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2
Posted on 10/13/14 at 12:16 pm to mark65mc
Yeah, usually it's outside city limits, though I know some very small cities qualify for it. No way Baton Rouge would be considered small.
Posted on 10/13/14 at 12:22 pm to jbgleason
quote:
This. I went in to get a 30% of value loan for addition/renovation on a home that I own outright and was turned down because I own my own (successful) business. They couldn't "verify" income. Meanwhile, $40 thousandaires are getting $500,000 zero down interest only loans to buy homes three times what they should be buying. I told the mortgage lender that this was why there is trouble in the market. He had nothing to say.
Why would you not be able to verify income?
Posted on 10/13/14 at 12:23 pm to BT
(no message)
This post was edited on 10/13/14 at 12:30 pm
Posted on 10/13/14 at 12:26 pm to CENLALSUFAN
This is a bad thing. A very bad thing.
Posted on 10/13/14 at 12:43 pm to junkfunky
quote:
Depends. My wife and I needed 100% when we bought our house but just refinanced on Friday. Worked out great for us but I'm allergic to debt and most people seem perfectly fine with spending beyond their means.
I did RD as well when I bought my house last year. At the time, I had a down payment but the interest rates were just better with RD. I used some of the savings to do improvements, then put the rest down on my mortgage.
But then again, I spent maybe half of what I was approved for. Mortgage is probably less than 10% of our combined income after taxes.
Posted on 10/13/14 at 12:43 pm to LuckyTiger
Maybe I'm missing something, but AFAIK RD loans have a comparatively low qualifying max household income of around 75k or something, that should limit the value of homes purchased to around 250k, maybe 300k at most even at an absurdly high 45% ratio. So while the danger is definitely there that people buy more house than they can afford, the image of a McDonald's cashier purchasing a 500k house is probably exaggerated.
Posted on 10/13/14 at 12:46 pm to Huey Lewis
Yep, that is true. I was glad I decided to buy a house before changing jobs and getting married. Combined now we'd be way over.
I can definitely see the downside in this though, I know of a couple neighbors that are barely scraping to make the payments, and have no savings. One major repair away from foreclosure. I don't see how they ever got past the income verification and all the stuff where they look at your bank statements.
I can definitely see the downside in this though, I know of a couple neighbors that are barely scraping to make the payments, and have no savings. One major repair away from foreclosure. I don't see how they ever got past the income verification and all the stuff where they look at your bank statements.
This post was edited on 10/13/14 at 12:52 pm
Posted on 10/13/14 at 12:49 pm to Tigerpaw123
quote:No they're not.
Meanwhile, $40 thousandaires are getting $500,000 zero down interest only loans to buy homes three times what they should be buying.
This post was edited on 10/13/14 at 1:07 pm
Posted on 10/13/14 at 1:12 pm to jbgleason
quote:
This. I went in to get a 30% of value loan for addition/renovation on a home that I own outright and was turned down because I own my own (successful) business. They couldn't "verify" income.
The only reason they wouldn't be able to verify income is if you don't claim enough on your tax returns. Either your business is not successful as you say and you don't make a lot or you cheat on your taxes.
Posted on 10/13/14 at 1:48 pm to lsu480
No. I was within my first three years of this company. I had just sold my interest in another company (doesn't count, not there anymore) and, according to the Loan Officer, returns within the first three years of the new business just don't count. Like not at all.
As far as people buying more house than they can afford (this doesn't happen says other posters) I know people who did that. I know, I know, trashy friends and all but it did happen. Granted, this was at the height of the bubble when they were practically handing out mortgages at the grocery checkout line but I know two people who overbought and subsequently defaulted. One was a salesman (commission only) and the other was a manager of a equipment repair garage. Neither of these dudes were killing it.
As far as people buying more house than they can afford (this doesn't happen says other posters) I know people who did that. I know, I know, trashy friends and all but it did happen. Granted, this was at the height of the bubble when they were practically handing out mortgages at the grocery checkout line but I know two people who overbought and subsequently defaulted. One was a salesman (commission only) and the other was a manager of a equipment repair garage. Neither of these dudes were killing it.
Posted on 10/13/14 at 1:56 pm to jbgleason
Is your credit horrible? I am sure you can get someone to loan to you at a 30% LTV as long as you don't have any other liens and they get to be in first position. You may not like the rate but SOMEONE will give you that loan!
Posted on 10/13/14 at 2:04 pm to Huey Lewis
quote:
low qualifying max household income of around 75k
This
quote:
should limit the value of homes purchased to around 250k
Think there is a lending limit too. Don't think it is that high.
Posted on 10/13/14 at 2:08 pm to lsu480
I can't understand how this would be a bad thing. When there are more loan options, there are more buyers. Therefore, the housing market is getting better, and in turn, so is your economy. What would be 'a bad thing' is when you have less loan options and less potential buyers.
Posted on 10/13/14 at 2:10 pm to kbyall
RD isn't geared towards those that can't pay their monthly payment, but for those that didn't set a conventional 5% aside to put down. Not many 'starter' families have those assets. That doesn't mean they can't pay their monthly. I think its safe to say that just as many WEALTHY conventional buyers have trouble paying their payments from living outside of their means as USDA buyers do.
Posted on 10/13/14 at 2:10 pm to kbyall
quote:
I can't understand how this would be a bad thing. When there are more loan options, there are more buyers. Therefore, the housing market is getting better, and in turn, so is your economy. What would be 'a bad thing' is when you have less loan options and less potential buyers.
Because it's likely they'll default on their loans and these houses will become abandoned, re-sold for pennies on the dollar and ruin the home values of every responsible homeowner in a 3 mile area.
Posted on 10/13/14 at 2:12 pm to upgrayedd
Why? Cause they don't HAVE to have a down payment. Well lets chalk that up all VA loans too.
Posted on 10/13/14 at 2:17 pm to kbyall
quote:
Cause they don't HAVE to have a down payment
Exactly.
quote:
Well lets chalk that up all VA loans too
What percentage of the population qualifies for that? It has to be very low.
Posted on 10/13/14 at 2:23 pm to PhiTiger1764
quote:
Why would it make such a big difference compared to the 95% conventional and 97% (I think) fha options? Serious question.. I don't know much about a RD loan.
Because just like the last sub prime crises you will be able to push the appraisal price up and roll closing cost and everything into one loan.
Its the same exact thing people did last time and how people that had zero money saved bought houses. Those people weren't ready to own a house.
At least people who pay closing cost and a little down payment show more responsibility than those that move in with nothing out of pocket.
Posted on 10/13/14 at 2:26 pm to upgrayedd
In some states there are 100% financing for conventional and FHA loans. I would say that percentages for qualifying for those are pretty fair. In comparison.
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