Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Monday, April 17, 2006

Down Payments- Let's Pretend They Exist


Not really sure who this article in Motley Fool is targeting... being the derth of down payments made in the last few years due to the exotic financing being used... many buyers in the biggest bubble areas made no downpayments and could only qualify to get into the game with risky loans. Many have little to no skin in the game. So this article is hardly news....


"What percentage of what you're paying for a house should be your down payment? There's no single best amount, and it will likely vary according to your situation. Mortgage lenders typically like to have you pay 20% or more down (which means you're financing only 80% of your purchase price), but some special loan plans can get that down payment into the low single digits."

"By using private mortgage insurance, you can also swing a down payment that's less than 20% of your home's purchase price. In addition, there are some programs available that offer low-cost loans with very small down payments."

"If you're fairly flush with funds at the moment, and you work in a profession where you never know exactly how much you'll make in any given year, you might consider paying more than 20% as a down payment. The higher the down payment you make, the lower your mortgage loan and, therefore, the lower your monthly payments will be."

"Of course, it's also reasonable to pay only as much as you need to and invest the rest. It's up to you. Just remember that you need to be comfortable with the amount you're putting down and with your monthly payments."

2 Comments:

At 4/17/2006 08:49:00 PM , Blogger moonvalley said...

Very interesting show on KSVY this afternoon. All about RE, hosted by someone from Sothebys'. When asked about the Bubble, she in her wonderful British accent denied one existed. And, if by chance it did, it certainly wouldn't be found anywhere near magical Sonoma, where the rules of gravity do not apply and things only go up. When asked if there had ever been a price drop in RE from a bubble popping she said never, as long as they'd been keeping accurate records (1968). I couldn't believe it, I remember well the bubble poop of 90/91 when my house went from 550k to 200k in what seemed like the bat of an eye, another friends place went from 750k to...well, he sure as shit couldn't sell it, let's leave it at that and draw the veil.
How can people say such things and not be challenged??????!!!

 
At 4/17/2006 09:31:00 PM , Blogger Athena said...

well let's make this its own post... what do you think?

Number one, sothebys hasn't been in the sonoma market since 1968. They are a new kid on the block and only came to Sonoma to capitalize on all things shishi in recent years.

Secondly, all one has to do is go to Zillow and look up properties in sonoma between 1992 and 1998 and see how the values DID go down.

One house in particular that I know of sold in 1993 for around 180k... and then in 1997 sold for 50k less and then in 1998 was sold again and the price only went up by about 20k... so the 1998 price was still lower than the 1993 price even though it had gone up from 1997.

so not only is sotheby's new to the area, but either they don't have accurate records or are lying. Which one do you think it is?

 

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