20% Dp?

[LivingAlmostLarge]

Weird question, more and more friends I mentioned that we refinanced and they should check it out. Rates are low. I thought responsible adults, people who talk about not having credit card debt.

Not one person yet has put down 20% so none are able to take advantage of refinancing. Most put down 3 or 5% or at best 10%. What is going on?

What happened to this 20% DP?

[MonkeyMama]

I just saw an add for 0.5% down, know several people who put 0% down (generally military programs - much easier to refinance - no DP required), and everyone else I know is doing 3% down.

This is one reason I am not convinced that home prices have hit rock bottom. Prices will hit rock bottom when people will buy what they can actually afford. At this point in time, I see the same old behaviors that got us into this housing bubble in the first place. To me - it's still a bubble. (& it's more than just the DP - I know several people buying investment property with no money down - they have no money to cover it unless they have renters - and the rental market isn't great if you ask me. So what has changed?).

What happened to 20% DP? We live in an immediate gratification society. Saving 20% takes TIME. The horror!

[skruggie]

I originally wasn't going to do 20% down, but in going back and forth with my financial situation, it was the only way it made sense to buy in this market.

I'm doing the dreaded 401k loan to make it to 20% - but I feel like based on the current situation with the stock market that is completely working in my favor. I will be super aggressive about paying it back in a 2-3 year timeframe, really thinking of it as an advance on my down payment.

It was the only way I could get into the market in Los Angeles - and I got a super sweet deal at an unbelievably low interest rate. Very happy with my decision.

To answer your question, there is no way on the planet I would do this without 20% down, even when my original plans when I first started researching real estate were no where near that number. It would be financial suicide.

[photo]

Not one person yet has put down 20% so none are able to take advantage of refinancing. Most put down 3 or 5% or at best 10%.

In what years did these people buy these houses? If it was within the past year or two, whatever financial institution did the lending deserves to fail if those mortgages are not paid.

[bennkar]

What happened to 20% DP? We live in an immediate gratification society. Saving 20% takes TIME. The horror!

I agree a down payment is a good thing, but if you are a responsible person with a steady job and you will be staying in one location, waiting to buy only makes sense if you expect prices to go lower in the future (which is not an unreasonable thought). I say that because I was determined to have a house as quick as I could and used a 3% down loan (ok, this was back in '98 when prices were stable). If I had waited to build a 20% DP, I would be lucky to have a house today, and certainly not one paid off like mine is. Just saying... there are exceptions to the rule that larger down payments make sense.

[MonkeyMama]

Just saying... there are exceptions to the rule that larger down payments make sense.

I didn't say there weren't exceptions to the rule.

Problem is putting 20% down is now a very rare thing. No one really does that any more. Certainly not where I live. You can't convince me that the majority of the population is better off when they put less than 20% down. They aren't. The foreclosure and short sale rate in our own neighborhood will easily be 90%+ when all is said and done. Almost every home on our block has been lost to a bank or short sold. The ones that aren't? They put money down. Imagine that! It's such a novel idea, that most the rest have not a clue how some of us will actually keep our homes. (We put 20%+ down, we didn't borrow the equity, and we bough well within our means. These are all completely foreign concepts to most any peer I talk to in the city I live in).

[MonkeyMama]

P.S. I see the same bad financial decisions made today as I have the entire last decade. Truth is, most people will not be worse off if they take the time to save a down payment. Most people who think they will be, will not. It's *usually* just fear and nonsense. (Of course there are exceptions).

& I have heard it all. I bought in two insane sellers markets. I certainly understand what it is to be priced out if you wait too long. BUT, I don't think that's a bad thing. If you are priced out, you are priced out. It is what it is. The market always goes up and down. Always has. Always will. I don't buy the *buy now or the world will end* mentality. IT doesn't help that I have watched that mentality prevail every year for the last 12 years or so (since we first shopped for a home of our own - and since being homeowners). There may be some calculated risks that are okay for level headed buyers. But, the *buy now or regret it, I don't have TIME to save a down payment* mentality is certainly nothing unique to the times.

[sandrark]

We bought our first house with 10% down, in a very high COL area. Held it for 15+ years, and didn't use it as an ATM.

Sold it earlier this year, and bought our upgrade house. We put 30% down on the new place. Also in a high COL area.

The buyers of our old house? Also in their mid-40's, but this was their first house purchase. And they put down 3.5%.

Sigh.

[LivingAlmostLarge]

2007/2009, and currently 2011. So they put down 3.5% so they can't refinance. I thought it was a requirement. Turns out not.

I'm weird in having put down 20% and not cashing out our equity ever.