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Posted: 8/30/2004 10:02:20 AM EDT
[#1]
80/20 loan
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Posted: 8/30/2004 10:03:41 AM EDT
[#2]
without money down
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Posted: 8/30/2004 10:04:33 AM EDT
[#3]
What he said. You will need pretty good credit. |
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Posted: 8/30/2004 10:05:22 AM EDT
[#4]
join the army and get their loan
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Posted: 8/30/2004 10:06:10 AM EDT
[#5]
I got one, I think it was a fanny mae, or freddy mac program.
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Posted: 8/30/2004 10:07:05 AM EDT
[#6]
Can someone give a new home buyer a quick explanation of a 80/20 loan?
Just a quick overview...I am looking to buy early next year...this may be the way to go... Thanks in advance for ideas |
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Posted: 8/30/2004 10:07:15 AM EDT
[#7]
I've got his system but it's not needed if you want a no money down loan. Most banks/mortgage companies will finance you with as little as 5% down. Most also offer some sort of 0% down loan. You will have the additional costs of PMI when you go over an 80% loan but it doesn't prevent you from getting the loan. Somehow my brother managed a 0% down home loan, with no PMI, and with a decent interest rate. You just have to call around to find the deals. As for Carlton's system, his program is mainly geared for investment properties not your home. He talks about lease options, owner financing, owner financing of the down payment, getting a partner...and so on. Just creative ways of financing. |
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Posted: 8/30/2004 10:07:21 AM EDT
[#8]
I bought my house two years ago with 3% down, three things suck about little or no down payment: 1) You pay higher interest 2) Your monthly payment are higher 3) And you have to pay PMI, an extra $100.00 or so. |
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Posted: 8/30/2004 10:07:23 AM EDT
[#9]
I did it this way. Loan was $125k No PMI either. Edited to add 5.625% interest, 80% is a standard fixed 30 year. 20% is a 15 year home equity loan. I could have gotten a half percent lower interest rate with 5% down, but I am using that money to do some other necessary improvements, and paying an extra $30 a month. Consider taking a loan that will allow you to pay your principle and interest due each month, plus next month's principle. It will save you a bundle of interest and you will have the house paid for in 15 years. |
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Posted: 8/30/2004 10:08:54 AM EDT
[#10]
80/20 loan. You take out the loan for 80% as your primary mortgage. The 20% is another loan, to pay your down payment on. Usually a shorter loan. TXL |
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Posted: 8/30/2004 10:12:02 AM EDT
[#11]
Easy, you just ignore any naysayers about the housing "bubble," keep telling yourself that "This time it's different," and you sign the loan docs for an 80% loan, then a 20% loan. Do not come back here asking how to walk away from this situation when, yes WHEN you are upside down in this arrangement and you don't want to ruin your credit. ' BTW, "This time it's different" is the most terrifying thing that an investor can say to a student of economic history. When interest rates go up, banks will tighten the pool of qualified loan applicants. Prices will not just slow down, they will slip. Those who got in under the wire thinking that they'd sell to some other guy for more $$, getting them off the hook for that looming "variable" portion of the loan that they can't afford, will be SOL. In OC, Cali, we are looking at big problems, we have one of the highest percentages of people taking out variable loans, meaning that most can't afford the real payment once it kicks in. When they are UNABLE to sell for an amount that will cover their balance, we shall see pretty monumental problems. This is all IMHO, of course. |
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Posted: 8/30/2004 10:12:25 AM EDT
[#12]
Right. And when he talks about "buying homes with no money down", what he REALLY means is that you can do this AFTER you already own several other properties, and have sufficient equity in them. -Troy |
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Posted: 8/30/2004 10:12:30 AM EDT
[#13]
+1 Did 80/10 with 10% down. No PMI and you have the mortgage interest deduction on both loans. |
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Posted: 8/30/2004 10:16:37 AM EDT
[#14]
OK: instead keep pissing away twice as much as a mortgage payment on rent and not have anything to show for it. Great advice. You going to tell me all about peak oil now too?  |
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Posted: 8/30/2004 10:18:25 AM EDT
[#15]
I bought my home with NO money down, signature only, 80/20 loan with NO mortgage insurance. Its thru Wells Fargo, but you have to have 730 or better credit score.
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Posted: 8/30/2004 10:20:43 AM EDT
[#16]
It's called a second mortgage. Just put your 10% down, and bite it with the PMI for a little while. Coutnrywide did us well so far. |
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Posted: 8/30/2004 10:37:17 AM EDT
[#17]
As stated at the bottom of my post, "IMHO." He asked advice, I gave it. Do whatever you want. As to "rolleyes," if you start with ZERO equity, then the market dives, tell me how much "anything" you'll have to show for that little investment scheme? If you're comfortable that you can start at zero cushion and the market will continue to rise, go for it. "This time it's different." |
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Posted: 8/30/2004 10:38:49 AM EDT
[#18]
WOW!!!
OK, if you wanna know how, listen up.... Get you mtg. co. to approve you for an FHA loan. The minimum down pmt is 2.65% of the purchase price (you will need to come up with the other .35% in cash as closing costs for a total of 3%). FHA allows not-for-profit companies to assist buyers in the aquisition of the needed down pmt. In a nutshell, the seller agrees to pay for your down payment (plus a fee that ranges from $350 to 1% of the requested down payment amount). This money, at funding, is passed by the title company from the seller's proceeds to the down pmt assistance not-for-profit company (where they remove their fee) and then back to the title company for use as your down payment. As a practical measure, this seller contribution usually takes the place of a discounted sales price for your new house. In this way, the seller will net the same money and the sales price will not need to be raised, avoiding a possible problem with appraised value of your new home being less than the sales price....a big NO NO with FHA. Here for more questions.... |
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Posted: 8/30/2004 10:46:19 AM EDT
[#19]
Oh, and another thing...
...everyone with an 80/20 that has been in their loan for 12 months w/o 30 day lates on consumer credit or mortgage credit seriously needs to inquire about a refi into one loan. I have done the numbers every way to Sunday and the savings of no PMI is more than made up by the HUGE interest rate charged on the 20% second mtg! You guys........ |
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Posted: 8/30/2004 10:56:23 AM EDT
[#20]
I think I understand this. Does a VA loan guarantee help this equation? Any benefit or difficulties to purchasing a VA foreclosre property? |
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Posted: 8/30/2004 11:03:29 AM EDT
[#21]
My credit union offers a First Time Homebuyer's Loan. 103% of purchase price. 10 year fixed, 20 year variable.
Has worked out good so far. |
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Posted: 8/30/2004 11:06:09 AM EDT
[#22]
Join the military and use the VA loan. Here in California they'll loan you $334,000 which will buy a double wide nearly any place you'd like. The Federal VA loan is smaller - $120,000 or something like that. Co-signer? |
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Posted: 8/30/2004 11:10:34 AM EDT
[#23]
Do you have a VA loan available? I went to get out of the Navy class last week and have my book around here somewhere. It covered the VA loan program. |
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Posted: 8/30/2004 11:16:02 AM EDT
[#24]
Whether he starts with zero or 20%, if the house market crashes, as you seem to suggest, he'll be in the same boat: owing a hell of alot more than the underlying property is worth.
Sorry for being a asshole - I'm just sick of people talking about the "housing bubble". I just plain don't believe that entry-level houses (< $300K) are suddenly going to go back to $50K because of a bursting "bubble". I would agree about higher-end homes, however. Of course, someone who buys a $600K house with no money down deserves to get taken to the cleaners. I don't want people to continue to piss away $1500 / month on rent when they can "own" for $500. YMMV. |
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Posted: 8/30/2004 11:16:05 AM EDT
[#25]
Tango...
Sorry to confuse you, but if I had known you were VA eligible/approvable, I would have suggested STRONGLY that you pursue a VA loan. These loans have $0 down payment and NO mortgage insurance of ANY kind. There are only two downsides to a VA loan.... the most important is doing a VA loan with a mortgage company/loan officer not conversant with VA loans. The next downside is in laying your hands on a Eligibility Certificate because many of the records were destroyed in that infamous St. Louis warehouse fire. If you do not have your Certificate yet...get cracking!  Another issue has been touched on here in this thread, and that is the equity position you may find yourself in with a VA loan. VA will charge a 2% Funding Fee, so if you finance the funding fee as 99% of the VA borrowers do, then you will start out in your new home owing 102% of it's value. As normal payments will have little effect of the principal balance for the first several years, you will see little movement of this owed amount for the first few years and if a refinance or Home Equity Loan is desired, you will not have the equity to participate. BTW, today's rates for a VA loan begin at 5.375% Fixed for the term of your loan! |
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Posted: 8/30/2004 11:17:18 AM EDT
[#26]
Mine was only 4%... eta: I should refi, however, because my house has appreciated past the initial 10%. So I am technically paying 4% for no reason. |
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Posted: 8/30/2004 11:18:24 AM EDT
[#27]
Better than 720 middle score, huh?
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Posted: 8/30/2004 11:21:27 AM EDT
[#28]
Yeah. Looks like being anal about your credit pays off. |
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Posted: 8/30/2004 11:22:04 AM EDT
[#29]
What wiggy said. Espically about the VA part.
For a FHA try and put 3% down, and you can use what wiggy described (known as buyers assistance or a gift of equity) for your closing costs, if the seller is agreeable. I am not sure what kind of rates or penalties you will be hit with if you do FHA 0% down. |
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Posted: 8/30/2004 11:22:09 AM EDT
[#30]
YES...but not necessarily with the financing aspect. Your usual problems with purchasing a foreclosure property is that the foreclosuree trashes the house before the sherrif comes a knockin and your lender may balk at funding a loan guaranteed by a property that is trashed. You can get it done, but you need luck in finding the right property, the right realtor, the right property, etc. |
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Posted: 8/30/2004 11:22:27 AM EDT
[#31]
You can also check out www.homeloans.va.gov/ Depending on what credit union you might be in, that might help also. I'm in Navy Federal and they have a loan called Veteran's Choice. The eligibility requirements are the same as the VA, except that you don't use your certificate. Also, to everyone else, it is a conventional loan. This means that you don't have a lot of the same stringent requirements as a VA loan. |
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Posted: 8/30/2004 11:23:12 AM EDT
[#32]
The coastal area house prices seem to be completely out of whack, utterly insane. Outside the boom areas prices still seem sane.
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Posted: 8/30/2004 11:29:24 AM EDT
[#33]
I already have my certificate of eligibility. I am going back to the US next summer from Germany. I will probably go back to Montana if I get a job with a security compnay in Iraq. If I get a cheesy TDA assignment, I could land anywhere. I have 4 kids and need a large home and of course the large garage for a weapons workshop.
When I hit the US. What is my first step if I pursue the VA loan? |
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Posted: 8/30/2004 12:17:14 PM EDT
[#34]
Your first step, and one that you can take now, is to narrow down where in the US you would like to live. Nothing too specific, just get to the state level. Then find a Mortgage Broker in that state that a friend or family member has delt with and had a good experience. If no friend/family referrals are available, then use the BBB or state Chambers of Commerce to find a reputable broker. Make sure that this broker is .gov qualified to do FHA/VA loans. Once you have a broker picked out, ask them for an Automated Underwriting Approval, via either Loan Prospector or Desktop Underwriter (if they cnnot provide an approval via either system, RUN away as they are not really .gov approved and simply 'farm out' these types of loans. Once you get your AU Approval, then go shopping for the home you want under the conditions of your approval!. Quite easy actually |
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Posted: 8/30/2004 12:18:24 PM EDT
[#35]
PMI Sucks ASS |
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Posted: 8/30/2004 12:24:33 PM EDT
[#36]
Yeah, it does......BUT it sucks a wholeheap less than a sub-conventional loan at 8.5% 3-1yr ARM with no escrows! It is all relative...you don't wanna come up with 20% of your own money and as such want the lender to assume 15% more risk, then the lender is gonna require you increase the protection to the lender by buying PMI. Once you get the LTV down below the 80% you should have started with, the lender relaxes the PMI requirement....UNLESS you have been 30 days late on your mortgage in the meantime...then you get to keep the PMI in perpetuity! It's all about ball bearings these days....AND about lender risk. Think to the friend/coworker of yours that most recently bought a home....would YOU have lent them YOUR money? 90% of the time the answer is "NO!" So basically you would be saying that YOU would like to have PMI on a personal friend? Kinda different when it's YOUR money, isn't it? |
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Posted: 8/30/2004 12:35:03 PM EDT
[#37]
They are right just need good credit and/or verifiable income. If no verifiable income then--Stated income mortgage and A+ credit rating it is doable |
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Posted: 8/30/2004 12:37:18 PM EDT
[#38]
If you can't put at least 20% down, you can't afford to be a homeowner.
Owning a home is expensive to say the least. |
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Posted: 8/30/2004 12:39:33 PM EDT
[#39]
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Posted: 8/30/2004 12:43:53 PM EDT
[#40]
Check bankruptcy rates in your state. How many actually owned their home? How many had second mortgages ? Statistics say 80% loan/value ratio lowers your chances of going bankrupt. Its common sense really, you are trying to buy something you cant afford. If you make enough money to pay the payment why have you not saved any cash for a down payment? Is getting by good enough or would you rather have some money left over? Just my .02, you do 100% finance and your asking for murphy to come live with you. |
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Posted: 8/30/2004 12:44:42 PM EDT
[#41]
That may be, but it is cheaper than renting.
TR |
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Posted: 8/30/2004 12:46:40 PM EDT
[#42]
+1
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Posted: 8/30/2004 12:47:47 PM EDT
[#43]
Pointed and lucid argument though |
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Posted: 8/30/2004 12:49:55 PM EDT
[#44]
Depends on your lifestyle. You can rent for $1000 a month, or do like I did. My rent was $225 a month. Nothing fancy and my wife hated it. In 2 years I paid cash for our first house. You ever live debt free, there is no going back. Debt is taught as a needed thing to make the world go round. I say b.s. |
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Posted: 8/30/2004 12:51:22 PM EDT
[#45]
Every lender has access to or has run themselves a veritable harddrive worth of statistics indicating which scenarios more directly lead to a BK...and they price their loans accordingly, or restrict what buyers can participate.
Best advice is to get with a broker/lender that fmily or friends refer you to. Then be prepared to listen to what they have to say. Then be ready to down-size your 'must-haves" to a manageabe level...walk before you run. If you did not have a trusted friend in the business, you do now....ME!  In a perfect world, everyone would have perfect credit and gobs of cash. Last time I checked, 20% down Conventional loans were only 28% of the homeloans financed. |
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Posted: 8/30/2004 12:53:50 PM EDT
[#46]
VA loan.
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Posted: 8/30/2004 1:01:09 PM EDT
[#47]
I joined the Marines and got a VA loan.
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Posted: 8/30/2004 4:45:59 PM EDT
[#48]
My timing worked out pretty good on this. I did the 80/20. Waited a year and refianced into one loan. What worked out good was that property values were skyrocketing at this point. Even in that first year the money I was paying out on the second was recuperated at the end of the year when I did my taxes. |
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Posted: 8/30/2004 5:38:02 PM EDT
[#49]
We have a 95+% overlap in philosophy here, Cynic. Renting blows, the last real deduction lies in home ownership. Anyone who can, should. I don't think homes are going to tank to 25% of their current value, but starting off ON the bubble gives me the willies. ANY correction, 2%, 5%, etc equals a LOT of prople who will not be able to sell to anyone because it won't cover their note. And I come from the land of $600,000 plus homes, which colors my perspective. We paid just over $620,000 ONE year ago, last month a similar home sold for $850,000+. That kind of "appreciation" scares the heck out of me. I for one am not planning on refiing and grabbing all that "money" I now have. That "equity" will dry up and blow away sooner rather than later. To me, it's a function of what nut people can crack each month. People now buy houses like we used to buy cars, how much will it cost me per month? You hike interest rates, people will get less house for the same payment. |
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Posted: 8/30/2004 5:51:28 PM EDT
[#50]
I just bought a home @ 125,900, 80/20 and am only paying 4.2% on the 20%, locked in for 4 years! Woo hoo! If you can avoid it, why put down any more $$$ than you have to? You've earned your credit, freakin' use it, but use it wisely!
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