Hi folks. My friend, Bill Archambault, put up a post earlier today expressing his dismay over "When mortgage and real estate people start talking about people with out large down payments being undeserving a home of their own....." Take a minute and go read Bill's post.
Did you notice this statement? "Truthfully, big down payments protect no one except the bank! Little or no down payment may even protect the home buyer, by maintaining his liquidity and putting the bank mutually at risk with the home buyer."
That statement is what this post is about. This is a real life example.
I have a Seller right now who bought her home in Poinciana in late 2006 for $179,000. She's from NY and in early 2006 came into $100,000. You'd think that would be good thing but the money came from a lawsuit related to the wrongful death of her only son.
The stress of her son's death and the ensuing lawsuit placed her in a position of wanting out of NY. So, as many people do, she moved to Florida! She used every bit of her $100,000 as a down payment and took out a mortgage for $79,000.
Everything went well for about a year and then life, being unpredictable, dealt her a hand that caused her financial hardship. She was no longer able to keep up with her mortgage payments. She fell into default with her lender.
I met her about a month ago and valued her property at $75,000!!! This means that after selling expenses she is in a short sale situation. Could you imagine putting almost 60% down on a home and still being upside down in less than 2 years? That's incredible.
How much better off would this lady be if she had bought with even 20% down? She would still be upside down on her home BUT she would have cash reserves to help her weather the storm.
Now this is an extreme case but it truly illustrates how "Little or no down payment may even protect the home buyer, by maintaining his (her) liquidity..."
I wonder if her REALTOR® or mortgage broker mentioned this to her when she went to purchase? I wonder if I would have said anything to her? Should we?
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You make a good point and I think whomever sold her that house should have advised her to meet with a financial planner to determine how much of her nest egg she should invest in her residence. It is never an ideal scenario to put too much into the equity position of your home. Equity is great, but that money could be out working for you in other things. Diversifying your investments for your own protection.
It is sad that no one sent her to someone that could have advised her on how to protect her money...
Bryant , you have made a very great point. It would be a very brighter situation for the bank to hold some risk too instead of the Buyer assuming 60% of the risk up front. Thanks, Keith
For a lot of first time buyers they will have to scrap the 3% or whatever together and have no money in savings so if a storm hits they are in trouble so I agree with you on this.
Thank you Bryant, I actually advise my clients to put the minimum down. This illustrates one good reason. I also believe, especially these days, that your money would be put to better use in the bank or invested than in the home. That poor lady!
That is so sad Bryant. I really feel sorry for so many people in these situations.
BB- This is truly an amazing story. A dramatic decrease in value in that short period of time is breath taking. I might have suggested to her to only put 20% down but, on the other hand, I'm big on not having a lot of debt including debt on a mortgage. Who's to say that the Seller might not have spent the money on other things in the interim before life dealt her the lousy hand?
What a mess. I feel for her.
BB,
Could be true..I had 40% down on my home and now it's probably less now if I had to sell. It might be better on lower end priced properties because there isn't a large enough gap of equity.
I've been in this line of thinking for a while now but... wow... I haven't seen an example that sends the point quite like this one. My heart goes out to her. I'm glad she has representation Bryant- I know you'll serve her well.
Hey Bryant,
When I was counciling home buyers I ALWAYS tried to talk them into putting as little down as possible in order to keep money in the bank and have something to fall back on. Your unfortunate client is a prime example..... It is of no benefit to he house rich and cash poor. Everyone need to look at the worse case scenario and prepare for it by keeping cash available.
Sean Allen
Ever hear the old saying, "Everything in real estate is negotiable"?
Interest rates are negotiated through the amount of down payment, lock in period, lender fees.
Down payments are negotiated for benefits from the lender for the higher money down.
In the past several years with low interest rates, it makes little sense to tie money up in real estate, except that other investments aren't paying anything better, so what's the difference.
There is something to be said for being debt/mortgage/credit card/loan, etc. free.
Bryant, this is a point that is difficult for many to swallow. Sadly, the bank will be more apt to foreclose on a high equity position home than a fully leveraged one. Great post!
Bryant,
You're right, of course, the larger down payment DOES protect the bank. In this case, though, isn't she in a better position for the bank to accept a short sale? Instead of being $100K upside down, she's maybe $10-$20K in the hole. With her history, wouldn't the bank be more forgiving (yeah, right!)?
Not that this helps her pick up the pieces from all this, but it might help it work out easier... right??
Good luck to her...
BB, when I bought my first house in 1984, the mantra from lenders and various gurus was "put as little down as possible, period." At that time, ratios were ratios, so the audience to whom this proposition was considered, QUALIFIED. As we return to normalcy re. ratios (and not much else is "normal") your point is very well taken. While I (personally) never abandoned that notion, people entering the market would be wise to look at in exactly the way that you've presented. Great point, and post- thanks!
I would never have encouraged a buyer to put down all their money. I would have definitely discouraged that. You're right. If they had kept some of their money, they would have had a much greater chance of keeping thier house.
I really had not thought of it that way, but that makes perfect sense..
I really had not thought of it that way, but that makes perfect sense..
Bryant, it's almost like people think that homeowners stop paying their mortgages deliberately. I remember hearing someone from the Tuck School at Dartmouth talking about foreclosures, and almost all of them involved a health care bill crisis. A huge down payment won't help the homeowner then.
Bryant I fully agree with you and Bill. I wrote a blog over a year ago pointing out that 100% financing was a good thing and not a bad thing. It was my firm belief then and still is today, that it is better to be able to make a smaller or no downpayment and be able to keep some money in the bank to weather a stormy day, then to put a lot or all you have down, and not be able to have anything to fall back on.
Small downpayments or no money down loan programs were not what got us into the mess, but they might have actually have helped many of those in those programs to have kept their heads above water today.
We did a 100% financing on our small place...but you know what...we have money in the bank....for just in case.
BB,
I'm in agreement with you on this one. We've talked about the same issue in my office. It pains me even more to see someone upside down who put all their hard cash into a place, than others with zero down. I met with a client last week, they put almost all their equity $180,000 down and now the best they could sell it for is slightly less than their existing loan.
Today I came across a former listing, closed for $550,000 in Oct. 06, today is listed for $285,000.
Very true concept of Real Estate -- it is very illiquid. A house with a lot of equity can be quite a burden - in most cases you can't tap the equity quickly to use it when it is needed.
If your client had gotten a home equity line that she could tap -- maybe her situation would be better.
A house w/o a mortgage may give one piece of mind -- but it is dead money that doesn't provide you income or reserves in troubled times.
I'm becoming a firm believer in transactional equity lines and reverse mortgages(just the very best ones-there are some horrendous ones) so the home owner has that piece of mind plus the benefit of that equity.
Hindsight is 20/20. How often do home prices go down so much so quickly? If prices had stayed flat and she had financed an extra $100,000 she would have spent about $14,000 in extra interest in those two years.
With such a decline in prices down there, do you think things have bottomed out yet? How low do you think prices can go?
Response to Tim's comment ........ Yes, she would have spent an additional $14,000 in Interest (Big Deal), she would now only have $86,000 in the bank to fall back on if she had not put money down to buy the home.
Sean Allen
BB- that is a very interesting situation...I have never even really put thought into something like that....
Excellent post, I come from a financial background and always go into this aspect with folks thinking about putting down a large(r) amount. It does not make sense from a mortgage interest deduction as well.
I think the pre-owned RV business could pick up as people start to dig out of the mortgage mess, regardless of the price of gas. But maybe that's because that's the life I would love!
That's an interesting (and rare I would think) scenario with your client. Without access to the crystal ball of life it would be hard for anyone to tell a buyer how much to put down. It's easy to see now...she would have been better off to have that 100K in liquid assets... but what would have happened if she had put 3% down and invested the rest on the advice of a financial planner in say, Bear Sterns or some other investment that went belly up. Most folks aren't going to leave the bulk of their portfolio in a cash account. In the little/no down payment plan her mortgage payment would have been double what it was and she would have lost her investment. Not a great plan there either. Sometimes we end up in a situation like we're in now where there are no winners at the consumer level. Regardless it's a tragedy that I hate to read about.
Broker Bryant- even Foreign Nationals only have to put 25% down under new program guidelines. I agree, less down more in reserves. Many people are under the impression they will reduce their monthly payment by putting a large percentage down which is true-however your example shows how in THIS market, of accelerated depreciation it is not a wise thing to do. What a terrible situation for her.
Interesting observation. I guess the smallest down payment does make sense.
We have a buyer now who came into money from a car wreck. One of my team members wrote an offer yesterday for 20% down, no closing costs added in for the seller. Yes, he could have put down much more, but she told him why? So hope that answers your question.
Sometimes we are counselors but venturing into the mortgage process may bite you. You can recommend without crossing lines but when venturing into unlicensed territory the liability gator can bite you. I offer my thoughts but rarely do I get involved with the financing side. I send my clients to a couple of very reliable financial people that have over 18 years each in the business and I know they are in good hands. Nice post Bryant. The value drop is shocking for this poor woman. She is lucky to have you helping her.
Good point Gary. We need to take caution so as not to overstep out limits of expertise. In hindsight, BB point makes perfect sense and lets not overlook the tax deduction. None the less, this is a sad story.
Things they are and have changed. At one point having a large equity position was a good thing. Recently property values have declined resulting in homeowners being "upside down". Owing more than the property is worth is a terrifying position to be in. I don't see why a lender should be in a position of "sharing" the market value changes. There are mortgages that address this; A Shared Appreciation Mortgage- perhaps a new product, A Shared Depreciation Mortgage is in order now.
That is actually kind of crazy. Taking every penny you have and putting it into equity of your home is not a wise thing to do. Everybody needs some liquidity just in case things go wrong. Cash is king. Equity is not.
Requiring a buyer to put 3% down or more is a good thing though. It screens out the people that should not be buying a home. If someone doesn't have access to a few thousand dollars for a down payment, then how will they cope when the air-conditioner breaks down or when some other life circumstance happens and then need to get $1000 right now in order to address it. Some people are destined to be lifelong renters.
BB, a couple of points. As you lower LTV, you hit a few benchmarks where rates are lower. If rates were important or if minimum monthly payment were important, maybe that is why she put all her assets into her home. I personally like my clients, if possible, to have their investments distributed so funds will be available for financial "bumps" in the road. I hope that your client finds a solution to her problem. AJ
That's an unfortunate situation no doubt. If she had put the minimum down and ended up in the same situation wouldn't the bank be after her for the deficiency considering that she would have the excess cash or some of it to pay it?
She should have been advised somewhere along the line to speak with a financial planner and might have been told to set aside a rainy day fund for such a situation. If she had set six months or a years worth of living expenses aside her mmortgage payment would not have varied all that much and would have had much more time to work out a financial hard ship.
An agents job is to protect a clients best interest regarding the real estate transaction. There are way to many variables for us to be giving people sound financial advice and most clients aren't going to feel comfortable disclosing those details to an agent.
Your case is the type I don't like to hear......it's almost like a double whammy. I am not sure what is best....100% or as much as possible. My Market has been land...and most of that has been cash....some loans. And the houses were listings so I haven't had to counsel a Home Buyer on this.
Hi BB,
This is a heart breaking story. It was almost too difficult to see past the main subject once I read how she came upon the large downpayment monies. This poor woman has been dealt some very cruel life situations. It's something that we should all take pause to recognize about our profession. The point is crystal clear but now that the lenders are cracking down, it's becoming more difficult than ever for little money down buyers to buy.
Hi Bryant...Probably the best thing for your client would have been the services of a financial planner, one who would not gain from the advice. As a REALTOR I seldom get into financial discussions with my clients who are almost exclusively second-home purchasers or looking for their retirement homes.
When it has been a first time buyer, and that has been very, very rare, I suggest they not necessarily buy a home for the maximum that they qualify for as only they know what other prioriities they may have and to be able to handle unexpected expenses.
None of my clients, that still have the properties I sold them in this location, have had a foreclosure or short sale.
When I began as an agent in Northern Virginia we did pre-qualifying. When I moved to this market the agents did not. I fell into that practice.
Kate
It is easy to look back and say, she should have done this or that. Who knows...maybe should could have only afforded that $79,000 mortgage. I don't know.
I do agree in general that all of your eggs shouldn't be in one basket. All I know is that the woman lost her son, then had a financial hardship, and then lost her house. If there was ever a case for forebearance and recapitalization this has to be it.
This is just so sad.
You make a good point, BB. Unfortunately, I think this happens more than we realize. It definitely creates some terrible and sad situations.
BB-What a sad sad story. Hasn't this poor woman suffered enough? Wow. Who would have ever guessed 2 years ago that our economy would be in the "crapper"? I am so afraid to advise my buyers and sellers of anything financial anymore, because I just don't know! Makes me tend to think that less is better, at this point. I would have never considered it before. This is something to really think about.
Sad story. It is because of these stories that I feel that smaller downpayments are better for the buyer.
BB:
I went over to the Office of Federal Housing Enterprise Oversight and ran some rough numbers and you guys must have really hit bottom in the 2nd quarter of 2008. I'm talking a Nestea Plunge...kind of bottom. While it certainly is sad for this lady...it would seem that with this kind of rapid depreciation that the only place you have to go is up.
Makes me think about my own large downpayment...and I live in Michigan. Oh my. What a story; very sad.
Braynt, I agree with your statement. The bigger the downpayment the less risk to the bank. imagine this scenario such as is going on on many parts of california. This actually happened to a friend of mine in the Fresno area. He bought a house with a 20% downpayment.. then the bottom dropped out of the market and a year later the house was worth 30% less than what he paid for it...
I read all the postings and I thought most of them are SILLY, Im old enough to remember we bought our houses to have a secure place to live without the threat of having to move because the Owner sold the house, NOT as an Investment, so if you bought your house as an Investment and it went the wrong way...well to BAD for you....Im sure most of you ( us) have NEW or NEWER cars, useing the line of thinking that I read here, why not keep your old car with no payments and Invest that money...I read about the Depreciation of Real Estate and we all seem to shocked yet we have been Buying cars (a depreciating asset) and not one word about it
Hi Bryan, Remember also that the bank has even more leverage when there is a greater down payment. If you have minimal down the bank has little reason to go after you.
We need to advise our clients of the options available and let them do what they think is right. At the time I bet she never thought it would go down in value so far.
Interesting Perspective Bryant - To your point, it's almost always a good thing to keep some dry powder around. There definitely is a balance between maintaining sufficient liquidity reserves and keep leverage modest enough so that payments can be maintained
Great Post Bryant!
Thanks for pointing out the obvious that's not so obvious to most!
I recently got a call from a Realtor that was looking for a lease option for a client that had a $100K for a lease option down payment. I asked it he/she had made the client aware that such a large down payment could be risky, particularly with a lease option...given that something like 90% of them don't end up closing. I also advised them that an attorney write up the paperwork. Hopefully they did!
Well howdy everyone!!! Excellent comments as always. I rarely work with buyers and when I do I try to stay out of the financing side. The reality is I probably would not have counseled her on putting less down. This is just another reason why I don't like working with buyers. It's truly not my area of expertise.
And I do agree with all the should've, could've, would've comments. It's so easy to look at these situations now and question why they did what they did. But how could anyone have ever predicted a 50% + decline in property values in an 18 month period?
Jessica, These housing indexes are way off when it comes to Poinciana. Poinciana is a very specific market with it's own set of numbers. The Polk county side, zip code 34759, where this property is located, has a 15% foreclosure rate(1 in 7 properties) and prices are down almost 60% in the last 24 months. I'm not sure if there is a worse area in the country. I spoke to the leading REO agent in our area last week and he is predicting these numbers to quite bit worse before the end of the year. And I agree. We ain't seen nothin' yet in Poinciana Fl.
This seller is in a very difficult situation. It's heart breaking when there's really not much that can be done. At this point she just wants to go back to NY to be near her family. On top of everything else she's disabled and can barely walk. I had her sign an authorization yesterday so that I can communicate directly her lender. I want to see if we can get some kind of a forbearance or modification to buy her some more time. Of course none of this makes much difference if the value continues to plummet.
I'll just have to do the best I can to help her out.
Bryant--Wow...I wonder how many could have predicted a declining market when everything was going up, up, up? Housing is also an investment and not without risk. Usually it is more solid but there were many factors that lead to the situation today. Would you have told someone not to invest in the stock market or a 401K a few years ago? I know a bunch of people whose 401Ks are tens of thousands less than a decade ago too. There is no easy answer to this one...I do feel bad for your client to have lost so much in this changed market.
Bryant- Unfortunately I agree with the fact that the buyer needed better finanacial planning advice as to what to do with that sum of money. I do understand the comfort of knowing you don't have a huge housepayment but a declining real estate market is like a declining stock market. There is no guarantee that you will make money and unfortunately you can loose big time. Adjustments to any market can be painful to the players.
She is in trouble. Problem is even if it is suggested to people at times that they might not want to put all that much money into a home, they just don't listen and end up paying cash and then, as your example points out they are in trouble.
I tell each and every one of my clients exactly this. The bottom line is we never really know what is coming next, and if you can afford the payment for the larger mortgage comfortably then that is probably the best way to go. Equity in one's home is great, but it is hard to write a check on, and with the downturn we are currently in, setting up a HELOC is no picnic. That is also why I specialize in FHA loans, and VA loans;because they allow the buyer to come in with little or no money down, and avoid just this situation. Everyone out their pitching the Australian Mortgage, or MMA accounts should take a hard look at this scenario!
Ron Brown
FHA & VA Loan Specialist
First Mortgage Company of Washington
Puyallup, WA
Hi Bryant - I am a FIRM believer in protecting one's assets at all times, and this includes using smaller down payments when possible. And this is a perfect example of just why that would be. I feel badly for that lady, how sad to hear about this situation.
Ann
All you can do is share this story, I still belive the less debt you have the less likely you are to be overwhelmed when hard times come. Imagine how much quicker she would have lost her house had her payments been an extra $1000/month having had financed the entire amount.
good one BB. this really is sad, and a sign of the times. and every one of us hates it for all involved.
I know my 20% that I put down on my property is gone now and it will take me years to recover it. Others who financed at 100% have already walked away leaving those of us who are trying to protect our "equity" holding the bag.
Bryant,
Congrats on the feature. I recommend that people put more down if their financial situation warrants it. In this case it probable would not have been feasible if the agent knew the buyer's true financial picture.
Brant,
I have to agree with you that too much down is not a wise move - after all Cash is Still King, so hang on to your cash and conrol you own environment - even when life is happening around you, In todays market, I would never recommend more than 20% down unless you are an investor and looking to get the best deal posible on a home - and in this case cash is king.
On another note, I have not been around in the Rain very much lately - but am trying to get myself back intot he groove. I've changed companies and now onto a pretty incredible adventrue, which I allude to in my profile, but will expand shortly.
Looking forward to keeping up with your antics and spin on this industry we call REAL estate once again,
John
Brant,
I have to agree with you that too much down is not a wise move - after all Cash is Still King, so hang on to your cash and conrol you own environment - even when life is happening around you, In todays market, I would never recommend more than 20% down unless you are an investor and looking to get the best deal posible on a home - and in this case cash is king.
On another note, I have not been around in the Rain very much lately - but am trying to get myself back intot he groove. I've changed companies and now onto a pretty incredible adventrue, which I allude to in my profile, but will expand shortly.
Looking forward to keeping up with your antics and spin on this industry we call REAL estate once again,
John
Bryant,
That IS a tough one, BUT it is quite possible she would have spent all or most of the money she didn't put down on the house. The one really big thing that was bad about it was that she probably bought a more expensive house than she should have just because she put so much down in the first place. If I would have advised anything, it would have been to buy cheaper and put some of the money aside just in case of an emergency! But, you know what, hindsight is 20/20 ! I hope you can get it all worked out in her favor....
I am a firm believer that people should buy a lot less than they can actually afford and that is how I encourage my clients. Who really wants to be mortgage poor? And WHY would anyone want to live with too much debt in the first place? I sure don't and I sure don't want any of my clients to either! Getting OUT of debt or staying out of debt is the ticket!
Like you stated..."Could you imagine putting almost 60% down on a home and still being upside down in less than 2 years? That's incredible." Yes, it is incredible because the 60% should have been ALL that was spent and then NO ONE would be owed anything and she would have no fear of losing her home.........now that is the way it should be! NO HOUSE is worth that much of a gamble....
BB - This sends shivers up my spine. It's a very good point. But, imagine if she couldn't afford a mortgage payment based on a 79,000 loan, could she have ever afforded the house with 100% financing?
That is actually happening so much these days, but you point out a great example!
This is a sad situation. Equity is not a liquid asset, and I am not sure that most people realize this especially when we've had an increasing market for so many years in so many places until recently.
Bryant,
Thanks for the post. Your illustration makes the point very clearly. What I might have said would have depended on how much of a mortgage she could comfortable carry. If she could have handled a mortgage with only 3% down, I certainly would have explored the option. However, I have found that when people come into that kind of money and they turn to real estate, they are looking to get the lowest possible payment and the highest amount of equity. While that is not a bad plan, unfortunately it did not work for her.
I cannot help but wonder-if the new tax incentive is passed will that really trigger buyer who are on the fence?
(Congrats on crossing the 400,000 mile marker!)
She would have fallen behind even quicker with a higher mortgage payment...so she probably would have ended up in this scenerio no matter what she did at the beginning. Who is to say she would have saved that extra money that she didn't put into her house? If she couldn't afford the higher payments she would have used her cash reserves up quickly trying not to fall behind, and still wouldn't have anything to show for it. Or worse, she would have invested in several properties with that $100,000 and would now be in even deeper hot water.
I'd work 3 jobs just to make sure I didn't have to sell short or foreclose (unless of course I couldn't due to health reasons). In many cases, if they could just hang in there for a few years and ride it out, they would be okay. But it's become so easy to just walk away...
I do think that it is often better for the buyer to have a stake in the purchase. Perhaps only $5,000, but it should be something. A lot of people do not care much for their reputations or their credit histories, and when 100% financing is available, it is easy to walk away. I also think that first-time buyers need to be better educated on what it costs to own a home, beyond the mortgage, insurance, and taxes. When that furnace blows, there is no landlord to call. When the roof needs repairing, it's all up to you. I always try to get my customers to think about the future and what is best for them. Freezing all of your cash in a home could be risky. Keeping some funds liquid is not a bad thing. A home is an investment and diversity when investing is often the best way to go for the majority of people.
BB - A very unfortunate situation that points out so clearly the need to make prudent decision regarding downpayments vs. financing in a home purchase.
I suppose it is easy to say now that she never should have done this, but if the opposite had happened and prices has escalated the story would be different. But despite that possible scenario it does not make sense to put all the eggs in the proverbial basket.
Jeff
Hi Bryant- I did some quick calculations, and if your seller had a fixed 6% rate (her payment would be approx. $700.00 per mo.) with her putting 56% down on $179,000. I agree that its best to keep some cash reserves, and perhaps she should have gotten a less expensive home to start. I think she should have been advised of that. I am also so sorry to hear of the loss of your clients Son & now her home.
Bryant - I'm with you. I know there are advocates out there that say put as much down as possible - but I do not agree, and this is the exact reason why. Another reason is that even though some homeowners have equity in their homes, some areas HELOC's have been frozen, which takes away all access to the cash someone may need for whatever reason (let's say medical problems, emergencies, etc).
Wow, what a sad situation for this person to take everything she has had in here life and in less than 3 years it is all gone! I wonder if she could have even qualified for the home if she had only put 20% down? But, your point is well taken, if she had only put that down, she wouldn't be having the problems with the payments she is now, because of the reserve.
Well there are a lot of "what if's" and unknowns in this scenario. For example, if the client had a 6% rate the payment on a $79000 mortgage would have been $473 per month. If she had put 20% down the payment would have been $863. That is almost double! Im going to guess that she probably could not have afforded the lower downpayment /higher reserves route and that even the $473 payment was a stretch otherwise she should have still had a savings since her payment is almost $400 less than she could have been paying.
Also as someone else correctly pointed out, had she had the money in reserves it is likely the bank would have gotten a judgment against it anyway.
Above All- I guess I should have said my calculations at a 6% rate included taxes & ins. Payment-$473, Taxes $186, Insurance $41=$700.00. Thanks for pointing that out.
Wow, I am amazed at the comments on here like "how could anyone have imagined that the housing market would go down so much in such a short period of time?". I can honestly say that it was predicted by many, many people. I was one of them and the people I blogged with were calling this outcome in 2004. The sad part is ALL of the people who were/are involved in real estate that I know were advising the opposite. I did the best I could to stop family and friends from purchasing when the market went further then simple economics could account for. My brother-in-law is a real estate agent and him and I went round and round about what was going to happen. He would tell me how the NAR and CAR gave a presentation about how prices were going to keep going up and then level off, blah, blah blah yadi yadi yadi. I told him that people who are in the industry and have a financial incentive for this crazy market to continue are going to be blinded by reality. He still owes me $100.
I agree it's not a very good idea to put all your eggs in one basket like this poor lady did. This is a perfect example of why you don't do that. But advocating that you want the bank who loaned you money to take the hit illustrates exactly what is wrong with this country. Our society is all about credit and consuming these days. Put as little down on your house as possible? The goal is supposed to be home OWNERSHIP not indebtedness. The generation who has been alive long enough to know what the effects of the great depression felt like understand exactly what I am talking about. It's time this country learned that lesson again I think. The rules should have stayed at 20% down for home mortgages. This would have taught people to save and given them a bigger financial incentive to be more careful about purchasing a house TO LIVE IN and to read the fine lines in their loans.
What if you have a lot of cash but not a lot of income. Don't you want to put more money down to keep your payment lower?
More great comments folks. Thanks for adding to the post. I've been missing in action the last week or so buried in short sale negotiations. I haven't had much time to make if back here for comments.
This seller got served her summary judgement today. Needless to say she is very upset.
Bryant, I am truly sorry to hear that. Summary judgments are never fun for anyone. It takes a long time to get over the emotion and disappointment, not to mention the financial hit.
Bryant - What a different perspective on the market conditions! Those of us in areas that have seen such minimal property depreciation may not fully grasp the market conditions being faced in Florida, Nevada, Arizona and California. Thanks for giving us a glimpse of another side.
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