Wow! The credit market is brutal.

[hubberjub]

My wife and I are in the process of buying a new house in upstate NY. I'm 32 and have been buying houses for investment (flipping) since I was 23. The last house I bought was about five years ago, pre-housing market/credit crash. My wife and I have very good credit, long term employment, and our only debt is our (very small) current mortgage. I have previously been dealing with only short term loans with as little down as possible since I rarely keep an investment house for more than six months. Since this will be our primary home, I am putting down 20%. This morning I received an email from my bank stating that in addition to the 20% down, I need to show the bank that I have assets totaling 50% of the amount financed. Luckily, we're in a position to do that but this just totally blew my mind. I bought my first home with less than $10k down including my closing costs. My how the times have changed. On a good note, the interest rates are incredibly low. Sorry for the rant, I'm still coming to terms with reality.

[Bloozcat]

There are several economic factors affecting this:

The debt to capital ratio for most banks is too unfavorable for the banks. This is due to the many non-performing loans on their books now. The Fed has now defined non-performing loans as loans that are 90 days past due or no longer accruing interest...the latter which the banks have strenuously objected to.

The Fed has also required banks to up their reserve funds significantly to cover their non-performing loans (at or near 100% of the outstanding debt on these assets). Hence, the bad debt to capital ratio.

All of this has caused the banks to pull back in an attempt to shore up their own assests.

And here's the real kicker....

The big banks are currently borrowing money from the Fed at 0% interest and making risk free loans to the Treasury @ 3% interest. Why should they take a chance on you when the federal government is paying them not to?

[hubberjub]

Blooz, I have a background in economics and finance. You are right on. The reality doesn't set in until it hits home (pun intended).

[Tig]

My Dad was a real estate appraiser most of his career and was wanting me to re-finance my mortgage from the current 6% fixed to a 4% 15 year fixed.
It sounded like a perfect opportunity until they demanded 20-25% down. Sorry, but not too many people have that kind of cash, especially not me!

[MAXIFUNK]

50% collateral really what a joke that is..........
It appears things have went to far to the right after being to far to the left.
With most folks houses being upside down where do they expect people to get that kind of collateral. Looks like only the top 10% will be getting new and refinancing home loans what a joke.

[FrankenFretter]

Reading this thread has pretty much dashed my hopes of owning a home anytime soon. Well, I guess there's always the shining beacon of hope of everyman; the "Manufactured" home. Still, I'd rather not live in something that has wheels under it. Call me old fashioned, but I like my foundation to be immobile.

[deeaa]

Heh, when we bought our summer house we didn't have a penny to pay on advance (I never have any money just creditcard debt) but they accepted a mortgage to our house to equal amount. Just made sure it's a non-forcible mortgage meaning they cannot force selling the house if we don't pay etc. so it's safe. After 3 years now, though, the value of the summer house exceeds our mortgage debt by at least 50k though. I'm constantly thinking whether to pay off the debt in the next 5 or so years and then live debt free, or instead withdraw more debt money for living now and keep paying the debt for 15-20 years more. I sure would like a newer car at some point etc. and for that we do need to take more debt I guess.

[Eric]

That's crazy, showing assets totaling 50% in addition to your 20% down. I wonder how that'll affect my ability to sell my house when the time comes. I hope things calm down within the next year or so, but I'm not holding my breath.

Anyway, I'm glad you could swing it regardless.

[marnold]

Remember this the next time a politician whines about how slow home sales are.

[wingsdad]

....the shining beacon of hope of everyman; the "Manufactured" home. Still, I'd rather not live in something that has wheels under it. Call me old fashioned, but I like my foundation to be immobile.
Yep, you can get a 'Modular Home' delivered on a couple or 3 flatbed trailers to be set on a foundation, even with a basement under it, or, if you don't mind being labeled 'Trailer Trash' by myopics like my ex-son-in-law, go for a 'Mobile Home' because it's delivered on its own wheels, like this 1,456 sq. ft. 3 BR/2BA 'double-wide', hauled in by 2 truckers:

http://i17.photobucket.com/albums/b81/wingsdad/House%20Pix/81705-crs.jpg

But a week later, the axles and wheels get pulled, the 2 modules get zipped together & about 100 or so piers are set to hold it up:
http://i17.photobucket.com/albums/b81/wingsdad/House%20Pix/82505-crs.jpg

Then a block foundation gets built around that to 'set' it all, and you throw a 2-car garage up next to it:

http://i17.photobucket.com/albums/b81/wingsdad/House%20Pix/32606-crs.jpg

And eventually, you do a few more things to make it home and it looks like this:

http://i17.photobucket.com/albums/b81/wingsdad/House%20Pix/115_0910_2385cr.jpg

It doesn't get a 'conventional' mortgage because it's a 'Manufactured Home'...only certain lenders (like US Bank) offer 'Manufactured Housing Loans', sorta like a car loan for 20 years, and you can't get standard 'Homeowners' Insurance, you gotta find 'Mobile Home' Insurance (Allstate).

But it was half the price of a 'Real House' , it's home...and we're not waiting for an eviction notice like that ex-son-in-law for defaulting on the mortgage for his palace ...who may soon be 'homeless', while we'll just be 'trailer trash'.

[piebaldpython]

Pre-fab houses have come a long way. They can be quite stylish and are well made and well insulated. As WD said....they bring it in on flatbeds and will put it ON a concrete foundation if you'd like.

My niece has one and it's a beaut.

Quite frankly, at prices today, and problems getting loans.....it's a wonder anyone can afford to buy a house. I paid my mortgage off 6 years ago and I get the willies just hearing how much people pay for their mortgage.

[deeaa]

Over here I think most houses are more or less pre-fabricated. You just need to dig a hole six feet deep and fill it with plumbing and concrete and insulation etc. infrastructure, then you get custom built wall pieces from the factory, put them up, add rafters, then cover everything with whatever you like for surface materials.

I was actually shocked when I was in the U.S. that even upstate N.Y. where it's just as cold as here in the winter, many houses seemed to be built quite flimsily compared to how most houses are built here. I mean, the walls seemed at best half the thickness of what we use, and often there were mere single or double glassed windows, when we always have 3 or 4 layers. And the whole house might be built with no basement/deep concrete base that extends under the earth frost (3-4 feet), just on stilts of some kind. I suppose the cold time of the year is much shorter there or something, not warranting for more insulation.

[Heywood Jablomie]

Over here I think most houses are more or less pre-fabricated. You just need to dig a hole six feet deep and fill it with plumbing and concrete and insulation etc. infrastructure, then you get custom built wall pieces from the factory, put them up, add rafters, then cover everything with whatever you like for surface materials.

I was actually shocked when I was in the U.S. that even upstate N.Y. where it's just as cold as here in the winter, many houses seemed to be built quite flimsily compared to how most houses are built here. I mean, the walls seemed at best half the thickness of what we use, and often there were mere single or double glassed windows, when we always have 3 or 4 layers. And the whole house might be built with no basement/deep concrete base that extends under the earth frost (3-4 feet), just on stilts of some kind. I suppose the cold time of the year is much shorter there or something, not warranting for more insulation.
And that's what makes America great - cutting costs at any cost in order to increase the botom line.....

[hubberjub]

Wing, there's nothing wrong with manufactured homes. They aren't my thing, but that's just because I like houses with history. My current house is in a neighborhood that's on the historical register. It was built in 1889. The house I'm buying is in a town of 300 people and was built in 1850. There's something about living in a house that's been cared for by generations of people that appeals to me. I feel as though I'm continuing the houses legacy.

[Bloozcat]

Hurricanes like manufactured homes. They're the second course right after the mobile home appetizer...:agree

Actually, all new homes down here are supposed to be built to a code that used to be called the "Miami/Dade" code. It just means that there are more stringent specs for building materials now and your house shouldn't blow away in less than 130-140 mph winds. The manufactured homes are supposed to meet the new standards...but so are mobile homes, and every hurricane that crashes through blows a bunch of those to Oz.

My home that was built well before the Miami/Dade code went into effect here has withstood three direct hits from hurricanes and came through with barely a scratch (except for the flimsy aluminum screen pool enclosure. But even that has been rebuilt to the new code now).

Now, I have been to places that had no building code at all. None. Zip. Nada. Like north Georgia where we used to have a second home. We found a builder who constructed his homes to the North Carolina building codes which were almost identical to Florida at the time. He built homes in north Georgia and North Carolina only a couple of miles away, so it was easier for him to standardize them all.

[poodlesrule]

BC, is there a relatively easy way to retrofit braces and reinfocing palates to, say, roofs, even on an older code structure?
My impression (tv show?) was that *some* securing was going a long way.

A similar type of issue is houses where the soleplate is not bolted down or into the foundation. I think it is common in older houses (like mine, 1930's).
This may surprise a lot of folks in case of a mild earthquake, someday, finding their houses just slipping off the foundation.

[street music]

Wingsdad I hear you brother, we have been in our factory built home for over 20 years, no one believes that it was brought in on two flat beds but it has been and still is a great home.

[Bloozcat]

BC, is there a relatively easy way to retrofit braces and reinfocing palates to, say, roofs, even on an older code structure?
My impression (tv show?) was that *some* securing was going a long way.

A similar type of issue is houses where the soleplate is not bolted down or into the foundation. I think it is common in older houses (like mine, 1930's).
This may surprise a lot of folks in case of a mild earthquake, someday, finding their houses just slipping off the foundation.

Yes, there are hurricane straps that can be attached to the trusses that will bring them up to code. Of course "up to code" assumes that the rest of the roof substructure is not sub-standard in that it was constructed in accordance with the building codes of the last 20-30 years.

[Tig]

Also, if your home's trusses use gang nail gussets, do yourself a favor (as well as your local fire department) and reinforce the ones you can get to with screws or heavy brads. These substandard POS systems fail quickly in a fire and are not all that strong under high wind or heavy snow loads.
If possible, reinforce them with galvanized plates and long screws, but without removing the old gussets, of course.

http://www.pre-engineering.com/resources/tenconn/gussetw.jpg

[deeaa]

When I speak of manufactured homes, I mean something like this:
http://www.jukkatalo.fi/mallisto/images/normal/116.jpg
Or

http://www.kastelli.fi/portal/pls/portal/docs/1/406790.JPG

They are called 'package houses' here and they are not strictly pre-fabricated, but the houses are more like built somewhere in the factory in something like 20 parts that each fit a truck bed, and then assembled on site and built. I don't think the structures per se differ from a house that would be built completely on site.

The same way most apartment buildings are done, except in apartment buildings they'd build a concrete/steel 'skeleton' and then furnish it all over with similar 'element' wall parts etc.

I think that's mostly used because the 'best' season for building is quite short here; you only have a few months a year when it's reasonably warm and dry and thus it makes sense doing it with this kind of 'elements'.

The selection for this kind of houses is HUGE, there are hundreds and hundreds to choose from, ranging from 2-bedroom houses for maybe $30.000 to six-bedroom houses up to $250.000 or so. I'd venture an average home such as depicted in these pictures costs 80.000 to 100.000 in dollars.

The house itself isn't the most expensive one; the property adds about 50% and then all the infrastructure etc. which would bring an average house price tag to maybe 250-300K around here. My house was handbuilt in early 50's and much renovated, and it's worth is circa 300K now.

If I were to build a house for myself now, I'd probably however build it out of stone/concrete blocks and brick outer walls and have it drawn uniquely by an architect - it'd cost maybe 30K more than a package house but in the overall picture it's not hugely more expensive. I could save that much by doing much of the work involved myself.

But speaking of hurricanes and earthquakes, we have neither here. Some small bursts of wind, sure, some might even fell trees here and there, or throw around a few camping wagons and such light garages/huts but I've never heard of any natural phenomenon being able to seriously damage a house here - the only exception would be a tree falling on top of it. We had a tree fall over our house once and had to rebuild a small part of the roof that was damaged. But the roofs are built to withstand up to six feet of heavy snow and ice so they'll last thru quite a beating from winds too.

[deeaa]

This is what my house looks like BTW:

http://lh6.ggpht.com/_6nk96PAbWiI/SVBxlxY-3UI/AAAAAAAABWg/6fs9fOqbeaA/s800/IMG_0585.JPG

It's what's called a 'Front line soldier house' because this kind of houses were built by thousands and thousands after the war when soldiers returned home, they are all very similar in style and such, and very very common in every Finnish town. Very often depicted in movies etc. as everybody's dream to find a traditional handbuilt house like this in a city neighborhood and renovate it, have a golden retriever and a Volvo STW, LOL :-) but in reality these type of houses are a lot of work and their basic structures impose some limitations to furnishing them, for instance the idea that the whole house is built around a huge smokestack/furnace center 'tower' and in each floor the fireplaces and such are thus in the center of the house and quite big; ours has a full dozen pipes in the chimney for instance. SO all the rooms have to be around it in a circle sort of.

[Bloozcat]

If I wanted to build a new home today that was strong, energy efficient, and darn near impervious to the elements, I'd opt for a dome structure.

There's a guy on another unrelated site I visit who builds them. He posted about 30 pics of one of his under construction from the sight preperation through the finished interior. It was a large dome with a smaller one connected to it for a garage. Some people can't get over the non-traditional, futuristic look of the structures, but if that doesn't bother you they are very cool homes to own.

One of my co-workers has a relative who owns one up in Kentucky. During a really bad wind/rain storm a large tree came down right on the dome home. It hit, bounced, and slid to the ground. It cost him $100.00 to pay someone to fix the cosmetic damage the tree caused. His insurance agent told him that had the house been a traditional wood frame or CBS (block), the tree would have taken a large section of the roof and the support wall down to the ground. It would have cost tens of thousands of dollars to fix.

[tunghaichuan]

I saw this design in Sunset magazine a few years ago:

http://www.mkd-arc.com/homes/glidehouse

&

http://www.mkd-arc.com/wp-content/uploads/2010/08/mkD-Glidehouse_08_10.pdf

Very cool, flexible, modular design.

[deeaa]

Interesting. Neither would work here, though.

In case of a dome, the windows, if any, would be covered under snow most of the year. Also I foresee a lot of other problems associated with snow etc. and dome structures. There are some dome structures used here, mostly for large sports halls etc. but windowless. A sharp inverted V roof has many of the good qualities of domes, though.

That window style house is also nice, but wouldn't be very usable most of the year either. That kind of build is getting, however, quite popular in summer homes which are empty most of the year.

One interesting idea of late was to build houses on the water, just build them on big floating concrete bases. There's a lot of good to it - needs less insulation in the winter as the base is never under zero degrees celsius anyway, it's under water, and stuff like that.

If I were to build me a house, I'd build basically two houses joined with corridors of sorts to form a square with an inside yard - everything on one level, no basement or upper floors. High roofs sloped so that most of the snow falls on the outer side of the complex. Preferably on a sloping terrain so 3 outer sides of the house could be basically a balcony for summer use.

When I was a kid I loved drawing house plans on millimetre paper...I wanted to become an architect, but my plans were killed due to really poor mathematics scores at school.

[Spudman]

This topic hit home yesterday when I was in a meeting with the mayor. He told me a business that is close to my house finally got financing for a new location, rather than the residential zone they are currently in. This is a very large and successful butcher shop/meat dealer/caterer and the bank initially told him he needed between 15% and 20% down to finance the new location. Then they kept messing with him and he is now having to cover around 40% down. That's crazy for a long term successful business.

[Tig]

Thread revisit.
I've been shopping fixed mortgage re-finance loans the last 6 weeks. Many advertise below 3%, but turn out to be bait and switch ARM loans, or have terrible customer service reviews. I gave up on most and started working with the bank that my current loan is with, and they rejected me, even with a 749 credit rating!
(the rating system ranges between 320 for poor, to 844 for stellar)

All I can guess is there were too many hard credit inquiries from the other lenders I spoke with. I'm done. :flamemad:

[hubberjub]

Stick with it. Find out why they turned you down and ask how the problem can be rectified. Have you been in your current house for a while or did you just buy it within the last few years? Do you plan to keep the house for a long time or are you just trying to lower your monthly payment for the short term? Was the value of your house affected by the housing slump?

[mapka]

I went to the bank today to open a CD. I couldn't believe how low the rate are these day. Was basically told that the bank(s) are sitting on lumps of money but refuse to loosen the lending rules. Seems they didn't have to jump through many hoops to get their bale out money from us (US Citizens).

[Tig]

I forgot to update...
I ended up going with Quicken Loans. It is a real pain to buy/re-finance these days, but they were easy to work with. We'll be saving about $46,000 over the life of the new 20 year mortgage, and will pay it off in 16 years or less. It is about $320 per month cheaper than the old mortgage, so we'll put in an extra $350 into the principal each payment, and increase that more later. That will shorten the mortgage even more with additional savings.