Lower rates may not create a surge in mortgage activity - because the banks have cut too much staff!!

[w¡n9Nµ7 §£@¥€r 123]

I don't know, to me it looks like we're halfway through.

[Mononoke28 137]

I don't understand this, so mortgage applications are up and yet home sales are down. Another thing is, most banks are asking for at least 20% down in order to get approved, is that another reason why it's taking them so long to approve these mortgage applications?

Diana

[w¡n9Nµ7 §£@¥€r 123]

I don't understand this, so mortgage applications are up and yet home sales are down. Another thing is, most banks are asking for at least 20% down in order to get approved, is that another reason why it's taking them so long to approve these mortgage applications?

Diana

My understanding is that what's spiking right now are refinances. Mortgages on new homes, not so much. At least in my area, people who were "priced out" in 2005 still are. For example, a townhouse that used to cost 365k is now 325-330k. The number of households for whom a drop of 30-35k makes an unaffordable home affordable just isn't that high.

[zqt3344 21]

Small amount of refi is going on, but it is a problem cause the new loan appraisals are running lower thus less home equity and that causes problems for getting loan or good rate.

20% is the norm again now for a new home bought and think about it, how many of those people that were put in those subprime loans were able to pay down 20% in previous 5 years, they were all getting into these $100, 200, 300, 400k plus loans with little or no money down so it is no wonder they could all afford to buy one! Can you imagine having to come up with 20% of 100K or 200 or 300 or 400 now?

I don't understand this, so mortgage applications are up and yet home sales are down. Another thing is, most banks are asking for at least 20% down in order to get approved, is that another reason why it's taking them so long to approve these mortgage applications?

Diana

[Mononoke28 137]

Ahhh re-fi's, that makes sense.

But still, I seriously can't imagine many new homeowners having 20% saved up to buy a their first home, especially young people or single parents. There's no way. We're trying to save up for a nice home, in our area it would be between $250k-$350k and there is absolutely no way we can come up with at least $50k-$70k for a downpayment, that's just not gonna happen.

Diana

[w¡n9Nµ7 §£@¥€r 123]

... in our area it would be between $250k-$350k and there is absolutely no way we can come up with at least $50k-$70k for a downpayment, that's just not gonna happen.

It takes time, but it can be done. Gotta be strict and methodical about putting the money away.

[zqt3344 21]

Agreed, you are very correct Diana. That is the cold hard truth and reality of the matter like you state, there is no way anyone is going to be coming up with $50-$70K unless they save for like 5 -10 years maybe even then it is going to be hard when a person starting out is just living paycheck to paycheck or month to month and well, it is just reality. The plus side on all this is, if you are looking for a home to buy or build, just be patient and save and wait for in the next 12-18 months you will see prices on new homes drop another 25-35% minimum maybe more cause no one is going to be able to get financing or be able to buy them and the builders or sellers will get tired of waiting and will have to lower their prices if they want to sell their homes. It will soon become a buyers market even more so than now.

Ahhh re-fi's, that makes sense.

But still, I seriously can't imagine many new homeowners having 20% saved up to buy a their first home, especially young people or single parents. There's no way. We're trying to save up for a nice home, in our area it would be between $250k-$350k and there is absolutely no way we can come up with at least $50k-$70k for a downpayment, that's just not gonna happen.

Diana

[w¡n9Nµ7 §£@¥€r 123]

There are a bunch of new homes about 1/2 mile from me, in an older and uglier part of town. They were first listed last summer (07!) for 499k. This summer they were down to 449k. Not one has sold. Not one.

Next summer I bet they go down to ~400.

But it's still in an ugly part of town. Near the recycling center, adjacent to an industrial zoned area....

[zqt3344 21]

Hey just wait they will drop down to $200 -$300 range by next fall, watch. You may have a good buying opportunity next fall there.

Home prices here have remained stable in midwest. Maybe a drop of about 10% overall on average is what I notice mostly, of course we usually do not get hit with the downturn in a recession until the east and west get hit first then it moves inward to us, there is about a lag of 6-12 months, then same when coming out of one, and usually things never get too high or too low, just steady middle of the road consistency, no big booms or big busts usually, I wish the prices would correct here and drop another 25-35% on homes, be good time to buy then and more realistic or fair. The past 7-8 years prices have skyrocketed and are not worth it, whole thing was fueled by the easy credit and no money down no questions asked loans for past 7-8 years.

There are a bunch of new homes about 1/2 mile from me, in an older and uglier part of town. They were first listed last summer (07!) for 499k. This summer they were down to 449k. Not one has sold. Not one.

Next summer I bet they go down to ~400.

But it's still in an ugly part of town. Near the recycling center, adjacent to an industrial zoned area....

Edited December 23, 2008 by zqt3344

[w¡n9Nµ7 §£@¥€r 123]

Hey just wait they will drop down to $200 -$300 range by next fall, watch. You may have a good buying opportunity next fall there.

Those won't go into the 200s. Wall Street was bailed out, thank God

[Mononoke28 137]

So far we've been able to save $10k, so if my numbers are right, we should have $50k in about 5-10 years which means that a $250k home will cost a lot more than that by then, which in essence means we would have to wait another few more years to come up with the extra needed. It's just impossible. Now, we're lucky we're able to save just a little bit at a time, like I said earlier what about a recent college graduate? A low-income single working mom? A recent legal immigrant? It's hard especially for people like my husband and I who have our credit scores over 800 and can ideally come up with 5%-10% down within 2 years or so (knock on wood) but 20%? It's just not gonna happen.

Diana

[w¡n9Nµ7 §£@¥€r 123]

So far we've been able to save $10k, so if my numbers are right, we should have $50k in about 5-10 years which means that a $250k home will cost a lot more than that by then, which in essence means we would have to wait another few more years to come up with the extra needed. It's just impossible. Now, we're lucky we're able to save just a little bit at a time, like I said earlier what about a recent college graduate? A low-income single working mom? A recent legal immigrant? It's hard especially for people like my husband and I who have our credit scores over 800 and can ideally come up with 5%-10% down within 2 years or so (knock on wood) but 20%? It's just not gonna happen.

Diana

Couple of points.... if the last 'cycle' repeats itself then home prices won't begin substantially rising again until wages have caught up. Also, the current restrictions on credit won't last forever. 10% will be acceptable again in a few years, maybe sooner.

Also, and this is less certain, but wages do rise with time. Your savings per annum should rise with it.

[Mononoke28 137]

So far we've been able to save $10k, so if my numbers are right, we should have $50k in about 5-10 years which means that a $250k home will cost a lot more than that by then, which in essence means we would have to wait another few more years to come up with the extra needed. It's just impossible. Now, we're lucky we're able to save just a little bit at a time, like I said earlier what about a recent college graduate? A low-income single working mom? A recent legal immigrant? It's hard especially for people like my husband and I who have our credit scores over 800 and can ideally come up with 5%-10% down within 2 years or so (knock on wood) but 20%? It's just not gonna happen.

Diana

Couple of points.... if the last 'cycle' repeats itself then home prices won't begin substantially rising again until wages have caught up. Also, the current restrictions on credit won't last forever. 10% will be acceptable again in a few years, maybe sooner.

Also, and this is less certain, but wages do rise with time. Your savings per annum should rise with it.

Good points AJ. That's what keeps our hopes alive. Hopefully by the time we have 10% saved up, they will start being a bit more lenient towards people like us.

Diana

[w¡n9Nµ7 §£@¥€r 123]

Keep hope alive!

[Jasman0717 9]

This mortgage thingy sucks, my condo has droped 300K in the last several months