New loan program with no down payments

[54anickel]

Housing bubble must be in jepordy.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/01/25/REGCC4FS0F1.DTL

Washington -- What do you say to zero down on your first home purchase? And how about rolling your closing fees into the mortgage itself, giving you a home loan that costs you nothing out of pocket up front?

That intriguing offer could become a standard, government-backed option for an estimated 150,000 or more first-time home buyers if Congress approves a new zero-down program to be proposed in President Bush's federal budget. No- down-payment mortgages could go as high as $290,000 in high-cost markets on the East and West coasts.

If sanctioned by Congress, the program will be run by the Federal Housing Administration, the nation's largest single source of mortgage money for first- time buyers.

FHA loans typically carry minimum down payments of 3 percent. The new program would essentially allow home buyers to come to the table with no cash whatsoever.

more...

[wryter2000]

1. I got a mortgage like that

Wait until they see what the monthly payments are like. Luckily, I can make mine.

Editted to add: The house itself has to qualify for FHA money, which means it has to be pretty much in pristine condition. Even as a first-time buyer, I couldn't get FHA money. I still love my house and wouldn't trade it for the world, but this isn't all pie-in-the-sky.

[RC]

2. Sure, with floating interest rates

bankrupt hundreds of thousands more.

[wryter2000]

3. Variable rates?

Oh, ye gods! This'll kill people. I only considered this insane step because I got 6% fixed. Wait 'til the rates start toward the skies.

Of course, none of this damage will happen before 11/2004.

[DuctapeFatwa]

4. It's only an option if you are a renter 2 years or less from homelessness

as you are priced out of the rental market.

If you can get something with a FIXED rate with a monthly payment no higher than a rent increase or two from your rent, then you can postpone homelessness for a couple of years.

You should NOT think of it as buying a house.

You are just changing landlords. You will essentially rent from the bank until the rising costs of other things render you unable to make the payment.

[madrchsod]

5. this was discussed

last week here. it`s really a bad program. you`re paying interest on a down paymet even if you don`t have one. the government has alot of property to get rid of and must have decided to do this. bad program that`s going to screw alot of people.

[camero]

6. Ask your broker about Neahmiah Program.

It's a first time buyer program in much the same way as you describe except the rate is fixed. All you have to do is hold $1000 in escrow for a month I think.

The downside is they put the property taxes on the loan so the house doesn't get taken by the govt'. When the property taxes go up, the mortgage goes up. The closing costs are paid by the seller.

[Media_Lies_Daily]

7. Sounds to me like the mortgage industry is trying to head off a...

...major downturn in business.

[Pax Argent]

8. C'mon down!! We got tasty debt for everybody!!

We already have the finance industry allowing applicants to lie about income and appraisers playing games with their appraisals to allow people obtain more debt than they can afford. Now we can allow folks to finance larger amounts with no down and no fees? This doesn't seem like a recipe for success.

Keep in mind that this proposal is from the same kind folks who want to re-write the bankruptcy laws to favor the finance industry. The question I keep coming to is: what happens to our economy when our incomes remain stagnant and we are all pumping all of our discretionary money into debt repayment? What will the banks do with all of that wonderful property?

[DuctapeFatwa]

9. They will foreclose, double the price, and sell it to the next tier

of people who are being priced out of the housing market and therefore desperate enough to do anything to put off living on the street.