S
StarRidgeAcres
Guest
We recently learned that the home we lease (small farm house and 6 acres) is heading toward foreclosure. It wasn't overly surprising to learn since we've known for a while the owners are having financial difficulties. So we have to look for a place to buy. Although I knew it was coming, I'm still finding the process somewhat depressing. Dealing with lenders, seeing all the houses that are empty and losing value...it's just not pretty out there.
We started with lenders first so we'd know what price range to be looking in. I thought, going into this, that lenders had tightened their strings a bit and had become more conservative in what they'd lend. And I actually think that's a great idea. People do not need to be overextending themselves and when the lenders were allowing people to borrow more than they could pay for each month and allowing 2nd and 3rd mortgages and creating a whole population of folks that were upsidedown in their mortgages. But I'm sad to report that I think they are still up to some of the old (bad) policies. We both went to be pre-approved initially. They said together, our limit was $485k, or just Robert alone was $200k. I personally think both numbers are RIDICULOUS!
We have ZERO business buying a half-million dollar property. We'd be totally overextended, imo. Why in the world would a lender want their customer to be in a situation where they'd have difficulty paying? Isn't that what we (collective we) just got out of? And if Robert were just by himself, I think $200k is too much. I just don't understand.
So, we decided that since Robert is technically a first-time homebuyer, we will go with him getting the home in just his name. It means we can have several options open to us that we wouldn't if I'm also on it since I've owned before. There is one program that allows him to just put 3% down, another that allows for 5% down (as a seperate loan) and that loan is completely forgiven if he stays in the home for 5 years, an another means we have no PMI to pay. We haven't decided which way we're going, but there are some options and that's a good thing.
But the real driver behind our decision to look at properties that are $200k or less is that we want to keep our payment at $950 or less per month. That gives us the flexibility to pay it off in 15 years, instead of 30. I will be 60 and he'll be 48 and that sounds great to me! Also, if one of us should lose our job, we could still make the payment and not have to worry about losing our home. If we had a $2000 per month payment it would almost impossible to keep it up, for very long, if one of us lost our job. So why would a lender even consider that? I just don't get it.
The second part of this I'm finding depressing is the HUGE number of empty/foreclosed homes out there. To date, we have looked at 21 places. Of them, 19 were empty and foreclosures.
I find that SO depressing.
These homes were obviously loved at one time and now are running down, have the utilities turned off, some have frozen/broken pipes, some have been vandalized, etc. It's just so sad. They will need thousands in work to repair them/bring them back to life. One we looked at and really like its potential is a 3br, 3ba, 2200sf ranch, kitchen, breakfast room, dining room, living room and great room and a full/partially finished walk-out basement. The home has real hardwood floors and a great layout. The property is 6 acres with an old barn and a new (early 2011) Morton building with concrete floor (30x55) and also a pool. It is listed (the bank owns it) for $100,000. It will take, we estimate, $35k to get it livable. But where else in the world would we find all this for $135,000????
It's crazy. And there are TONS of properties out there just like this. The only difficulty we are having is finding ones with flat enough land for the horses and close enough for the drive to work. If those two things weren't considerations, we'd have our pick of just about anything we want.
My last thought comes from our agent. He is someone I met about 20 years ago when I also was a licensed Realtor. We've remained friends ever since. He is probably in his upper 60's now and is very successful, even in this market, in what he does. Sadly, he told us he doesn't think we've hit the real bottom yet and he also thinks the market won't turn around (completely) in his lifetime. That really bums me out. Things are already so bad, I just can't imagine it getting worse before it gets better.
So, now that I've thoroughly depressed the rest of you, what are your thoughts/experiences? Is it as bad in your area? Is this just a mid-west thing?
I'm excited about getting "our" place, but learning the banks really haven't changed their ways and seeing how despressed the market really is has made it kind of a bummer. I guess it's a good time to be a buyer, but it's so sad for the sellers. Many of the homes we're seeing have been on the market for well over a year....with no nibbles in sight.
We started with lenders first so we'd know what price range to be looking in. I thought, going into this, that lenders had tightened their strings a bit and had become more conservative in what they'd lend. And I actually think that's a great idea. People do not need to be overextending themselves and when the lenders were allowing people to borrow more than they could pay for each month and allowing 2nd and 3rd mortgages and creating a whole population of folks that were upsidedown in their mortgages. But I'm sad to report that I think they are still up to some of the old (bad) policies. We both went to be pre-approved initially. They said together, our limit was $485k, or just Robert alone was $200k. I personally think both numbers are RIDICULOUS!
So, we decided that since Robert is technically a first-time homebuyer, we will go with him getting the home in just his name. It means we can have several options open to us that we wouldn't if I'm also on it since I've owned before. There is one program that allows him to just put 3% down, another that allows for 5% down (as a seperate loan) and that loan is completely forgiven if he stays in the home for 5 years, an another means we have no PMI to pay. We haven't decided which way we're going, but there are some options and that's a good thing.
But the real driver behind our decision to look at properties that are $200k or less is that we want to keep our payment at $950 or less per month. That gives us the flexibility to pay it off in 15 years, instead of 30. I will be 60 and he'll be 48 and that sounds great to me! Also, if one of us should lose our job, we could still make the payment and not have to worry about losing our home. If we had a $2000 per month payment it would almost impossible to keep it up, for very long, if one of us lost our job. So why would a lender even consider that? I just don't get it.
The second part of this I'm finding depressing is the HUGE number of empty/foreclosed homes out there. To date, we have looked at 21 places. Of them, 19 were empty and foreclosures.
My last thought comes from our agent. He is someone I met about 20 years ago when I also was a licensed Realtor. We've remained friends ever since. He is probably in his upper 60's now and is very successful, even in this market, in what he does. Sadly, he told us he doesn't think we've hit the real bottom yet and he also thinks the market won't turn around (completely) in his lifetime. That really bums me out. Things are already so bad, I just can't imagine it getting worse before it gets better.
So, now that I've thoroughly depressed the rest of you, what are your thoughts/experiences? Is it as bad in your area? Is this just a mid-west thing?
I'm excited about getting "our" place, but learning the banks really haven't changed their ways and seeing how despressed the market really is has made it kind of a bummer. I guess it's a good time to be a buyer, but it's so sad for the sellers. Many of the homes we're seeing have been on the market for well over a year....with no nibbles in sight.
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