Wife and I are shopping for our first home in San Francisco. We looked at a condo (2 bed 2 bath) in the city that we really liked and wanted to get pre qualified so we can start the negotiation process. Our credit scores are in the 700 - 750 range and debt to income ratio is great..only debt is a car payment. After talking to a bunch of banks we were told that everything is great but we cannot do better than 10% down. 15% is ideal for the best interest rates but 10% can be done although the interest rates are ridiculous for a purchase price 685k+ and PMI is included.
In a city where the median condo price is 855K$ how in the world are we suppose to come up with 15% or even 10% down. All the major banks I've spoken to say that things have changed since April 1st (although SF is considered a non declining market). Before that they could do 2 loans but they dont do that anymore. I've heard of FHA loans as being an alternative as they require only 3% down but the interest rates are slightly high.. Is this our only alternative?
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- AussieIndian
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Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.
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- lorcha
- Cranky Member
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- bozo007
- Cranky Member
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- borisr
- Senior Member
Harpreet, is this you? Come back home to Fremont... vah!
Message edited by: borisr on 2008-04-22 11:32:28 CDT-
- AussieIndian
- Member
bozo007 said:Rent
u think?
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- delzy
- Senior Member - 1K
Maybe you should be looking for a flat in London's West End since you are already value shopping.
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- AussieIndian
- Member
lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.
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- AussieIndian
- Member
delzy said:Maybe you should be looking for a flat in London's West End since you are already value shopping.
No thanks..San Fran is expensive enough for me. What r u talkin abt value shopping? There's a reason foreclosure rates in SF are no where as high as Florida or the rest of Cali.
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- lorcha
- Cranky Member
AussieIndian said:lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.Well, did you pledge all that crap as collateral? No? Then it's a risky, high LTV loan.
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- AussieIndian
- Member
lorcha said:AussieIndian said:lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.Well, did you pledge all that crap as collateral? No? Then it's a risky, high LTV loan.
As a matter of fact we are ready to.
Message edited by: AussieIndian on 2008-04-22 13:32:06 CDT-
- Dealguy123
- Senior Member - 1K
AussieIndian said:There's a reason foreclosure rates in SF are no where as high as Florida or the rest of Cali.
Give it time! lol.. Although I agree, Frisco will likely not see foreclosure rates comparable to the rest of the country..
You have to realize that 5% down loans are not the HISTORICAL NORM, but the EXCEPTION. Armed with that knowledge, it should be no surprise that these types of loans are disappearing, especially with real estate contracting. It's pretty simple really, if you don't have at least 10%+ down (I'd argue 20% personally), the bank is not protected from falling home prices, and the real possibility that they could be stuck with a home due to the buyer walking away down the road.
I'm personally not seeing the problem here. Save more money till you can afford the downpayment, problem solved. I don't remember reading in the constitution about everyone being entitled to being a homeowner. If you can't afford it, you can't, that simple. Personally this could turn out to be a blessing in disguise down the road, but that's a whole different discussion..
Message edited by: Dealguy123 on 2008-04-22 11:58:01 CDT-
- xxjt
- Member
FHA loans are still available for 3% down. Star one credit union has some great rates. (Between 3.75 and 5.5 for a 40 year fixed up to 700k)
That being said take a look on Trulia for real time market trends and note that MANY neighborhoods have declining year over year price per square foot and median prices.
Neighborhoods that make the list include SOMA, Nob Hill, Lower Pac Heights, Potrero hill, etc. Can you afford to eat at 10-20% loss in value over the next 5 years? If you can't - which if you don't have a 10-20% down payment seems to be the case - don't buy!
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- kiasuchick
- Senior Member
AussieIndian said:lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.
*Shakes head*
If the mortgage payment is only 25% of your income, how come you haven't been able to save $100k+ for a down payment?
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- SlimTim
- Senior Member
Pledging your other assets as collateral will not be simple, I would expect few lenders to be willing to work out the arrangements. If you want the loan without a lot of trouble, sell those assets and pledge the cash toward your down payment. They'll all understand that and won't need any special contracts.
No one cares how unrealistic it is for you to come up with a significant down payment for some of the world's most expensive real estate. There's no fairness or reasonability involved - the lenders don't set the prices or assets & income of the borrowers. If there's a significant and long-term incompatibility between those, it will correct itself and strict lending policies will actually help move that process along.
I'd love to be able to afford to live in San Francisco. I've looked into it at several different times. I can't, so I don't. It's still very nice to visit.
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- AussieIndian
- Member
kiasuchick said:AussieIndian said:lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.
*Shakes head*
If the mortgage payment is only 25% of your income, how come you haven't been able to save $100k+ for a down payment?
*Shakes head*
We could..but most of our savings is in stocks/bonds!
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- jmo
- Senior Member
With all the recent news of bailouts falling on the backs of the responsible taxpayers, it's great to finally see some good news! Thanks OP!
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- lorcha
- Cranky Member
AussieIndian said:*Shakes head*
We could..but most of our savings is in stocks/bonds!Not after you sell them to make your down payment, genius!
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- MaxRC
- Senior Member - 2K
AussieIndian said:lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.It's simple, the banks want you to put up some of your own monies to purchase this asset. You think this is such a great purchase, great, put up some of your own money. They don't want to finance it (nearly) completely. If you don't want to put up a significant chunk of your own money, then they want to charge you a higher interest rate for the increase in risk that they are taking on - whether you perceive the risk to be there or not, a 95% LTV is riskier than 90% or 80% LTV. Really it's nothing personal, your numbers are crunched by a machine with a formula and this is what it came up with.
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- AussieIndian
- Member
jmo said:With all the recent news of bailouts falling on the backs of the responsible taxpayers, it's great to finally see some good news! Thanks OP!
Well dont be too happy! We were offered a 5% down FHA loan at 5.875% for 30 yr fixed. Not sure if FHA is the way to go.
Countrywide still does 5% down if purchase price less than 685k. Quicken loans still does 3% and 5% down but they require the complex to be 90% sold. The condo complex we are looking at is only about 60% sold.
Message edited by: AussieIndian on 2008-04-22 13:43:18 CDT
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