I knew mortgage rates made a huge difference in payments.....but.....

[MrsPete]

The banks are still qualifying people for more then they can afford ... I just think that banks and real estate agents really over estimate what people can realistically afford and still have any kind of life.

Banks and real estate agents don't care whether you can "comfortably" afford the payments or whether you can have any quality of life after you make the payments -- and all too many people don't stop to think about whether they SHOULD buy that $$$$$ house. Surely the bank wouldn't qualify them if they couldn't afford it, right?

 

[tvguy]

Banks and real estate agents don't care whether you can "comfortably" afford the payments or whether you can have any quality of life after you make the payments -- and all too many people don't stop to think about whether they SHOULD buy that $$$$$ house. Surely the bank wouldn't qualify them if they couldn't afford it, right?

True. We bought our first home with 5% down in 1983. 4 years later we went to refinance the loan officer insisted his bank never wrote mortgages "for only 5% down". This was 1987, so our original loan documents were not computerized, they were paper files in storage. Our second refinance meeting he pulled out those documents and his jaw dropped. "I have never seen us write a mortgage for only 5% down, but you have one". It was a special program the bank started to jump start mortgage business because mortgages had been as high as 16%, ours was 12.25% and business was way way down. A lot of folks defaulted on those mortgages and the bank lost a lot of money since with only 5% down, the down payment didn't cover their foreclosure costs. We managed to make the payments, which literally were equal to half our take home pay each month. But my CPA said from a tax standpoint, it was a smart move. We managed. House has been paid off for 21 years now.

 

[QueenIsabella]

True. We bought our first home with 5% down in 1983. 4 years later we went to refinance the loan officer insisted his bank never wrote mortgages "for only 5% down". This was 1987, so our original loan documents were not computerized, they were paper files in storage. Our second refinance meeting he pulled out those documents and his jaw dropped. "I have never seen us write a mortgage for only 5% down, but you have one". It was a special program the bank started to jump start mortgage business because mortgages had been as high as 16%, ours was 12.25% and business was way way down. A lot of folks defaulted on those mortgages and the bank lost a lot of money since with only 5% down, the down payment didn't cover their foreclosure costs. We managed to make the payments, which literally were equal to half our take home pay each month. But my CPA said from a tax standpoint, it was a smart move. We managed. House has been paid off for 21 years now.

That might have been true at your bank, but not the one we used on our first house, also purchased in 1987. Not only did we put 5% down, but they let us subtract the amount of the new furnace that the house needed, so we actually put down less. We bought much less house than the bank said we could afford, on a variable rate mortgage (I think it started at ~6.5%, could change as much as 2% a year). We prepaid as much as we could each month, definitely made out on the variable rate versus fixed rate. Back in those days, they let you get out of PMI pretty quickly, that was our initial goal. We sold that house in 1998.

 

[person]

Banks and real estate agents don't care whether you can "comfortably" afford the payments or whether you can have any quality of life after you make the payments -- and all too many people don't stop to think about whether they SHOULD buy that $$$$$ house. Surely the bank wouldn't qualify them if they couldn't afford it, right?

The fact is that they are totally impersonal....maybe very polite but in general totally impersonal...

 

[MrsPete]

The fact is that they are totally impersonal....maybe very polite but in general totally impersonal...

Eh, I think it's a difference in wording.
These days real estate agents say they want you to be "pre-approved" ... so you go to the bank and fill out an application, and they say they'll lend you $$$$$$. That's not really "personal", but they're saying you can pay $$$$$$, when -- in reality -- you cannot live comfortably if you borrow $$$$$$. They don't council you that it'd be smarter to spend less.

 

[person]

Eh, I think it's a difference in wording.
These days real estate agents say they want you to be "pre-approved" ... so you go to the bank and fill out an application, and they say they'll lend you $$$$$$. That's not really "personal", but they're saying you can pay $$$$$$, when -- in reality -- you cannot live comfortably if you borrow $$$$$$. They don't council you that it'd be smarter to spend less.

Oh realtors do indeed want you to sort out finance first, else they are less likely to return calls promptly...

 

[DLgal]

Banks and real estate agents don't care whether you can "comfortably" afford the payments or whether you can have any quality of life after you make the payments -- and all too many people don't stop to think about whether they SHOULD buy that $$$$$ house. Surely the bank wouldn't qualify them if they couldn't afford it, right?

Banks use the same formula for debt to income ratio for everyone. But beyond that, they don't know anyone's spending habits. Some lenders relax the DTI ratio for people with high credit scores and high incomes/assets, allowing up to (I think) 43%. Others stick with a number around 30%. Trying to personalize it for every borrower would require such a deep dive into ones finances that it would take forever and be FAR too invasive. It's already bad enough what they require for income verification.

At the end of the day, the borrower is responsible for making sure the total monthly payment (not just the P&I) is something they can comfortably afford while not sacrificing on other essentials.

 

[MrsPete]

Banks use the same formula for debt to income ratio for everyone. But beyond that, they don't know anyone's spending habits. Some lenders relax the DTI ratio for people with high credit scores and high incomes/assets, allowing up to (I think) 43%. Others stick with a number around 30%. Trying to personalize it for every borrower would require such a deep dive into ones finances that it would take forever and be FAR too invasive. It's already bad enough what they require for income verification.

At the end of the day, the borrower is responsible for making sure the total monthly payment (not just the P&I) is something they can comfortably afford while not sacrificing on other essentials.

Your second paragraph is my point. Too many people say to themselves, "If the bank says I can borrow this much, I must be able to repay it. They don't stop to think about the 'comfortably afford' portion of the equation."

 

[barkley]

Your second paragraph is my point. Too many people say to themselves, "If the bank says I can borrow this much, I must be able to repay it. They don't stop to think about the 'comfortably afford' portion of the equation."

spot on. as well i'll add-i think many first time homeowners are grossly unaware of the 'start up' expenses of that new home. if a person is going to do their own yard work then the tools and machinery required add up, likewise simple items such as a ladder, a few hand tools, an outdoor broom and such add to that total. move to an area like ours where the white stuff falls on a regular basis during late fall-early spring and figure on acquiring snow shovels and a snowblower at minimum. with our first home i remember how it didn't even occur to us how much window coverings would add up to so much.

 

[DisneyHardin]

That might have been true at your bank, but not the one we used on our first house, also purchased in 1987. Not only did we put 5% down, but they let us subtract the amount of the new furnace that the house needed, so we actually put down less. We bought much less house than the bank said we could afford, on a variable rate mortgage (I think it started at ~6.5%, could change as much as 2% a year). We prepaid as much as we could each month, definitely made out on the variable rate versus fixed rate. Back in those days, they let you get out of PMI pretty quickly, that was our initial goal. We sold that house in 1998.

When I bought my first house in 2001, I put 0% down.

 

[DLgal]

spot on. as well i'll add-i think many first time homeowners are grossly unaware of the 'start up' expenses of that new home. if a person is going to do their own yard work then the tools and machinery required add up, likewise simple items such as a ladder, a few hand tools, an outdoor broom and such add to that total. move to an area like ours where the white stuff falls on a regular basis during late fall-early spring and figure on acquiring snow shovels and a snowblower at minimum. with our first home i remember how it didn't even occur to us how much window coverings would add up to so much.

You think people who rent don't have these things? Plenty of people rent homes and yes, you are usually in charge of yard work and things like basic home maintenance that requires things like ladders and shovels when you rent. We lived in VA for 4 years. We made do with a shovel. No snow blower needed, even during the massive snowfalls we experienced. We sold the shovels at a yard sale before moving back to CA. We have plenty of tools and a ladder, brooms to sweep out the garage, hoses, hedge trimmers, etc.

If we bought a house right now, we would not need to buy anything.

 

[DisneyHardin]

Eh, I think it's a difference in wording.
These days real estate agents say they want you to be "pre-approved" ... so you go to the bank and fill out an application, and they say they'll lend you $$$$$$. That's not really "personal", but they're saying you can pay $$$$$$, when -- in reality -- you cannot live comfortably if you borrow $$$$$$. They don't council you that it'd be smarter to spend less.

When we bought the house we are in now, the realtor wanted a pre-approval letter before we started looking. We went to the bank to get it and our mortgage guy was so fantastic - he asked us what was the very most we felt comfortable borrowing and wrote the letter for that amount - not what we actually qualified for so that the realtor wouldn't try to pressure us into a more expensive house.

 

[afan]

You think people who rent don't have these things? Plenty of people rent homes and yes, you are usually in charge of yard work and things like basic home maintenance that requires things like ladders and shovels when you rent. We lived in VA for 4 years. We made do with a shovel. No snow blower needed, even during the massive snowfalls we experienced. We sold the shovels at a yard sale before moving back to CA. We have plenty of tools and a ladder, brooms to sweep out the garage, hoses, hedge trimmers, etc.

If we bought a house right now, we would not need to buy anything.

Not what was said, but I'd venture to guess there's a lot more people moving from an apartment, condo or their parents home than one's that rented a house first. Yes it absolutely happens, but there wouldn't be so many apartments all over if everyone was renting houses.

 

[QueenIsabella]

Not what was said, but I'd venture to guess there's a lot more people moving from an apartment, condo or their parents home than one's that rented a house first. Yes it absolutely happens, but there wouldn't be so many apartments all over if everyone was renting houses.

This. We moved to our first house from an apartment. We have a smattering of tools, but nowhere near the number you'd have if you'd previously lived in a house. And when we owned a rental unit, our tenant wasn't required to do any outside maintenance. And even when DH shared a rental house, prior to us getting married, the usual tools were in the garage, so he and his roommates didn't have to buy anything.

 

[barkley]

y.m.m.v.


not our experience over the last 35 years where we've lived/rented/owned.

apartments (then california)-no maintenance required let alone permitted on exterior portions by tenants (also no garages to store stuff), here (washington) same standards only you can pay an arm and a leg for a tiny enclosed 'garage' space that barely fits the most subcompact of cars with no space for anything else (so if you own that stuff you will pay an arm and a leg for a storage facility b/c if you opt to pay the extra for the enclosed space you've 'conditionally opted out' of an assigned exterior parking place so you have no choice but to park your car in that 'garage'). house rentals-our experiences (again california) but also here is that landlords prefer to bundle into rent the cost of a landscape service to ensure upkeep b/c the legal amount they can charge for deposits can come nowhere near what a tenant can do through neglect (and if the rental is in an hoa-the additional fines). as far as snow blowers go-maintained properties of good value in our neck of the wood provide renters with service contractors to plow b/c they don't want (1) someone cheaping out with piles of de-icer pellets destroying their driveway concrete (and potentially garage floor/interior hardwoods due to tire, shoe residue), or (2) someone absent the skills/rushing the job with a snow blower and ripping up chunks of concrete driveways (and owner financial responsibility for-public sidewalks).

it's always telling as to the tools/supplies someone is lacking when moving to our area b/c they are generally eager and willing to pay a premium amount above the sales price if the seller will bundle in the most basic of home maintenance supplies.

 

[barkley]

i know the housing market is nuts right now. i know people are overbidding and driving up prices even higher. i also know that price 'zestimates' on zillow are not entirely reliable but seriously? how in god's name has my home gone up over $55,000 in value over the past 30 days? that is nuts.

 

[afan]

i know the housing market is nuts right now. i know people are overbidding and driving up prices even higher. i also know that price 'zestimates' on zillow are not entirely reliable but seriously? how in god's name has my home gone up over $55,000 in value over the past 30 days? that is nuts.

My rental I just sold shows it went up over 20k in the last 40 days. But I'm going to go with because it sold for higher than they had it at when it was listed. Now the zestimate is a bit over 300 what it closed for last week.

 

[DLgal]

y.m.m.v.


not our experience over the last 35 years where we've lived/rented/owned.

apartments (then california)-no maintenance required let alone permitted on exterior portions by tenants (also no garages to store stuff), here (washington) same standards only you can pay an arm and a leg for a tiny enclosed 'garage' space that barely fits the most subcompact of cars with no space for anything else (so if you own that stuff you will pay an arm and a leg for a storage facility b/c if you opt to pay the extra for the enclosed space you've 'conditionally opted out' of an assigned exterior parking place so you have no choice but to park your car in that 'garage'). house rentals-our experiences (again california) but also here is that landlords prefer to bundle into rent the cost of a landscape service to ensure upkeep b/c the legal amount they can charge for deposits can come nowhere near what a tenant can do through neglect (and if the rental is in an hoa-the additional fines). as far as snow blowers go-maintained properties of good value in our neck of the wood provide renters with service contractors to plow b/c they don't want (1) someone cheaping out with piles of de-icer pellets destroying their driveway concrete (and potentially garage floor/interior hardwoods due to tire, shoe residue), or (2) someone absent the skills/rushing the job with a snow blower and ripping up chunks of concrete driveways (and owner financial responsibility for-public sidewalks).

it's always telling as to the tools/supplies someone is lacking when moving to our area b/c they are generally eager and willing to pay a premium amount above the sales price if the seller will bundle in the most basic of home maintenance supplies.

Um, okay. I've lived in CA most of my adult life as a renter. First in an apartment (twice) and then in homes. Our landlord here in CA pays for a landscape service to come trim the plantings in the back yard every 4 months. The front maintenance is covered by the HOA. They are primarily rose bushes and bougainvillea and if you know anything about these plants, you know that they need to be trimmed back FAR more often than that, so we have garden tools to do so.

We have 11ft ceilings downstairs and 9ft ceilings upstairs. We have recessed can lights. We need a tall ladder to change air filters (ceiling mounted intake vent), lightbulbs and fire alarm batteries (all our responsibilities renters). Luckily we bought one when we moved to VA in 2011 because we needed one to do the same things there. We have always had a garage, even in our apartments. So, we have the big sweeper broom and a hose to clean it out (had a hose hook up in the garage both times). We now use our hose all the time to clean the massive floor to ceiling windows along the back of the house (there are 10 of them), hose down the concrete out back, and hose down our entryway and garage periodically. All of this is just basic home maintenance that keeps the house clean and free of insect debris like spiderwebs and such. I can't imagine living in a house for years on end and literally doing NO maintenance on it. That is crazy. We treat all our rental homes as though we own them, because we have to live here and don't want to live in a disgusting place.

In our VA rental house, we had a HUGE yard. Yardwork was our responsibility, to include mulching, fertilizing, etc. It was in the lease. We hired out a landscaper to do this for us at $100/month rather than bother with it. After that experience, we purposely looked for homes with NO yard. We don't ever want to have a yard to maintain again. What a pain for literally no benefit.

 

[tvguy]

i know the housing market is nuts right now. i know people are overbidding and driving up prices even higher. i also know that price 'zestimates' on zillow are not entirely reliable but seriously? how in god's name has my home gone up over $55,000 in value over the past 30 days? that is nuts.

Easy.
This house in the city next to where I live got 122 offers, including one OVER $100,000 over asking price. So at least here it is entirely possible for a house to go up in value $55,000 in 30 days. At least for my home, my son's and daughters, Zillow, Redfin, Realtor.com are always within $10,000 of each other in estimated value. https://fox40.com/news/home-for-sale-in-citrus-heights-receives-122-offers-in-one-weekend/

 

[barkley]

Easy.
This house in the city next to where I live got 122 offers, including one OVER $100,000 over asking price. So at least here it is entirely possible for a house to go up in value $55,000 in 30 days. At least for my home, my son's and daughters, Zillow, Redfin, Realtor.com are always within $10,000 of each other in estimated value. https://fox40.com/news/home-for-sale-in-citrus-heights-receives-122-offers-in-one-weekend/

yeah but you live in an area where the houses went for outrageous amounts before in the hot housing market but then the housing crash came and some still haven't come back from it-i just checked zillow on my former home there and despite the current skyrocketing prices it's still not valued for what i sold it for in '06. we've had a much more stable market historically here.


i think it's interesting to note that the house that got all the offers didn't sell for the $100,000 over asking price, they sold instead in the mid 400's (which is a couple of hundred thousand less than a home on a double lot with an in ground pool was selling for in my old neighborhood back in '06 and still fails to sell for today).

it's a feeding frenzy and when the market readjusts people will be upside down in equity again.