Market Conditions: Percentage of FHA Loans in Chicago Area Falls in 2010 As Lending Tightens
Crain’s is reporting that the percentage of FHA loans fell 36% in 2010 from the year before in the Chicago area as lending standards tightened.
In 2010, 12% of all Chicago-area home loans were FHA which was down from 18% in 2009. This is still a dramatic increase from the bubble years when FHA loans accounted for only 2% of all loans.
(And no- I don’t know why we are only now talking about 2010 data when it is nearly the end of 2011.)
FHA loan originations may have dropped last year because mortgage activity over the past two years has been dominated by refinancing, said Guy Cecala, CEO and publisher of Bethesda, Md.-based Inside Mortgage Finance Publications Inc., a trade publishing company.
“FHA doesn’t benefit as much from the refinance market,” he said. “Those loans are primarily for home purchases.”
Another reason the number may have dropped, he said, is that the minimum down payment required for the loans increased to 3.5% from 2% two years ago.
Still, the greatest lure for using an FHA loan is the low downpayment requirement. As we have chattered about numerous times, younger home buyers simply cannot easily save up the 10% or 20% down payment.
As with conventional loans, FHA lenders are scrutinizing personal financial documents more closely. When newlyweds Dustin and Melissa Landgraf bought a single-family home in Bloomingdale last month for just under $200,000 with an FHA loan, they had to provide bank statements and copies of checks they received as wedding gifts, said the loan officer who handled their mortgage, Tim Corr, vice-president of mortgage lending at Guaranteed Rate.
“They (underwriters) see large deposits going in your bank account and want to know where it’s coming from,” Mr. Corr said.
The Landgrafs were able to put down just 3.5% and get a 30-year fixed-rate mortgage with a low interest rate of 3.75%. The couple, who got married in September, isn’t able to save a lot of money each month in part because of student loans, Ms. Landgraf said, so putting money aside for a 20% down payment would have taken years.
“If we had to go the conventional route, we wouldn’t own a house right now,” she said.
But with Chicago area home prices continuing to fall, it doesn’t take long before a homebuyer who put down 3.5% is underwater.
Delinquencies on FHA loans have remained fairly constant in the past five years. Though no metro-level data were available, 15.3% of FHA mortgages in Illinois were past-due in the third quarter, according to the Mortgage Bankers Assn., compared with 15.5% in the year-earlier period and 15.1% in the third quarter of 2006. not 2009?
By comparison, the past-due rate for all mortgages in Illinois was 8.5% in the third quarter of this year, compared with 9.8% in the same period last year.
Are today’s FHA loans a disaster waiting to happen in just a few years time?
FHA loans plummet in the Chicago area [Crain’s Chicago Business, Mary E. Morrison, December 1, 2011]
“Are today’s FHA loans a disaster waiting to happen in just a few years time?”
Yes, if the private loan market won’t loan them money, there’s probably good reason why. Insufficient funds is the reason for this couple. Welcome to the new world of government where if you cannot afford it, don’t worry, you deserve it anyways and we will be more than happy to give you more than you need.
Article in the WSJ about this very topic yesterday. They are estimating 50% of them coming hat in hand for a bailout in 2012.
I think there is a valid target market for FHA as a family member of mine with a stable job whose spouse has one too just purchased a modestly priced foreclosure (~150k) with an FHA loan.
However that is quite a bit different than someone buying a 756k house in California or New York with an FHA Loan needing have only 26k down. The FHA needs to be reined in regarding these huge loan balances at the very least.
Of course we will be bailing out FHA in 2013. Down payment requirement for loans over $150K should be 10%, and under 150k should be 5%. The 3.5% requirement is absurd, and never should have been allowed. I don’t care about the effects of any changes in the down payment requirements on the housing market, because it has been artificially propped up by FHA anyways. Let the market self-correct and the pain will be over much sooner and the market functioning better again.
“Another reason the number may have dropped, he said, is that the minimum down payment required for the loans increased to 3.5% from 2% two years ago.”
This is hilarious in its own way. How many of these people couldn’t save the extra 1.5%? Amazing how screwed up people are in their abilities to save, and now they are homeowners. I’d love to see default rate data. This could be our next sub-prime crisis.
I’d be curious to see stats on the percentage of green zone mortgages that are FHA.
“Article in the WSJ about this very topic yesterday. They are estimating 50% of them coming hat in hand for a bailout in 2012.”
Bob, you got a link to the article, it sounds like a good read.
“Yes, if the private loan market won’t loan them money, there’s probably good reason why.”
Yep, that every loan written is being written at a negative expected value. An immediate ‘expected’ loss and transfer of capital.
Lovely!
I think the numbers don’t represent the true story. In theory the FHA loan is supposed to help those who cannot easily come up with 20% and don’t have the absolute best credit scores. However, a lot of smart people are using FHA loans to get good rates with low money down. After all, why put down 20% on something that may lose value quickly in these uncertain times when 3-5% will do.
My point is that those people probably aren’t the ones defaulting on the FHA loans but if we took them out of the equation, that 15% would actually be a larger percentage.
How in the world can FHA buyers get 3.75% mortgages with no money down? When I prequalified a while back the best I could do (with no points) was 4.0% with 20% down and 800+ credit score. It makes no sense.
http://www.redfin.com/IL/Bloomingdale/139-Warren-Ave-60108/home/18192198
Wow, that’s hideious. I hope they can save just a little money to fix up this dump. And they’re west of 355 – to me that’s far out there. I’ve never even lived that far west.
But in all honesty, they paid a little over $100 psf for a house on a large lot (60×180) in a nice suburb, the house needs a little updating but it has new roof, garage, windows, siding, refinished kitchen (really???) so that alone is tens of thousands of dollars they don’t have to put back into the house. And it’s nearly 1,800 sq feet finished (or so the assessor says).
In all honesty, this is at 1999 or 2000 prices, and it’s hard to argue with that.
3.75% on a 30 yr fixed with 3.5% down?!?!?
i shouldve went FHA.
“How in the world can FHA buyers get 3.75% mortgages with no money down? When I prequalified a while back the best I could do (with no points) was 4.0% with 20% down and 800+ credit score. It makes no sense.”
They deserve it, man. They’ve worked hard, they’ve got student loans, you can’t expect them to save for 3 or 4 years and any downpayment above $7,000 for a $200k house is just the fatcat 1%ers getting over on everybody. They have a fundamental right to live where they want to, man, and the market can’t tell them otherwise. Read the Constitution sometime, lawboy.
The catch is that their mortgage ins. is probably 200$ a month!
“How in the world can FHA buyers get 3.75% mortgages with no money down?”
Because it’s a risk free government handout, but at least they get fucked with pmi. Best I could do with over 25% down and excellent credit was 4.625% earlier this year, just refinanced to 4.00%.
“When newlyweds Dustin and Melissa Landgraf bought a single-family home in Bloomingdale last month for just under $200,000 with an FHA loan, they had to provide bank statements and copies of checks they received as wedding gifts”
I remember going through that last year, it seemed ridiculous to me… my wife organized her friend’s bachelorette party and paid for everything and then their friends paid her. She had to provide receipts of all the party expenditures to our lender to validate the amount. Luckily she had them, not sure what she would have done otherwise. Also, providing months worth of expense reports wasn’t exactly fun either.
“The couple, who got married in September, isn’t able to save a lot of money each month in part because of student loans, Ms. Landgraf said, so putting money aside for a 20% down payment would have taken years.
“If we had to go the conventional route, we wouldn’t own a house right now,” she said.”
So if they can’t save much of anything month to month, then they are only one job loss or emergency expense away from missing mortgage payments. And don’t forget in addition to monthly PMI there is upfront PMI, so with closing costs and that they are already underwater on day 1 even with 3.5% down. The funny thing is if they tried to sell the place for the same price they paid for it, they would need a larger payment to close the sale than they needed to close the purchase!
Do people really think they own something if they owe 101% of what it’s worth?
“She had to provide receipts of all the party expenditures to our lender to validate the amount.”
DC is that because you tried to buy/refinance so soon after the party? In other words, if it had been say three months later, do you think they would have just taken the bank statements at face value? We received some checks as wedding presents which we used to start a joint account and I’d hate to jump through crazy hoops to show where the money came from six months later.
“The couple, who got married in September, isn’t able to save a lot of money each month in part because of student loans.”
It was their choice to take out those huge student loans. They are not entitled to buy a house if they cannot afford it. You don’t get to do both, bud. Make your bed and lie in it. I’d love to know what their degrees are in, btw.
“Do people really think they own something if they owe 101% of what it’s worth?”
Surely the put option they purchased is “something” so yes. Plus, they have unlimited upside potential.
” but at least they get fucked with pmi”
against the 3-4 years of living rent free, while waiting to be foreclosed on?
Art and Philosophy of course. 😀
” I’d love to know what their degrees are in, btw.”
“We received some checks as wedding presents which we used to start a joint account and I’d hate to jump through crazy hoops to show where the money came from six months later.”
I just did a mortgage and I only had to justify deposits/withdrawals for the last 2 months.
They probably spent money that could have been used for a down payment for their wedding. When the son of a family friend got married, the bride’s parents said they could give the couple a $75k down payment for a home or a they could use it for a wedding. The bride wanted the fancy wedding! They ended up having to live with her parents after they got married.
You are all ostriches!!! All of the news and data point to a recovering economy (jobless rate at 2 year low, stock market soaring, etc.) and all you guys talk about is how housing is going to continue to decline for several more years. This is the most classic case of wishful thinking. For all those readers out there who don’t post – don’t listen to the HDs and Gs on this site. House prices are going to go up from here on out – and here are the reasons:
– improving economy (biggest reason – boosting confidence)
– people LOVE real estate and most people aspire to BUY their own home/condo – this will NEVER change
– the general population is non-analytical – they don’t know or care about CSI or any data – they will start looking and, if they can afford the monthly payment, they will buy. There are several ways around the 20% down payment (FHA loans, contract sales, lease/option, borrowing from relatives and even “borrowing” from the seller).
“stock market soaring”
we are where we were 2 weeks ago.
The deposit thing is driven mostly by Fannie/Freddie. The reason for sourcing the deposits is that the banks are looking for fraud/money laundering. As I have mentioned before, the amount of fraud in residential real estate is mind boggling. You’d be surprised at the stuff people will try to pull. Borrowers will get an undocumented loan or could be a straw buyer. So by requiring all funds be documented and sourcing deposits, it prevents some of the fraud.
However, what happens is that because of the secondary mortgage market and the legal reps and warrants, there is very little room for underwriters and banks to use any common sense when it comes to these matters. Loans will get kicked backed over the most asinine stuff, but if it isn’t documented it doesn’t matter how stupid it might be – the loan is essentially worthless. For example, I had a bank kick back a loan to us AFTER closing when we went to sell it off. My client had $1 million in cash, put 40% down, 800 FICOs…. blah, blah, blah. The purchasing bank wouldn’t buy the loan because our underwriter missed a $1000 deposit into an account with $1 million dollars in it! WTF? It used to be we could just exclude the deposits from the proceeds used for calculation if we didn’t want to be bothered wth documentation, but we can’t do it anymore EVEN IF THE MONEY ISN”T NEEDED.
The bottom line is that any movement of funds between accounts needs to be sourced so it is best to keep deposits other than payroll related and transfers to an absolute minimum at least 2 months prior to applying for a mortgage. If it shows up on the statement, we have to document it.
Clio: what does that have to do with FHA loan quality, exactly? If you are going to shill at least be on topic…
“DC is that because you tried to buy/refinance so soon after the party? In other words, if it had been say three months later, do you think they would have just taken the bank statements at face value? ”
Yes I think they went back 3 months for us, and these expenses/deposit were within about two months.
“Clio: what does that have to do with FHA loan quality, exactly? If you are going to shill at least be on topic…”
Took the words right out of my mouth.
FHA fell off because there are now other alternatives that are usually cheaper. From about ’08-’10, you couldn’t get above 90% with PMI, so FHA was really the only option. However, almost all the PMI companies have loosened up so now you can go to 95% with PMI and the terms are usually better than FHA. FHA only works best if the FICO score isn’t about 740 typically.
FHA also jacked up their MI rates to 1.15% so even though the rates on FHA are stupidly low, by the time you pay the MI, you are better off with a higher rate/lower or no PMI on a conventional mortgage.
Jenny –
The friend of a friend recently did the same thing as your friends. She got knocked up on her second date by a guy she met outside Magnolia Bakery in the West Village. He is 10 years her junior and does not have a good job. She did have a good job but she is a contractor and is getting 1/5 the work she got a couple of years ago. She recently sold an underwater home in the sticks of Virginia which was an impulse purchase when she had temporarily left NY. They are having trouble paying their rent and putting food on the table, but they recently had 2 wedding ceremonies. One in NY and one in San Francisco. Her father gave her 25K and she put it all towards the weddings.
I don’t understand it. It’s just one day, people!!! I don’t feel the need to get married because I don’t want kids, but if I ever change my mind, I’ll do it at City Hall. You can even buy the rings there.
Russ, I’m curious what you think about the FHA program as a whole. I think by design it is only supposed to help people who can’t otherwise afford the buy a house, but I think we finally learned those people probably shouldn’t be buying anyway! From your perspective, does it have enough value to justify its existence?
BTW my sibling got a 3.75% rate as well. I was in disbelief at first. My advice to them wad pay doen the loan to 78% ASAP to drop PMI then minimum payments for the rest.
“BTW my sibling got a 3.75% rate as well. I was in disbelief at first. My advice to them wad pay doen the loan to 78% ASAP to drop PMI then minimum payments for the rest.”
You must pay monthly PMI for 5 years if it is a 30 year loan. If it’s 15 years or less than you can drop it as soon as you get to 78% LTV
iirc pmi can be prepaid so that you don’t have to pay it every month. Something like 1% of the loan which is probably what I would do.
“iirc pmi can be prepaid so that you don’t have to pay it every month. Something like 1% of the loan which is probably what I would do”
the rules seem to change every year, plus it depends if you are talking about FHA or conventional. for FHA there is both upfront and monthly. for conventional, you may pay it all upfront, and then you are betting on how long you will keep that loan. it acts similarly to paying points for a lower int rate
DC, is that specific to FHA loans? I have a conv 30 yr and was quoted the 78% to rid ourselves of PMI
“You must pay monthly PMI for 5 years if it is a 30 year loan. If it’s 15 years or less than you can drop it as soon as you get to 78% LTV”
DC, I think the intent of the loan program is fine. Even though many like to moan about the low down payments, the reality is that FHA has been doing that for decades with no issues. VA loans have the best 100% financing program available and also lower default rates than conventional loans. What is different though is that we’ve never had such a wholesale drop in values on a national basis combined with unemployment. People’s attitudes about homes has also changed. In the past, people bought a house and lived in it for 10-15 years or longer so even though they start with little equity, they build it eventually. Now we have everyone wanting to buy a 2/2 or small house and move up in two year or three years which doesn’t work as well.
Also, It isn’t the low down payment by itself that is the problem, it is the risk layering (mediocre FICO scores/credit history, high DTIs, minimal reserves) combined with the low down payment.
FHA needs to tweak its guidelines, but given the politics involved, I don’t expect much. Most banks significantly overlay FHA guidelines anyway. The loan quality could be higher imho. Where FHA shines though is when you have borrowers who have something minor that turns into a mountain with conventional loans (i.e., Ballys gym falsely put you in collection and your FICO score is 660). Conventional lending with screw you over big time with the price adjustments, while FHA won’t.
Zerohedge has been talking for a long time about the benefit to all important consumer spending from a squatters economy, now Cramer is talking about it too (clip is too long, Pisani is a tool, imo):
http://www.youtube.com/watch?v=ycEPO166lWU
“against the 3-4 years of living rent free, while waiting to be foreclosed on?”
RoscoeVillage, PMI drops off by law at 78% LTV. However, that is only based on the actual amortization schedule, not prepayments. The bank is not obligated to drop PMI if you accelerate the payments/prepay to get to that LTV. It is much harder to drop PMI ahead of schedule these days with just an appraisal or high prepayments.
“In other words, if it had been say three months later, do you think they would have just taken the bank statements at face value?”
I didn’t do FHA, but all they asked me for was 2 months of statements, so you should be good.
“against the 3-4 years of living rent free, while waiting to be foreclosed on?”
I feel positive enough about my fellow humans and our economic outlook that I hope that that situation won’t be a significant number. And even then, I’d rather have my neighbors get a piece of the pie rather than it all going straight to banker bonuses.
Juliana,
I just wasted 2 years of my life, so the last thing I am about to do is watch CNBC. Concept intrigues me a bit, seems intuitively somehow that it should be a zero sum. Will smoke bowl, walk dogs, if I remember, I will think it through.
btw.. I always used to call him piss-on-me, one of those things that makes me make myself laugh, every time.
you don’t need to pay the up front PMI if you put 5% down, however
basically you pay the up front pmi is covering the 1.5% gap between the needed 3.5% down payment and the 5% FHA loan requirement
Follow the money…
ZH quote from last March:
“And considering that banks continue to be woefully undercapitalized, and one Mark to Market resumption away from total insolvency, the money that one deadbeat squatter is “saving” today, is money that all other taxpayers will have to make up tomorrow when the lender bank blows up at any given point in the future. Yet the enforcement of this process is the bank’s prerogative, and there is little that can be done unless a lender is actively pursuing the expulsion of a squatter. But why should they – this process begins an involuntary Mark To Market process on the underlying mortgage which will have a far greater cost than benefit from letting the status quo persist.”
http://www.zerohedge.com/article/benefit-us-economy-deadbeat-squatters-50-billion-year
“I feel positive enough about my fellow humans and our economic outlook that I hope that that situation won’t be a significant number. And even then, I’d rather have my neighbors get a piece of the pie rather than it all going straight to banker bonuses.”
“What is different though is that we’ve never had such a wholesale drop in values on a national basis combined with unemployment.”
Exactly. But I think low DP and subprime was largely to blame for this (that and the financialization of mortgages, imo), and that is the bread and butter of FHA. Granted, during the bubble conventional lenders made the same mistakes, but would they have done so without the FHA providing the spark? We don’t know. It will be interesting to see if long term housing prices return to their historical stability or if they will be at a permanently higher level of price fluctuation.
“Also, It isn’t the low down payment by itself that is the problem, it is the risk layering (mediocre FICO scores/credit history, high DTIs, minimal reserves) combined with the low down payment.”
Again I agree, but aren’t these the borrowers for which FHA was created? Sure the FHA does other loans for better borrowers, but those people don’t NEED FHA. My wife and I did FHA, but we are high credit score and low DTI with good savings. If FHA didn’t exist, we would have just waited two more years or sold some other assets to come up with the 10%
It just seems like FHA’s sole purpose is to provide something that won’t be provided by the private market because it doesn’t make financial sense to the private market. But someone is always bearing the risk (for the FHA it is the public), and that will always cause trouble eventually.
“you don’t need to pay the up front PMI if you put 5% down, however
basically you pay the up front pmi is covering the 1.5% gap between the needed 3.5% down payment and the 5% FHA loan requirement”
I don’t think that is right, or wasn’t when we did our loan. We would have put down the extra 1.5% to save 1.5% upfront on PMI. We would have had to do 10% down and a 15 year loan to avoid PMI (but that isn’t true anymore). But again these things change so often that might be right now or might have been right at some point in the past.
“Follow the money…”
60 billion is a drop in the bucket, and a result of the shit loans handed out around the peak of the bubble. I doubt we’ll see the same sort of defaults with current FHA applicants. Any why is anyone even worried about 60 billion when banks been getting trillions already anyways… The senate just passed a 662 billion defense bill, and 60 billion is somehow gonna be a problem? That Zero Hedge article even says it’ll drop off gradually, who the fuck is even gonna notice 10 billion a year as contemplated in that piece of shit? (and I call it a piece of shit because it’s your typical “rage against poor and deadbeats instead of the people who are really fuckin you” piece)
The only way I see CNBC is if some blog posts a link. In this case, some conservative blog my dh was reading this morning had link. I think Cramer is merely stupid, not a tool like Pisani. Probably giving him too much credit. In any case he occasionally comes up with a gem like this one. I decided to find it on youtube to avoid endorsing unknown website.
The least watchable would have to be Lies-man, only watchable when somebody like Santelli is ripping him a new one.
“I just wasted 2 years of my life, so the last thing I am about to do is watch CNBC. “
ZeroHedge = ZeroBrains
“The only way I see CNBC is if some blog posts a link. In this case, some conservative blog my dh was reading this morning had link. I think Cramer is merely stupid, not a tool like Pisani.”
Maybe we can replace rickrolling with pissrolling by directing unsuspecting web surfers to videos of pisani
Tell me about it Milkster. One of my assistants is a single mother who has raised 3 daughters. The oldest studied drama or something and is now in NYC trying to make it as an actress! So my poor assistant still helps her with rent and is paying off her loans. The middle daughter wants to study fashion design and I am like really?! I am amazed at how selfish these kids are. If she were my mum, I would have studied something that paid the bills, or would just get a job and help my poor mother out.
” I’d love to know what their degrees are in, btw.”
DC, the private market did provide it. This is what Alt-A, subprime, and even looser conventional guidelines offered. FHA was marginalized hence their 2% market share several years ago. However, when the private market got ahead of itself offering crazy ass loans (those 100% investor with stated income for instance or the 100% neg am), it completely shut down the entire secondary market leaving only FHA and plain vanilla conventional. Baby got thrown out with the bath water.
The only reason we don’t have similar alternatives now is because there is no secondary market for the loans due to the lack of reliable ratings. Combine that with no one wanting to lend on a declining asset. In some ways it feeds on itself. Banks don’t want to lend because of declining values, but values are declining because banks won’t lend. Chicken or egg.
You are again right milkster. I had a wedding and it was not very big or anything, but I think it is a waste of time and money for everyone. I mostly did it to make my mother in law and my mum happy. Actually my father offered to pay but my husband and I refused. I think it is pathetic to make our parents pay for the wedding when we make enough money. But, I guess sometimes parents really feel like they want to do something and then it is better to use the money wisely say for a car or a down payment or for jewelry or something.
“I don’t understand it. It’s just one day, people!!! I don’t feel the need to get married because I don’t want kids, but if I ever change my mind, I’ll do it at City Hall. You can even buy the rings there.”
My wedding was a blast, but we focused on the important things, like 1) Booze and 2) quality food
Actually my wedding food was great too, but I did not eat much to make sure I photograph well…sigh
” I’ll do it at City Hall”
Worked for me… took really nice pics in the atrium of the world financial center and then had cake with a few friends, at a bakery just north of Houston St. Good times!
“Combine that with no one wanting to lend on a declining asset. ”
Like a car loan? Most business equipment? Problem is pricing. Problem was pricing. Shit’s too cheap. Private money ain’t that stupid. Private money has a better memory.
“…it is better to use the money wisely say for a car or a down payment or for jewelry or something.”
Hi miumiu –
Exactly. I’d rather invest that money. My Sheridan Road condo which I rent out cost less than most weddings. Plus they have a super nice party room there which rents for something ridiculously cheap like $80. If I get married I’ll have a Sonies-style pool party reception there with lots of food and booze and you guys can all come.
I often cringe when I get a wedding invitation unless I know the person really well. They are expensive to go to and expensive to hold…. It seems like a waste of money all around. I would go the city hall route. I agree with miumiu, it seems pathetic to expect parents to pay for weddings…especially when the couple are both out of college. I suppose some parents insist, but the money people shell out for wedding is ridiculous.
yeah I laughed at my friend who’s now ex-fiance negotiated with him a 50k wedding… (she wanted to spend more!!!!)
needless to say, I am a damn lucky guy
I would be inclined to re-think the marriage if my fiance wanted a $50k wedding.
I cringe too. Getting invited to friends of friends weddings because I had a drunk convo or two at a kegger next thing you know your on the spot for a wedding gift. Damn facebook to hell.
And if it ain’t family I only do a hundo which is a lot for me but I know the costs are more than q*100 for the damn thing so even then you look bad. Damn facebook to hell again.
If you get an invite to a wedding you don’t want to go to, the best thing you can do is let the bride/groom know as soon as possible if you cannot attend. There’s usually a b list of people from work or friends of friends that they’d like to invite but cannot afford to so if you can free up your seat when you get the save-the-date everyone wins.
I got married in a smaller market up north at a pretty nice facility and it was roughly 1/2 to 1/3rd of the cost of a Chicago wedding. And we even had kegs of New Glarus flowing freely – they even offered to let us bring our own kegs to save a few bucks (which we declined). We had to bring in a DJ from Milwaukee though because the DJ’s in the northwoods focus have a proclivity towards polka music.
“Damn facebook to hell again.”
I’m Google+ only now but it’s a hard sell to get the Facebook crown to switch. How did we ever get the lemmings off of Myspace?
Icarus –
What’s the proper etiquette on that? If you decline a wedding invitation, are you still obligated to send a gift or money?
shit, jenny has a fiance……..
I really thought her and bob would hook up some day 🙂
I think jenny meant her hypothetical finance.
Milkster, Proper Etiquette depends who you ask. i think the conventional wisdom is if someone thought enough to invite you and you cannot/will not attend, you should send them a small token gift.
For us it wasn’t about the presents, it was about inviting as many of our friends as our budget allowed. I was pleasantly surprised to get big gifts from people who couldn’t come. At the same time, there were a couple of invites who knew when we sent out the Save-the-date that they had a conflict and couldn’t come. More important than a gift, it would have been nice to be able to squeeze a few extra friends in.
yeah hd having our wedding NOT in chicago saved me around ten thousand dollars probably
As an expert on weddings, I would say the best weddings are those with receptions held in the basement of a VFW in some town with a population in the 4 or low 5 digits, where the main course is ham and turkey sammiches on those small butter rolls (with potato salad, slaw and Ruffles for sides), a DJ with a wide selection of ’80’s music and enough kegs of beer to intoxicate a small army. All in, less than $2000 but plenty of friends and fam and something that keeps the newlyweds from getting behind the financial 8 ball when they start out and that doesn’t break the parents’ bank. Eff the wedding-industrial complex.
Hello. In a hurry today, so I know I could look it up myself, etc. ….. Don’t have time.
Could someone explain to me simply, how the FHA loan plan works?
1) who qualifies and doesn’t?
2) Why would anyone deal with 20% down and a higher rate, if they could go FHA instead and get a lower rate? In what cases is non-FHA preferable?
Helmet, anyone qualifies for FHA.
FHA only requires 3.5% down and typically at least a 640 FICO score. No income limitations. FHA can be tricky on condos. The mortgage insurance is higher than conventional loans which erodes the benefit of the slightyly lower interest rate..
Generally, if you have great credit and at least 5% down, you will be better off with conventional financing. If you have limited down payment and/or a credit ding, FHA will likely be better.
As with all mortgages, you have to really just compare side by side for a specific scenario to determine which is better.
There are pluses and minuses and every situation is different. You have to weigh the cost of the down payment relative to making a smaller down payment. There is no one right answer. It depends on your situation what works for each borrowers financial situation.
Back to the house this couple in Bloomingdale bought:
Leaving out the discussion of whether they really should be homeowners considering the state of their finances (I’m leaning toward no), and the fact that the house is perfectly adequate, has anyone looked at the listing’s interior photos? They’d be great for a museum exhibit on 1970s home decoration.
http://www.bairdwarner.com/real-estate/bloomingdale/139-Warren-Avenue/07757298.cfm
You have to imagine that house 139 Warren Ave without the nasty furniture and a new coat of paint. It has nice hardwood floors, ceiling fans, mechanically and structurally appears to be good, overall it’s a fairly solid deal I think. yes tehre will probably be better deals tomorrow, and yes, the buyers probably should have waited a year or two; but if they’re starting a family soon, maybe they jumped the gun, but overall this is not a bad deal. Nice (although boring) burb, great area, probably decent schools, big lot, all for under 200k which is probably around the 1997/1998/1999 price. Maybe it’ll go down to $150k which implies another 25% but $50k is something they should be able to absorb over the years. It’s the people who in that subdivision in 2006 for $350k that is now worth $200k that got totally screwed. Overall, this is what you’re supposed to do when you’re young. Buy an affordable home, solid construction, live there for a while and fix it up as you go along.
I’m definitely no fan of the wedding-industrial complex. Getting married in the Chicago area – even if you try to save money – will cost about $30k-$40k for anything resembling what we think of as a wedding.
In any case, I can’t imagine someone putting together any wedding anywhere anymore for less than $100 per guest unless they were willing to take drastic measures like serving only cookies and juice at the (brief) reception.
To cut costs further than this, best to just elope or have a courthouse wedding.
“To cut costs further than this, best to just elope or have a courthouse wedding.”
That shit might fly in some cultures but this is not acceptable for most middle class families or their daughters.
@ Milkster, I think the proper thing to do is to buy a gift no matter when you decline. That is why I did not send invites to people I knew could not attend (my wedding was in Italy and most of my friends with kids could not attend, just think of plane tickets for a family of three or four). I asked them in person if there is a chance they could come and they mostly said they could not with the kids and all so I did not send them an invite. Still most bought us gifts and some pretty pricy gifts so it kind of sucked. But good thing is I managed to compensate buying stuff for their brats ; )
“That shit might fly in some cultures but this is not acceptable for most middle class families or their daughters.”
Flies for second marriages sometimes. And sometimes if the gal is much past 30s (they’re out of that princess phase by then). But its tough treading.
The idea that there has to be a big perfect wedding has been taken advantage of by the wedding-industrial complex causing rampant inflation beyond most other sectors of the economy to make that “perfect day” cost 30k+.
I’ve been to a low budget wedding as well as a high budget one over the past couple years. To be honest the low budget one was just as fun, perhaps even funner. Both couples seemed equally happy to have been getting married as well as the guests there happy for them.
Some of the nicest weddings I have been to have been at someone’s home. Granted, you need a relative with a large home, but if possible it’s a great idea and saves money. I think I would still opt for the courthouse wedding followed by a dinner with close friends/family.
“my wedding was in Italy”
Did you get married in a Roman Catholic church or under a gazebo in tuscany? (can’t wait to hear the answer to this one….)
I’m pretty sure I just found WestLoops childhood bedroom..
http://www.poshtots.com/Childs-Furniture/Childrens-Beds/Fantasy-Themed-Beds/Fantasy-Coach/2639/2644/2387/927/PoshProductDetail.aspx
“In any case, I can’t imagine someone putting together any wedding anywhere anymore for less than $100 per guest unless they were willing to take drastic measures like serving only cookies and juice at the (brief) reception.”
Food and drink are the biggest costs (and where nearly all of the money goes.) You can cut back on flowers etc. There are even some lovely venues that only cost like $2000 a night to rent. And renting the chairs/tables isn’t too bad either. The DJ and photographer aren’t the largest expenses either (unless you have a band.)
If you want to cut down costs-do what miumiu did and have a destination wedding. Most people won’t come (can’t afford it- especially those with kids, as she said.) So you can keep the guest list down to like 30 or 40 people.
Did anyone else see this:
http://hinsdale.suntimes.com/news/9200666-418/high-end-homes-selling-again-lake-forest-leads-way.html
cLio: gist of that article is that price reductions have moved some inventory. More or less, these markets are priced at $XXX psf and clearing at that price psf.
“a new 12,000-square-foot home on Prospect by Heritage Builders, sold for $5.15 million”
that’s $429 psf
Crains reports that “The Landgrafs put down just 3.5%” to buy their 200k house ?
C’mon. Next, they’ll be writing about Mr. Fezziwig, the kindly capitalist; Mulberry Hawk, the seducer of innocents; Wilkins Micawber, the imprudent debtor; Ebenezer Scrooge, the miserly moneylender, and so on & so forth.
The Landgrafs ?
that’s too obvious.
“I’m pretty sure I just found WestLoops childhood bedroom..”
i had high expectations before I clicked, and you blew them out of the water.
Neither. Actually if one gets married in the church in Italy cannot get divorced until a 3 year period of separation has passed. As I value my freedom and I am not a religious frick like you, and don’t particularly enjoy financing one of the shadiest institutions in the world, I am sure you can guess I opted out of the first.
I opted out of the second too as personally I find wedding vows very cheesy especially the death do us part type of nonsense.
“Did you get married in a Roman Catholic church or under a gazebo in tuscany?”
Ha, I knew it.
This is off topic- but as a reminder to some commenters:
If you want to post about how awful a property is and trash everyone who is associated with that property by name- I’m going to delete the comment. This simply isn’t the forum to gripe about personal grievances.
And I have even less sympathy if you’re a renter. Just move out and move on with your life!
“Did anyone else see this:
http://hinsdale.suntimes.com/news/9200666-418/high-end-homes-selling-again-lake-forest-leads-way.html”
This is what I’ve been commenting on. It appears that there has been a spike in luxury homes selling. But several things stand out:
1. They’ve had to reduce by 50% or more in some cases which means they’re finally waking up to the reality of this market.
2. Have any sellers actually seen any profit? In the celebrity real estate sales column in the tribune, all the sellers are still losing money
3. The inventory is still huge. There are many $2 million+ homes/condos for sale in the city that have been sitting there for years. If they reduce- they’ll eventually find buyers. It’s like any other property out there right now.
I DO find it interesting that with all the mess in Europe and a volatile stock market that the rich are stepping in and buying at all (as so much of their wealth is tied up in the stock market.)
“This is what I’ve been commenting on. It appears that there has been a spike in luxury homes selling. ”
This was suggested last month, too. I thought I posted data then that showed no such spike. Why waste my time?
I remember your data, G. It could just be that a rash of them has happened in a very close time period so in my mind (and others) it seems that more of them are selling (when the yearly numbers show it to be less than last year.) It seemed like this year was pretty dead on the luxury side until the last few months. Frankly, I’m surprised any of the $5 million houses are selling so I do notice when one of them does finally sell.
Looks like we need monthly data, G….
$3M+ Chicago Metro SFH/Condo/TH Closed Totals
Mo. 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Jan 3 8 6 6 7 11 3 4 2 2 4
Feb 2 4 3 18 12 6 2 3 1 2 1
Mar 7 11 11 17 16 9 7 4 3 2 1
Apr 11 8 8 11 9 11 4 0 4 4 4
May 10 7 5 10 10 11 7 2 3 2 3
Jun 7 13 7 6 18 17 13 6 11 3 7
Jul 9 3 6 10 19 10 11 12 5 2 3
Aug 12 8 11 8 9 15 10 6 5 4 3
Sep 6 1 4 5 12 7 13 5 3 2 4
Oct 4 8 6 7 16 8 10 8 10 3 1
Nov 7 7 4 7 8 7 10 11 2 6 1
Dec 17 8 14 7 14 13 11 4 7 5
Total 78 95 79 119 143 126 103 72 53 39 37
thru Nov 78 78 71 105 136 112 90 61 49 32 32
last 6 mos. 45 40 38 43 82 64 67 48 36 20 19
last 3 mos. 17 16 14 19 36 22 33 24 15 11 6
I don’t know how to make it easier to read. Note that the “0” is missing from the Dec 2011 total, so the 17 was in Dec 2010, 8 was in Dec 2009, 14 in Dec 2008, etc.
Interesting G, Thanks!
lmao… No s*** Sherlock; one would think you have just proven the Riemann hypothesis.
I think only Jenny might have been more adamant than me about her distaste for the church.
“Ha, I knew it.”