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Regular Visitor
McDeeee
Posts: 2
Registered: ‎02-11-2013
0

It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

So I've been looking for a home for about 3 months now. Got my pre-approval and got my cash to put down. Problem is with my FHA loan and 3.5% down I seem to be on the bottom of the offer pool. I've made several offers either at list price or above with no luck.

Where's everyone getting all this cash to throw down at purchases? China?

I guess it's just tough on the beach side of the 405, I must not be the only one who wants to live somewhere where you don't need to run your AC most of the year.

Now my lease is up and I have to move. Figured 3 months would be pleanty of lead time to find a home in the low $400's. Boy I was sure wrong.

Sorry, Just needed to vent.

Regular Contributor
SunshineTax
Posts: 94
Registered: ‎01-14-2013
0

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

FHA is basically a sub prime loan. I think it's better for the housing market if FHA offers get tossed out.

Super Contributor
Cadenza
Posts: 309
Registered: ‎04-16-2008
0

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

[ Edited ]

I hear ya...

 

Mainland Chinese with dough - legit or corrupt - they do not trust their government.  In droves they evacuate their cash and park it all over the world.  First it was Australia, which has been trending downward since 2011.  For years, mainland Chinese poured more cash over the Hong Kong Chinese and pushed RE prices in Vancouver BC into the stratosphere...  it too is showing weakness.  Now it's the US.  They paid cash because it came easy to many of them.  I know of Asian kids in their 20s who have allowances of $5k - $7k per month to party and splurge. 

 

China's Communist party cadres launch property fire sale

 

"The CDIC report, which was obtained by the Economic Observer newspaper,

suggested that nearly 10,000 luxury homes had been sold by government officials

in Guangzhou and Shanghai alone last year.  It also claimed that an astonishing

$1 trillion (£630 billion), equivalent to 40 per cent of Britain's annual GDP, had been

smuggled out of China illegally in 2012."

 

"In the United States, the National Association of Realtors said that more than

$7 billion of properties had been bought by Chinese in the US last year.

Some high-end homes are now specifically built for rich Chinese with ponds for

koi carp and a second kitchen for pungent cooking."

 

Gold Contributor
BobPhillips-RE
Posts: 1,701
Registered: ‎12-13-2010
0

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

The theory that the Chinese are buying all our properties is strictly HOGWASH.

 

30% of Orange County sales in 2012 were cash transactions, and the majority of those cash buyers were fellow American investors, either looking to flip properties, or hold onto to rent to the people who haven't been able to save up at least 20% to put down.

 

To be successful in getting a property with little money down you need to be A.)  Luckily in the right place at the right time, also known as you AND your Realtor doing your due diligence to be "Johnny on the spot",  B.)  Find more alternatives - lending wise - than FHA, and there are some, or C.)  some combination of the above.

 

You need a GOOD, experienced lender rep, and a GOOD, experienced Realtor working in your corner, getting your ducks lined up, so that when the right property pops up, you're on it, like white on rice.  Even then, you might lose a time or two, because even with a good lender and a good Realtor, you'll occasionally run up against a not so good, or not so ethical Realtor.

 

You can't win 'em all, but you CAN improve your odds by being diligent, and being smart.

All this, of course, is merely MY opinion. Thanks for reading.

Bob Phillips - Realty ONE Group - South Orange County, CA
Redfin Open Book Certified
LoansbyJW
Posts: 3,208
Registered: ‎04-30-2009
0

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

[ Edited ]

Even in a dual agency transaction, if there are two offers on the table and one of them is FHA financed, the seller is likely to be advised to take the Conventional offer over the FHA, even if they are similar in price. I say this from experience, not conjecture.

 

If 3% down is your only option, there are Conventional Conforming 97% LTV loan transactions. Unfortunately not many people qualify for them and getting PMI is very difficult. Most 3% down transactions are for condo purchases which also makes it difficult to structure given the high rates these loans have relative to a low rate FHA loan. Over the past 90 days of looking have you been able to save up enough to structure a 95% Conventional Loan ($417k max)? That is going to help more than anything else.

 

Unfortunately FHA is a stigmatized loan product and the majority of ill advised sellers will simply pass on an FHA insured loan transaction with a solid backing and willing buyer and go with a buyer who has more cash to close. Those said same high down payment buyers often have offers on two or three other homes at the same time and frankly are MORE willing to cancel on one purchase than a solid and energized FHA buyer.

 

Since the rotation from a buyers to a sellers market has now been completed, getting as few objections (even the perception of an issue) out of the way early on is important. Obtaining a Conventional conditionally loan approved loan structured is going to remove some of the barriers to purchasing faster than anything else.

 

Thanks for reading,

John Wheaton NMLS 653018 | Redfin Open Book Recommended Lender
See all my reviews
Gold Contributor
BobPhillips-RE
Posts: 1,701
Registered: ‎12-13-2010
0

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

As JW stated, ( And as I had earlier.)  a 3.5% FHA is NOT the only low down payment loan program available.

 

I've had numerous lenders send me their blurbs about 3% down FHA "alternatives". 

 

This was a program described by one of my preferred lenders, in case a $417k loan isn't big enough:

 

Maximum loan amount $625,500

Maximum Loan to Value is 90%

Minimum fico is 660

Exceptions on a 640 score ( case by case )

Owner occupied

Borrower must have a minimum of 5% of own funds

All this, of course, is merely MY opinion. Thanks for reading.

Bob Phillips - Realty ONE Group - South Orange County, CA
Super Contributor
Cadenza
Posts: 309
Registered: ‎04-16-2008
0

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

[ Edited ]

OP:

I would suggest to anyone considering low down payment avenues (ie FHA 3.5%) to do a simple spread sheet / calculation to find out how much more  you will paying due to mortgage insurance over X number of years till the required LTV ratio is reached.  I would be conservative on RE value appreciation.

 


BobPhillips-RE wrote:

The theory that the Chinese are buying all our properties is strictly HOGWASH.

 


But the theory is pushed by RE agents, not pinpointing the Chinese alone but foreign buyers.  One Westwood agent told me, "Buyers from China and the Middle East are descending upon the Valley (S.Fernando) like locusts, with cash in hand." 

 

She is pretty, has sexxy curves and a delicious S.American Spanish accent.  How can such a hotty say things that are not true???  

 

Hogwash indeed.... as reported up there by the NAR-ly boys, the Chinese spent $7 billion in the US.  Even if 90% of that amount was transacted in CA, it isn't gonna make a huge dent.  Of course, there are plenty of ways to make a purchase or invest w/o revealing one's identity or ethnic background.

 

 

Regular Contributor
zaxolot
Posts: 51
Registered: ‎03-12-2012

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?

as mentioned earlier, I also have the opinion that FHA constitutes subprime and we do not need that in the market.  We need to go back to the days of 20% down loans with the time tested 28-36 front end/back end ratios with the appropriate reserve requirements.

Regular Contributor
truelie
Posts: 71
Registered: ‎02-26-2012
0

Re: It's getting frustrating with the FHA Pre-approval. Is it time to give up the dream for now?


Cadenza wrote:

OP:

I would suggest to anyone considering low down payment avenues (ie FHA 3.5%) to do a simple spread sheet / calculation to find out how much more  you will paying due to mortgage insurance over X number of years till the required LTV ratio is reached.  I would be conservative on RE value appreciation.

 


BobPhillips-RE wrote:

The theory that the Chinese are buying all our properties is strictly HOGWASH.

 


But the theory is pushed by RE agents, not pinpointing the Chinese alone but foreign buyers.  One Westwood agent told me, "Buyers from China and the Middle East are descending upon the Valley (S.Fernando) like locusts, with cash in hand." 

 

She is pretty, has sexxy curves and a delicious S.American Spanish accent.  How can such a hotty say things that are not true???  

 

Hogwash indeed.... as reported up there by the NAR-ly boys, the Chinese spent $7 billion in the US.  Even if 90% of that amount was transacted in CA, it isn't gonna make a huge dent.  Of course, there are plenty of ways to make a purchase or invest w/o revealing one's identity or ethnic background.

 

 


Chinese (Oversea) are not very interested in southern O.C (even Irvine right now, there are few homes for sale), buyers are American investors, they get too much "FREE" money from government.. I feel like the Bubble 2.0 is coming now, but in 4 years, when president leave office, I think US will be in big troubles, we can see another around foreclose wave....