How to aquire good credit?

In reply to frenchyd :

You're lucky that you didn't have any hiccups in your income that would've been problematic for most people. And you're lucky you were born when/where you were. You were able to lay the foundation for your life in a unique time period in history where it was much easier for an average person to thrive than it has been any other time. I don't begrudge anyone for when/where they were born, and I applaud you for taking advantage of it as much as you did. I also don't want to trivialize the sacrifice of your service and the perks that you earned as a result. You did what you could with what you had and that's a credit to you. But that doesn't mean that the techniques you used are just as likely to succeed today as they did decades ago in a much different environment. 

 I can find no info to back up your claim that loans with smaller down payments have fewer defaults. Everything that I see seems to show the opposite is true. That data is a bit dated, but it shows that loans with a downpayment between 0-5% have a default rate around 16%. Loans with 20% down payments default at a rate closer to 6%. For those that put more than 30% down, the rate of default drops below 2%. Suggesting somebody take out a mortgage with a small down payment, without acknowledging the significantly higher risk of default in those situations is irresponsible. Can it be done? Sure. Should it be done? In my opinion, Only as a last resort.

And that's the key phrase. This is my last resort. This is not the way I really wanted to look for a house. But, it beats the alternative. 

Last resort? I’m just not clear on why renting a different place is impossible. Maybe with roommates again if cash flow is so problematic that you face homelessness when given several months notice of an impending need to move. 

dculberson said:

Last resort? I’m just not clear on why renting a different place is impossible. Maybe with roommates again if cash flow is so problematic that you face homelessness when given several months notice of an impending need to move. 

Ignoring the roommate situation as a possibility, the housing market in Chicagoland is just completely bonkers. My brother was looking for a place so he could finally move out of my parents, my parents were helping him. They finally decided to help him with a down payment because the rents were just too ridiculous. This was a similar area to where Appleseed is looking. 

Appleseed, is Wisconsin a possibility? 

It is. Maybe an additional 15-20 min drive. The trailer idea as a temporary solution is still there as well. 

I appreciate everyone's advice. 

STM317 said:

In reply to frenchyd :

You're lucky that you didn't have any hiccups in your income that would've been problematic for most people. And you're lucky you were born when/where you were. You were able to lay the foundation for your life in a unique time period in history where it was much easier for an average person to thrive than it has been any other time. I don't begrudge anyone for when/where they were born, and I applaud you for taking advantage of it as much as you did. I also don't want to trivialize the sacrifice of your service and the perks that you earned as a result. You did what you could with what you had and that's a credit to you. But that doesn't mean that the techniques you used are just as likely to succeed today as they did decades ago in a much different environment. 

 I can find no info to back up your claim that loans with smaller down payments have fewer defaults. Everything that I see seems to show the opposite is true. That data is a bit dated, but it shows that loans with a downpayment between 0-5% have a default rate around 16%. Loans with 20% down payments default at a rate closer to 6%. For those that put more than 30% down, the rate of default drops below 2%. Suggesting somebody take out a mortgage with a small down payment, without acknowledging the significantly higher risk of default in those situations is irresponsible. Can it be done? Sure. Should it be done? In my opinion, Only as a last resort.

You are right my times were different. To get a zero Down loan back then you had to prove income. 

Even the zero Dow program started under Carter started out wit success and a lower foreclosesure rate. The banks figured out how to shed risk and instead of requiring proof of income  ignored that to gain the origination fee.  

I can understand you getting different numbers. Mine originate from the VA  

banks don’t want to admit their culpability so they play the numbers game.  

As for personal hiccups, Yes I had some big ones about ever seven years of so the sales manager who hired me was replaced. When the new guy came it he looked at his best salesmen since we had the best accounts the new guys were given them but split up 

so I’d go to the competitor and take my Clinents with me.to the new vender  

yes that took starting over but my income remainm

Appleseed might be just before the millennials, but we will throw him in for the sake of this post. 

In reply to frenchyd :

Your nostalgic post on how you did things and how they worked out for you eons ago just don't apply to most the current things going on with affording a home. Especially in this thread.

You seem to just be saying, "well back in 57 I did this so that's all you gotta do". Then when a poster asks you a question or make a counter point, you reply ignoring what they said but tell another story from whatever decade. Which usually has nothing to do with the OP or who you're directly replying to. 

Homes and Jaguars...

To be fare, some of his posts are nostalgia and slightly irrelevant. The idea of having  SWMBO  set up as a "renter" isn't irrelevant at all. I'd rather have blocks of nostalgia with a few good ideas thrown in, than nothing being said at all. 

I do appreciate it all. Really.

In reply to mtn :

I work with a lot of engineers making well into 6 figures who type with one finger.  Well... one finger on each hand.

Ian F wrote:

In reply to mtn :

I work with a lot of engineers making well into 6 figures who type with one finger.  Well... one finger on each hand.

I mean really, who has time for a typing class with a busy schedule... and I do use both hands. 

In reply to Appleseed :

It’s never easy getting your first house. No one pat answer will work so you have to get creative. 

Here are some ideas that I’ve seen work.  Aside from working with banks.  

Work with the clergy.  There are seniors struggling to live in a house too big for them. Maybe they don’t have family nearby or at all . Offer to the help around the house in exchange for room.  See if she would like to travel or do something special while you house sit. 

Do this before though. Figure out a fair price for the house in its current condition and when you have a good relationship offer to do a Reverse mortgage.  Write  the contract so she  will live there the rest of her life and any equity will go towards her burial and unpaid pills.  

Make her happy with the deal and she’ll give you a better deal up front. 

ps women out live husbands by  7-10 years on average  but it may be a widower. 

Watch the personal columns. single people try to hold onto a house they can’t afford by getting renters in.  Inspect it as a renter but keep it in mind as a purchase. When the time is riight make her an offer Give her your card and explain the benefit of not having to pay a realtor.  

House sit. Amazing how many house sitters are offered first dibs on a listing. 

Meanwhile start shopping now!  You need an education in house buying. 

You need to distinguish a dirty messy house from one that is worn out and needs a tear down. How to look at a roof and tell how long before you’ll need to spend 20,000 replacing it. 

Know if the plumbing or wiring will need replacement soon .  

How to look past a house that you hate to see a house you can make your own.  A little paint knock down a wall or two, maybe build an addition, it can change everything.  

Learn location location location.  Why nice old  neighborhoods can be a much better and cheaper deal than a new house. 

What’s wrong  with old neighborhoods too! What to look out for, tell tail signs.  

Why new neighborhoods  with new house. are going to get so expensive. 

Realestate to avoid like the plague even if they are in good shape and a good deal.  

A lot of those deals you won’t be working with a bank so your character and doing what you say is all the paperwork needed. Then if a mortgage is required banks will be eager and work around problems. 

STM317 said:

In reply to frenchyd :

You're lucky that you didn't have any hiccups in your income that would've been problematic for most people. And you're lucky you were born when/where you were. You were able to lay the foundation for your life in a unique time period in history where it was much easier for an average person to thrive than it has been any other time. I don't begrudge anyone for when/where they were born, and I applaud you for taking advantage of it as much as you did. I also don't want to trivialize the sacrifice of your service and the perks that you earned as a result. You did what you could with what you had and that's a credit to you. But that doesn't mean that the techniques you used are just as likely to succeed today as they did decades ago in a much different environment. 

 I can find no info to back up your claim that loans with smaller down payments have fewer defaults. Everything that I see seems to show the opposite is true. That data is a bit dated, but it shows that loans with a downpayment between 0-5% have a default rate around 16%. Loans with 20% down payments default at a rate closer to 6%. For those that put more than 30% down, the rate of default drops below 2%. Suggesting somebody take out a mortgage with a small down payment, without acknowledging the significantly higher risk of default in those situations is irresponsible. Can it be done? Sure. Should it be done? In my opinion, Only as a last resort.

It took me a while to drone through that tomb you sent me. Then I realized who put it together and what their bias is.  

You did notice that none of the zero down loans were VA loans prior to 2000 didn’t you?  That’s when most banks still required income documentation.  In other words they were doing due dilengence. Acting as responsible bankers.  

The warning clue came when No -Doc loans were getting approved. Banks could sell off any loan because they had forced the rating services to certify everything as top rating or they would use their competitor. 

VA ( Veterans  Affairs ) has totally different numbers. Please look them up.  

The simple fact is unless there is fraud intended  people hang onto their houses through thick and thin. 

The 3 leading cause of foreclosures has always been 

1 loss of job. 

2 loss of spouse.

3 loss of health. 

Homeowners will sacrifice many things to retain a home. And if there is equity in the property a bank is smart to refinance in order to keep the homeowner in the property.  

It is considered normal for a bank to lose 10% in a foreclosure sometimes much much more!!Just 10% of a $400,000 house is $40,000 in the loss column and if vandals get in the house that can easily increase up to $100,000 or more, not to mention the carying   costs of a non performing loan on the books. As well as maintenance ( lawns mowed, sidewalks shoveled furnace work etc )  

My point is this, historically zero down has been a success for banks. Except when banks cheat and then try to cover their tracks like they did from 2000 until 2008 

In reply to frenchyd :

Appleseed hasn't mentioned being eligible for a VA loan, so their default rates are irrelevant to this discussion. If he can't use it, it's pointless to discuss in this thread.

I'm also not sure why you keep acting like banks don't verify income these days. What happened 10/20/30 years ago isn't any more relevant to this discussion than the VA loans are. These days banks verify the hell out of income, credit history, etc. That's the entire reason Appleseed started this thread. He needs knowledge from those who have bought a house in modern times because He's trying to get a house now, in 2018. Not some Mayberry 40 years ago where old ladies give their houses to nice guys for a smile after they responded to an ad in the 'personal columns'.

And how much of the LIVING population is even eligible for a VA loan? And if you're eligible you still have to be approved. VA loans and zero down loans just don't seem relevant to this thread. 

STM317 said:

In reply to frenchyd :

Appleseed hasn't mentioned being eligible for a VA loan, so their default rates are irrelevant to this discussion. If he can't use it, it's pointless to discuss in this thread.

Banks verify the hell out of income, credit history, etc. That's the entire reason Appleseed started this thread. He needs knowledge from those who have bought a house in modern times because He's trying to get a house now, in 2018. Not some Mayberry 40 years ago where old ladies give their houses to nice guys for a smile after they responded to an ad in the 'personal columns'.

Yes now! Bank are forced back to being  responsible for their depositors funds. 

Your statement was that zero down had higher foreclosure rates and my response was post 2000 those rates happened because banks didn’t do due diligence.  

I’ve also mentioned several valid ways to buy a home without 20% down. Ways that are valid and legal. Just not easy.  

 People still get old and infirm.  Given a choice most would like to stay in their home rather than an old people’s dying place, er folks home. 

There typically isn’t as “gift” of the house, rather a legal transaction where any equity goes to the owner and ultimately the owners heirs. 

It’s just a little more friendly / civilized than a corporation's  reverse mortgage 

Yes the spouse who acquired a home in a divorce may not have the income to retain it. Rather than suffer a foreclosure some sell or. Even allow the buyer to assume the loan. I’ve explained the process.   Still happens. And not just in Mayberry 

 A close friend moved into an empty home in Rural Wisconsin during a blizzard.  Following the blizzard he found out the prior owner had passed away and the State was in the process of claiming the property for back taxes.  

Hiring a lawyer he found a law that let him acquire the property by paying the taxes.  Check the county’s records for abandoned property.  Most is little pieces odds and ends  but occasionally especially in more rural counties things turn up.  

Contract for deed is still a common method to buy property as long as the owner has a clear tittle. Credit ratings and interest rates are very flexible. 

My oldest daughter bought her first house that way.  Basically it’s a rent to own. Usually converted to a conventional mortgage once sufficient equity is satisfied.  Because the property appreciates at the rate of inflation actual ownership occurs faster than is possible just saving.  

There are several more ways to buy a home.  You don’t have to save for a long time with your money earning practically no interest. Nor do you have to gamble whatever you’ve got on the rigged system called the stock market.  

You do have to do a lot of the work others do for you. And you do have to educate yourself so when a good deal happens you’ll know if it’s really a good deal or not.  

yupididit said:

And how much of the LIVING population is even eligible for a VA loan? And if you're eligible you still have to be approved. VA loans and zero down loans just don't seem relevant to this thread. 

All Vets are eligible for zero down loans. And it will shock you but zero down loans still happen to non vets. 

Just above I listed a few examples  rather than retype it would you please look?  

I will grant you it’s not common anymore.  But it’s occurring on a regular basis.  Education is the magic here.  Learn how. And then find a way. Since there tends not to be a big commission in theses sorts of deals nobody will take you by the hand and sell you. 

Its very much like finding the good deal in cars. Exactly a GRM approach