BEST YET 20% DOWN HOLLA IF YOU CAN RELATE, DOSE ANY ONE HAVE PROBLEM WITH HSBC TOO?????????

And it’s not like we’re scraping the barrel to get it done either. We still have fun and buy things and go out with friends. We’re just not stupid with our money. We don’t impulse shop and we keep our regular expenses down. I’d rather have a house than a new sweater every other day, you know?

“I think what a lot of people fail to realize is that housing prices skyrocketed, in part, because people weren’t required to put 20% down anymore. ”

People weren’t required to put 20% down in the past either. The very first property I bought was in late 80s; the second in early 90s (job transfer) and my current one in late 90s. So I have personal experience with what was required or not required in the past.

Yes “creative” lending practices lead to this bubble, but it wasn’t just the downpayment. The main change between recent and not-so-recent past was the removal of any kind of checks that one could actually afford the payments as well as any kind of actual income verification. Before the secutirization of mortgages banks actually cared if you could afford the mortgage. Also in the past, we didn’t have 80/20 situations. In fact, banks tried to verify that whatever downpayment you give them was not borrowed.

But 5% down mortgages were pretty common in the past too. The first condo I got in late 80s was with 5% down. The amount itself was only about 1.5 times my yearly gross, so I could easily afford the payments. In fact, buying this place made sense to me financially: with tax deduction it was cheaper for me to own this condo than to pay the rent on a similar apartment (one bedroom). So by buying even with 5% down I saved money every month.

I don’t remember if I had 20% at the time – it was 5 or 6 years after I started working and I had some savings, but I lost a large percentage of what I had in 87 crash. I think I could’ve raised 20% if I were to sell my stocks at the bottom, but I chose not to. This worked out fine for me. I sold with a small loss after I transferred to another branch of my employer, but I had funds to cover it.

For my new place and the one I bought after that I gave over 20%. But by that time I had more money saved.

Even in the “good old days” 20% down wasn’t the requirement. There were 5% down mortgages in the past. But in the past the banks actually looked if you could afford to pay it. The allowed percentage of you gross you’d pay for housing was higher if you were giving 20% down, i.e. with 20% down you could take a slightly higher mortgage. They also took your whole financial situation into consideration – income, income stability, savings, other debts. The banks also checked that you actually had the money for your downpayment and not just borrowed it from another bank or anybody else — you had to send in bank statements to prove that money for your downpayment were there before. At least in my experience.

Yes, 20% is a good idea – why waste money on a PMI? But it’s possible to only give 5% down, but still be OK. Banks just need to look at each situation individually.

I’m grateful we’re responsible and able to make our payments on time, as well as live debt free and have put money into the home (it needed some work and still does). I spoke with my original realtor and he said if there were comps in the area he could compare, based on what my loan officer said I could refi and have nearly 90k in equity after putting 30k in and suffering all the losses. Problem is, there are no comps that come close in my area for size of lot or house style.

Still, we plan on staying, so the original loan isn’t bad. But over the long term, the refi i mentioned could save an additional 100k or so, on top of the 100k or so I’ll already save if I pay 1 extra payment a year.

Funny how that works.

Sorry – that was all off topic. At any rate – 20% down isn’t a bad concept, but it shouldn’t be a blanket rule. It should be the standard, then up to the bank to decide if it a person is worthy of alternate terms. That said, said banks that agree to these non-standard loans deserve to burn in hell when their greed gets out of control.

I think demand is not going to be very strong… prepare for further house price declines.

However, I called Bank of America and they told me they still offer a “Physician’s mortgage” where they will loan a physician or resident 100% (no down payment) and no PMI, with a 1% origination fee. Without the origination fee the interest rate would be about 0.5% higher. This afternoon the rate on a 30 yr fixed was 5.75%. Of course to qualify you’d have to be a physician or resident. We qualify so we’re all over this loan, but we’re still getting the home we’d intended to buy when we thought we had to put 20% down. Just cause we now don’t have to put anything down doesn’t mean we’ll increase the amount of home to buy.

Now, about 2 1/2 years later, we are buying a new house (closing next week!) with /over/ 20% down. We want to make sure we can afford the place, since it is where we intend to start our family, so we didn’t want to play any games about “well, we may be able to afford…” – so as far as I’m concerned, the faster we own the house and the less we pay in interest, the better!