payment and both down payments were equal and they WANTED the larger house but did not NEED it what is the deterrent.

I don't think it is a bad idea to require some type of money down, I agree with cars4lyfe. I think it should be a progressive amount though to deter people from over extending themselves.

I haven't bought a house recently but you know you can manipulate the system by borrowing the down payment too. As the long as the seller agrees to pay you back the money you borrowed extra on paper there's your free down payment paid back.

[MrHarris]

The US is in epic fail mode.

[johnnymu]

Originally Posted by cars4lyfe

There is one way that people can't manipulate jack shit. Say I'm the mortgage company - I'll require the following:

1) at least 20% (just a rough figure)

2) full documents (pay stubs, 3 years income taxes & verify info with IRS, bank statements for the last 3 years, I'd also require your credit card balances be at a certain level [preferably less than 25% of your down-payment], other debt including automobile, etc..) This might be extreme, but I'd consider sending someone to your job to make sure you work there and are still working there and verify your salary and hours with your boss.

3) based on the previous info, I wouldn't approve your loan if your mortgage monthly payment was going to be more than 25% of your total household monthly income.

Then on a federal level, I'd put a yearly 5% price increase cap (or at least match annual inflation rate). For example, due to speculation or whatever the case was, in my neighborhood the avg price of a home was about $385K in 2004 and then jumped to $600K+ the following year. The price increase in one year is totally BS.

Will this make it tougher to own a home? SURE. We all can't have million dollar homes, ferraris, yachts, etc...People should live within their means. For Christ sake, I saw a clip on cnn.com the other day about a bus driver who was foreclosing on an $800K home WTF!?

Are you pretending again or is this for real? And please don't say I can't manipulated jack shit when I have and still know how.

[Rawhide]

Those are good ideas, but if they aren't being used across the lending industry then people would just find a more lenient lender because your company would be a pain in the ass to work with. So you'd either loosen up the rules or go out of business.

Bu really, the sub prime fiasco was just the first domino to get the others falling and it's just being used as an easy scape goat anymore.

[johnnymu]

Originally Posted by cars4lyfe

johnnymu, I have nothing against you or your ideas or abilities to come up with down-payment money. Sorry if I gave you that impression. That said, no I'm not pretending. We need mechanisms in place to ensure that the whole industry complies with these pre-cautions so that we don't wind up in this mess again.

If people want to manipulate the system, they're just fooling & hurting themselves and dragging the whole world down with them. I mean the only other solution is to abandon the whole credit system and force people to buy houses 100% cash lol.

Don't worry, didn't take it personal was just confuse if you were still playing devil's advocate or not. The basic rules you've mentioned above are nothing new and not something unheard of. I'm sure when you tried to purchase your first home you went through the same process exactly what you mentioned above. But somehow there are holes and it can get exposed. Unfortunate, In this society, when things deal with money anything can happen. Just like the new stimulus plan is to help eliminate flipping of homes, for some reason I still see it possible.