No money down home loan in SoCal?

Question

Me and my husband have been renting for about 4 years. With house prices that have risen so high it seems almost impossible for us ever to be able to buy a home! My husband and I make "okay" money, but not enough to put a down of 10% on $700,000 (average home for 3 or 4 bedroom in our area). I've heard of "no money down" home loans, but what exactly does that mean? How screwed would we actually be??

Answer 1

Get a first time buyers loan. That's what we did. 100% financing. You only get screwed for a year or so by paying a lot of interest, but you can refinance after a year without getting too penalized. Usually your house is worth more then too so you can use that extra money for some repairs or something.

Answer 2

Can you afford the monthly payments on a $700,000 loan? Let's say for the sake of argument that you have enough cash to pay your closing costs and good enough credit to get a 100% deal. In SoCal your best bet is an 80/20 loan, that's an 80% first and 20% second. This way you pay no PMI (mortgage insurance). A best case scenario would look like this: your first is going to be around 7%, your second around 9.25% (and adjustable, at that). 700K x 80%= 560K @ 7%= $3726. 700K x 20%= 140K @ 9.25 = $1179 (at interest only, which would be available for the first ten years of the loan). Property taxes in L.A. county are 1.25% of the purchase price, or $729 monthly. Figure another $100 or so for homeowner's insurance. So, can you afford a monthly bite of $5734.00? To qualify for this, your gross annual income would have to be at least $140,000, assuming you have no other debt (car payments, credit cards, etc.). So whattaya say, are you ready to move?

Answer 3

I am a Real Estate Appraiser. Move. You can buy a Huge house almost anywhere else in the U.S. ... You're crazy to pay inflated prices just because of location. Find somewhere else to live and live well, get 2 or 3 new cars BMW, Mercedes, Hummer.

As for the no money down. Not just for first time buyers, anyone can get them at any time. But it is typically an ARM Adjustable rate mortgage. It will rise in 2-3 years. Not always though. Depends on credit score. Anyone over a 650 should be able to get a good fixed rate.

Answer 4

What most companies are not telling you is that behind the "no money down" is a higher interest rate which will make your monthly payments boom. You'll have a moment of ackward silence on closing.Watch out for the variable rate or ARM rate. For exmaple, it will lock in a rate of 5.6 for the first year, then the second year it will go up to 6.8, and the third it will rise up to 7.8 or something similiar. Most families are enticed with the lower rate. They become convinced that their financial situation or income will be become better during the first year so they don't anticipate having problems making the future payments. But for many it doesn't change. Then they get in trouble.

Answer 5

Just ignore the idiots that try and tell you to move. Of course you can go to nebraska and make $5/hour. Hate to break it to them, but a BMW costs almost the same anywhere you go in the country and some people are not able to move.

with that said, if you do not have the down payment, then it is best to wait. No money down mortagages are just that. You buy a house and do not have to put money down. You still have closing costs and such. The problem with these are that you have to pay a higher interest rate, on more money (since you have to borrow $700K, instead of $560K) and more insurance (since you do not own 20% of the house). Is there any reason that you want to own a house besides you think you are wasting your money on rent? Well if you buy with no money down you will be waste MORE money on extra interest, extra insurance, extra a lot of things.

Answer 6

No money down means you don't have to put a down payment.

The down side to this of course means you will have a larger mortgage, and of course this is subject to more interest over the term of the loan.

Maybe you should consider a 10-year interest only loan, which means much cheaper monthly payments, and perhaps you will have much more money to refiance somewhere down the road.

Don't always look for permanent fix... Life is a chess game.

Answer 7

Well, you can forget about a no money down in California - In short here's the deal, if a property is worth $700,000 and the seller needs out quick and is willing to sell for $650,000 then you basically have $50k in instant equity, that makes it much more attractive to a bank, unfortunatly in CA where you must bid over and above the asking price this situation does not exist.

Unless there is a big downturn, as in the fall of the dot commers in SF those prices are not going to go down. Also you better have PERFECT credit, but I can not imagine how you could find a no money down deal in CA unless it was a serious fixer upper.

Good luck

Answer 8

You would have a very high mortgage payment and a high interest rate. But you could still take out the loan and then refi in a year or so to bring the rate and payments down. Also I know a guy who can do amazing things with loans. If your interested.

Answer 9

Very screwed prob a variable rate or worse int rest only. Its a trap. Try AZ or 1000 miles east its almost totally ridiculous to buy in CA. But if its home and must have CA try Bakersfield or Visalia other than that good luck. Watch out for those traps they are everywhere.

Answer 10

I am a mortgage broker in SoCal and Mighty is absolutely correct. The numbers he gave look right as well.

It sounds like you're in Orange County and maybe in Irvine. Shoot me an e-mail and I'll see if I can find a property and the means in which you can afford.

Regards