Author Topic: 1% Down Mortgages  (Read 4494 times)

Freedom Invested

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1% Down Mortgages
« on: March 02, 2017, 08:45:06 PM »
I heard an ad today that was offering home loans for as little as 1% down.

1. If you can only manage to save up 1% for a home purchase are you financially mature enough to handle a liability like a house? What happens when major issues occur not covered or only partially covered by insurance? After buying are you suddenly going to have the discipline to save for those before they happen? The big five come to mind: HVAC, Roof, Foundation, Electricity, or Plumbing.
2. They're going to gouge you on that interest rate.
3. Paying rent is not necessarily a bad thing. You could be saving up a more reasonable amount for a home down payment and/or perhaps you want to be strategic, earn more in a high cost of living area, and move to a lower cost of living area after retirement like I am sure many mustachians do: http://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

From the Ad: "Aren't you tired of paying rent? Its only a rent payment or two and you can be in your own home!"

This screams of "We're in a booming market now and it can only go up! We're taking little to no risk by offering these loans." 2008 is so easily forgotten...
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Philbert

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Re: 1% Down Mortgages
« Reply #1 on: March 03, 2017, 06:29:07 AM »
I'm renting a new apartment, and the previous tenants just bought a condo putting 1% down. They put down 1% and the bank puts down 2%, or something like that. I was SHOCKED. I didn't know that was allowed. I thought 20% was enforced now. Isn't this how we got into the last crisis?

Kimera757

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Re: 1% Down Mortgages
« Reply #2 on: March 03, 2017, 06:47:23 AM »
If you put less than 20% down you have to pay insurance. In Canada you aren't allowed to put less than 5% down, but maybe there's no minimum in some other countries.

Mind you, there are ways of putting 0% down, even in Canada, by being "creative". (You can borrow your down payment from certain sources in Canada.)

Freedom Invested

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Re: 1% Down Mortgages
« Reply #3 on: March 03, 2017, 07:15:07 AM »
If you put less than 20% down you have to pay insurance. In Canada you aren't allowed to put less than 5% down, but maybe there's no minimum in some other countries.

Mind you, there are ways of putting 0% down, even in Canada, by being "creative". (You can borrow your down payment from certain sources in Canada.)

I'm in the U.S. and unfortunately there are a lot of ways companies end up screwing consumers here. I cannot speak for other countries, but 5% minimum by law (and maybe even higher) is a great idea.

I can see doing some creative financing to end up way ahead. For example, I have been considering a HELOC to pay for a down payment on an additional home, fix it, rent it, and use proceeds for more homes. I'm just risk averse to real-estate as it is harder to liquidate. Though I think if I was borrowing the down payment because I did not have the money in any form, that'd be a poor choice.

I'm renting a new apartment, and the previous tenants just bought a condo putting 1% down. They put down 1% and the bank puts down 2%, or something like that. I was SHOCKED. I didn't know that was allowed. I thought 20% was enforced now. Isn't this how we got into the last crisis?

It is. Perhaps it is all a conspiracy and those high enough in the echelons of the finance world want this to happen, are encouraging it, and have elephant guns (huge reserves of cash) ready to buy up massive amounts of inexpensive stocks. I'm not sure if that is better or worse than incompetence (lending to people that cannot handle it out of short term greed).
« Last Edit: March 03, 2017, 04:09:36 PM by Freedom Invested »
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paddedhat

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Re: 1% Down Mortgages
« Reply #4 on: March 03, 2017, 07:54:30 AM »
I built and sold new homes, straight through the great recession, and for the next seven years. Allegedly in the middle of the "great crackdown" on predatory lending and shady practices, it was, and still is,  routine to see a buyer who had no business being at the table, and was doing a deal with little, or no money down. In every case it was a loan that "required" a 3% or less down, and was part of a government backed program. The realtor would write the contract for a "seller's assist" then inflate the selling price to cover the down payment. I closed a deal a few months ago. The buyer was a teacher in a high paying job, and a thirty year career, Great credit, and no ability and/or desire to put a dime down on a hone. The sale price was inflated by roughly 4% and she brought nothing to the table. I have done a deal where another woman, with a similar deal, not only had zero in the game, but walked away with a check for a few hundred at closing.

It makes me laugh to see talking heads in the media whine about all the "new regulations, and tougher requirements" having impacted the market, and made it so hard for first time buyers to move up to their starter home.  I'm no sure where those reporters are from, but in my world the old rules still apply.  Decent credit score, verifiable income, and the ability to sign your name, are the requirements.

Kimera757

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Re: 1% Down Mortgages
« Reply #5 on: March 03, 2017, 09:08:45 AM »
In Canada you can get a NINJA loan if you put 35% down. Maybe not so bad... However, it's also fairly common for houses to be "owned" by the self-employed and students (they're really owned by somebody else, of course).

In the US, there's a capital gains exemption for part of the price of a house you sell, and you get a tax break for mortgage interest. In Canada, your principal residence is sold completely tax-free, but there's not tax break for mortgage interest. Note that if you buy and sell extra houses for profit in Canada, you're supposed to pay tax on that profit. Because house prices have ballooned in some parts of Canada, it's common practice for people to get a confederate to "buy" a house, then eventually sell it and collect a tax-free windfall. The real owner has their own principal residence. Often the "confederate" is really poor (eg a student) and so it's clear they couldn't possibly have bought the house without some suspicious "gift".

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Re: 1% Down Mortgages
« Reply #6 on: March 03, 2017, 09:13:31 AM »
Mind you, there are ways of putting 0% down, even in Canada, by being "creative". (You can borrow your down payment from certain sources in Canada.)
So, if you don't pay, will these "certain sources" break your legs?

ketchup

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Re: 1% Down Mortgages
« Reply #7 on: March 03, 2017, 01:55:56 PM »
It makes me laugh to see talking heads in the media whine about all the "new regulations, and tougher requirements" having impacted the market, and made it so hard for first time buyers to move up to their starter home.  I'm no sure where those reporters are from, but in my world the old rules still apply.  Decent credit score, verifiable income, and the ability to sign your name, are the requirements.
And not just that, but you can qualify for way more house than you should.  GF and I went to get pre-qualified a few years back, and we could only use my income to qualify(she had quit her dayjob the previous year and been self-employed since, so too little history there) so we freaked out a little, but it turned out even that alone allowed for more than we wanted to buy...

Freedom Invested

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Re: 1% Down Mortgages
« Reply #8 on: March 03, 2017, 03:07:23 PM »
It makes me laugh to see talking heads in the media whine about all the "new regulations, and tougher requirements" having impacted the market, and made it so hard for first time buyers to move up to their starter home.  I'm no sure where those reporters are from, but in my world the old rules still apply.  Decent credit score, verifiable income, and the ability to sign your name, are the requirements.
And not just that, but you can qualify for way more house than you should.  GF and I went to get pre-qualified a few years back, and we could only use my income to qualify(she had quit her dayjob the previous year and been self-employed since, so too little history there) so we freaked out a little, but it turned out even that alone allowed for more than we wanted to buy...

Yes, it was crazy to me to see what we qualified for. I thought things would be different after the housing crisis. Nope. Sure, we had a decent down payment, good credit, and a higher than median of assets for our age in various investment vehicles, but it was still a little much. We qualified for 3.5 times what we ended up buying.
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Just Joe

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Re: 1% Down Mortgages
« Reply #9 on: March 03, 2017, 03:14:15 PM »
I figure if someone proposed the 5% law here in the USA there would be "people" saying that it was unfair to the poor and function as a barrier to home ownership. Of course those "people" likely benefit off of low income people buying things that the low income people can't afford.

Freedom Invested

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Re: 1% Down Mortgages
« Reply #10 on: March 03, 2017, 04:08:17 PM »
I figure if someone proposed the 5% law here in the USA there would be "people" saying that it was unfair to the poor and function as a barrier to home ownership. Of course those "people" likely benefit off of low income people buying things that the low income people can't afford.

USA media: everything is a scandal, especially because it is taken out of context, no rational discourse is given much air time, other-izing, and someone benefiting from the distraction.
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Ryo

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Re: 1% Down Mortgages
« Reply #11 on: March 03, 2017, 06:19:44 PM »
I'm in Japan, but here you can certainly get a mortgage with 0% down, and because rates are so long and low (1.5% fixed for 35yrs), it makes more sense not to dip into your 4% yielding stash for a down payment.

Freedom Invested

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Re: 1% Down Mortgages
« Reply #12 on: March 03, 2017, 07:29:25 PM »
I'm in Japan, but here you can certainly get a mortgage with 0% down, and because rates are so long and low (1.5% fixed for 35yrs), it makes more sense not to dip into your 4% yielding stash for a down payment.

Wow. Good point. And that is fascinating. What contributes to the rate being so low? How is that profitable for lenders? To what extent does the government promote these rates? Do few people qualify? I imagine home prices are quite high with a relatively high population density and there is a larger renter market. Thus few people own or pay mortgages on property?

I know that was a lot of questions there, but it is always fascinating to me to compare and contrast other countries: whether it be finance or otherwise. 
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maizeman

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Re: 1% Down Mortgages
« Reply #13 on: March 03, 2017, 07:51:52 PM »
I'm in Japan, but here you can certainly get a mortgage with 0% down, and because rates are so long and low (1.5% fixed for 35yrs), it makes more sense not to dip into your 4% yielding stash for a down payment.

Wow. Good point. And that is fascinating. What contributes to the rate being so low? How is that profitable for lenders? To what extent does the government promote these rates? Do few people qualify? I imagine home prices are quite high with a relatively high population density and there is a larger renter market. Thus few people own or pay mortgages on property?

I know that was a lot of questions there, but it is always fascinating to me to compare and contrast other countries: whether it be finance or otherwise.

Also keep this in mind (@Ryo, I don't know how representative this story is of reality on the ground in Japan or not, but if true, is a very big different in the fundamental assumptions about buying a house.

"It turns out that half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S.  There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years."

http://freakonomics.com/podcast/why-are-japanese-homes-disposable-a-new-freakonomics-radio-podcast-3/
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Kimera757

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Re: 1% Down Mortgages
« Reply #14 on: March 03, 2017, 08:58:46 PM »
Mind you, there are ways of putting 0% down, even in Canada, by being "creative". (You can borrow your down payment from certain sources in Canada.)
So, if you don't pay, will these "certain sources" break your legs?

Nope. You just borrow the down payment from a bank, possibly the same one giving you a mortgage. The interest rate is higher. Still, it's better than going to the loan shark, since interest rates are low. You can literally get a mortgage for 2.2% if your credit and income is good enough, and you put 20% down. Mortgages with interest rates in the 3% range are very common.

I've seen schemes where you can borrow against equity, even when your equity is 0%. Equity futures! "Houses always go up." I think the CMHC eventually said "no" to that one.

People will borrow from parents, but claim it as a "gift" (there are restrictions on what you can borrow). Then they essentially have two mortgages.

A few people will fraudulently file tax returns with excessive income just so they can "prove" that they can afford a house. Either they can afford the higher taxes, or they go through an audit to prove that their income isn't so high. If that's not enough, the mortgage broker might fraudulently increase your income so you can qualify without telling you. (Not kidding.)

redbird

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Re: 1% Down Mortgages
« Reply #15 on: March 03, 2017, 11:07:59 PM »
It makes me laugh to see talking heads in the media whine about all the "new regulations, and tougher requirements" having impacted the market, and made it so hard for first time buyers to move up to their starter home.  I'm no sure where those reporters are from, but in my world the old rules still apply.  Decent credit score, verifiable income, and the ability to sign your name, are the requirements.

I'm going through a house buying process right now. I don't know if those supposed tougher requirements affects people being able to get a house or not. But the documentation that is mandatory to provide to get a mortgage has increased by quite a large margin, compared to how it was when I bought a house in 2005.
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neverrun

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Re: 1% Down Mortgages
« Reply #16 on: March 04, 2017, 04:15:26 AM »
It makes me laugh to see talking heads in the media whine about all the "new regulations, and tougher requirements" having impacted the market, and made it so hard for first time buyers to move up to their starter home.  I'm no sure where those reporters are from, but in my world the old rules still apply.  Decent credit score, verifiable income, and the ability to sign your name, are the requirements.

I'm going through a house buying process right now. I don't know if those supposed tougher requirements affects people being able to get a house or not. But the documentation that is mandatory to provide to get a mortgage has increased by quite a large margin, compared to how it was when I bought a house in 2005.

I think this is the problem of more money, more problems.  I honestly think it is easier for someone to get a 1-5% down payment loan because they have nothing than it did for me to get my last 20% conventional loan.  I mean the bank had an issue with my bi-weekly transfer of $75 from my Checking account (Direct Deposit) to my Savings Account at the same bank.  Why, the checking account statement came out on the first of the month the savings account came out on the 15th (they were set up at different times).  So they could not see where $75 went, it could be paying off a loan.  I also had to write a letter explaining that yes that same $1,500 deposit around the first of the month was rent paid to me, every freaking month.  (OK so it was 2x but annoying still).

havregryn

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Re: 1% Down Mortgages
« Reply #17 on: March 04, 2017, 06:15:39 AM »
I'm in Japan, but here you can certainly get a mortgage with 0% down, and because rates are so long and low (1.5% fixed for 35yrs), it makes more sense not to dip into your 4% yielding stash for a down payment.

Wow. Good point. And that is fascinating. What contributes to the rate being so low? How is that profitable for lenders? To what extent does the government promote these rates? Do few people qualify? I imagine home prices are quite high with a relatively high population density and there is a larger renter market. Thus few people own or pay mortgages on property?

I know that was a lot of questions there, but it is always fascinating to me to compare and contrast other countries: whether it be finance or otherwise.

We have similar kind of interest rates here in Luxembourg. We have 1.45% fixed for 15 years. I think it is slightly higher for 30 but not much. You can get a lot of it back on tax too. Purely mathematically it probably would have been better if we took a 30 year mortgage but for some psychological reasons it worked better like this. Here you need to put something down but it seems to vary immensely. We were buying for 500 000€ and it took a lot of negotiation with our bank to let us put down 80 000 as they knew we had more but it was in investments and we didn't want to use it. At the same time, some friends are buying a place for 750 000€ and they are incredibly proud of themselves for having total savings of 30 000€ to put down and their bank seems more than happy with it.
Prices are incredibly high here due to these interest rates and no property tax. It's a difficult decision to go into that market but renting has just as many downsides (most pro-renting arguments don't apply here as it's beneficial for landlords to change tenants often which is also easy for them to do due to constant demand) and I hate this so bad but our "home" is also a HCOL place where we can earn only a fraction of what we can earn here so we're here for the stash building and later we will see.

Abe

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Re: 1% Down Mortgages
« Reply #18 on: March 04, 2017, 09:50:52 AM »
If you have resources to pay the 20% down but can get away with 1% it's potentially a great deal. But I get that 99% of people going for this don't have the resources and are playing with fire.

paddedhat

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Re: 1% Down Mortgages
« Reply #19 on: March 04, 2017, 01:55:05 PM »
If you have resources to pay the 20% down but can get away with 1% it's potentially a great deal. But I get that 99% of people going for this don't have the resources and are playing with fire.

Yea, I ended up closing at least a deal a year, over the last decade, when I just walked to the car, check in hand, shaking my head. Vacation homes sold to individuals who are married, claiming they are separated, claiming they are first time home buyers, claiming that it will be their primary residence, all lies.  Buyers dumping entire retirement accounts, or spending inheritances to buy second homes. Buyers who can't qualify and can't afford the place, buy get daddy to cosign as a co-owner so that the precious little snowflake get what she wants (I have seen this one repeatedly) Buyers who settle on a price then request that you agree to a 5-7% sale price bump and return it all as seller's assist, since they don't have a damn dime saved to buy a home, and never will. There may be a lot more paperwork since the great recession, but when it comes to banks and realtors still being in bed together, there has been no interest in stopping a lot of really poor decisions made by buyers, appraisers and lenders.

omega13

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Re: 1% Down Mortgages
« Reply #20 on: March 05, 2017, 09:17:47 AM »
If I read this correctly, the op is stating that putting little money down is not the best strategy when buying a home. Please correct me if I'm wrong.

I happen to disagree with that premise. Putting little money down can be a great strategy if you know what you're doing. If you plan on renting the place, and have more cash than is needed for a sizable down payment, it would be a mistake to tie it all in one property. Downpayment is the riskiest money in real estate. You put a small % down, live in it for a year, then rent it out. That's after all the strategy louded on BiggerPockets.

However, if your goal is to own a home you plan on living in, then it may make sense to have more equity on it from the start.

If you buy a home that's outside your means though, putting more down will still put you at a financial disadvantage.


Abe

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Re: 1% Down Mortgages
« Reply #21 on: March 05, 2017, 10:29:27 AM »


However, if your goal is to own a home you plan on living in, then it may make sense to have more equity on it from the start.

This is only true if you have a rate that is higher than whatever you could earn long-term investing in something else. Otherwise you're less diversified in your investment/savings/equity position. In all other cases it's better to have less equity. This is just a subset of how fast to pay your mortgage discussion. 

maizeman

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Re: 1% Down Mortgages
« Reply #22 on: March 05, 2017, 10:38:29 AM »


However, if your goal is to own a home you plan on living in, then it may make sense to have more equity on it from the start.

This is only true if you have a rate that is higher than whatever you could earn long-term investing in something else. Otherwise you're less diversified in your investment/savings/equity position. In all other cases it's better to have less equity. This is just a subset of how fast to pay your mortgage discussion.

The problem is that you won't know what you'd earn in alternative investments until after you've already done it. We had the same discussion over in the "I didn't pay off my mortgage and I feel great" thread, and running the numbers is looks like a person in the USA with a 30 year mortgage would be better off paying it off quickly one time out of eight, and better off putting extra money in the stock market seven times out of eight.

Some people will take that as a ringing endorsement to make minimum payments on their mortgages and invest the balance in the stock market, others as confirmation that it's risky to use their mortgage as a source of leverage and they should just pay it off. Neither is false, it just depends on how different people weight getting the best average outcome against getting the least-bad worst case outcome.
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Kimera757

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Re: 1% Down Mortgages
« Reply #23 on: March 05, 2017, 01:32:55 PM »
Supposedly there's a high risk of putting down little money on a mortgage: negative equity.

If you put down 5%, and the housing market collapses, your house would lose so much value that you're "underwater" (you owe more than the house is worth). Supposedly banks might try to take the house back if that happens, presumably when you try to renew your mortgage. (In Canada, a mortgage term of over 5 years is really rare.) I'm not sure if it's reasonable for the bank to try to take back the house, at least not in Canada: people will heroically hang onto their house, refusing to rent or downsize, instead cutting back on other spending, in order to not lose the house. Why would the bank release such a still-paying customer, when the bank would have to sell the house at a loss?

Lots of Canadians are house poor because they bought "too much house", or their expenses rose after buying the house and they haven't cut back effectively, but Canadians actually getting foreclosed on is really rare. In addition, Canadians can "walk away from their house" in only one province. In many US states, you were allowed to do that (this commonly occurred when your house was "underwater").

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Re: 1% Down Mortgages
« Reply #24 on: March 05, 2017, 03:57:32 PM »
Lets not forget who the ad is likely targeting, which is why I posted it as anitmustachian. The tone of it was that you could be living in your own home and not paying rent. Barely able to scrape up 1% downpayment, moving into a home, and unable to cover big expenses that do come up with real estate is clearly a bad idea.

Now, if you know what you are doing, including understanding the risks, and have money elsewhere for a larger down payment - more power to you, but you were not the target of the ad.

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Re: 1% Down Mortgages
« Reply #25 on: March 11, 2017, 04:53:36 AM »
I'm in Japan, but here you can certainly get a mortgage with 0% down, and because rates are so long and low (1.5% fixed for 35yrs), it makes more sense not to dip into your 4% yielding stash for a down payment.

Wow. Good point. And that is fascinating. What contributes to the rate being so low? How is that profitable for lenders? To what extent does the government promote these rates? Do few people qualify? I imagine home prices are quite high with a relatively high population density and there is a larger renter market. Thus few people own or pay mortgages on property?

I know that was a lot of questions there, but it is always fascinating to me to compare and contrast other countries: whether it be finance or otherwise.
Is this substaintally different than the current situation in America? 3-ish % for 30 years when the markets return 7+%? Might depend on the terms of the mortgage insurance, but I know I'm way ahead having put less money down on my mortgage.
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Re: 1% Down Mortgages
« Reply #26 on: March 11, 2017, 04:34:11 PM »
I figure if someone proposed the 5% law here in the USA there would be "people" saying that it was unfair to the poor and function as a barrier to home ownership. Of course those "people" likely benefit off of low income people buying things that the low income people can't afford.

Fannie Mae and Freddy Mac cut their required 5% down to 3% down in 2014. No housing bubble here, move along please.

Kimera757

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Re: 1% Down Mortgages
« Reply #27 on: March 11, 2017, 05:39:51 PM »
Is this substaintally different than the current situation in America? 3-ish % for 30 years when the markets return 7+%? Might depend on the terms of the mortgage insurance, but I know I'm way ahead having put less money down on my mortgage.

A lot of people are afraid of the stock market, calling it "gambling". They won't be seeing 7%+ gains if they can be persuaded to invest. They might put the money into GICs (CDs in the US) where you're lucky if you get 2% interest per year, if you can't touch the money for 1-5 years. While Canada has low interest rates on mortgages at the moment (2.5 to 3% is pretty common), it actually makes sense to pay your mortgage off if you cannot invest. I suspect the situation isn't different in the US. People saw the market crash "recently", with investors who took risks losing 50% of their stock value temporarily,* and fear loss than they want gains. The US crash was worse than the Canadian crash. (Considering how bubbly Canadian housing is right now, said statement might not be accurate for much longer.)

Furthermore, many people are house poor. They have almost no money left over after paying their mortgage, necessary bills, and "fancypants bills" that they think they must have.

*Supposedly people who diversified had their investments during the crash made their money back within a year. Unfortunately, a lot of people sold when their investments were low and never invested in the stock market again.

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Re: 1% Down Mortgages
« Reply #28 on: March 11, 2017, 06:12:09 PM »
Is this substaintally different than the current situation in America? 3-ish % for 30 years when the markets return 7+%? Might depend on the terms of the mortgage insurance, but I know I'm way ahead having put less money down on my mortgage.

A lot of people are afraid of the stock market, calling it "gambling". They won't be seeing 7%+ gains if they can be persuaded to invest. They might put the money into GICs (CDs in the US) where you're lucky if you get 2% interest per year, if you can't touch the money for 1-5 years. While Canada has low interest rates on mortgages at the moment (2.5 to 3% is pretty common), it actually makes sense to pay your mortgage off if you cannot invest. I suspect the situation isn't different in the US. People saw the market crash "recently", with investors who took risks losing 50% of their stock value temporarily,* and fear loss than they want gains. The US crash was worse than the Canadian crash. (Considering how bubbly Canadian housing is right now, said statement might not be accurate for much longer.)

Furthermore, many people are house poor. They have almost no money left over after paying their mortgage, necessary bills, and "fancypants bills" that they think they must have.

*Supposedly people who diversified had their investments during the crash made their money back within a year. Unfortunately, a lot of people sold when their investments were low and never invested in the stock market again.

Also, most people who play the stock market don't diversify. They either have company stock or they buy a handful of individual stocks based on a news story or a tip from someone else. Small investors like that can make out like bandits if they're lucky and pick the right stock, or they can get by reasonably well in a bull market, but they simply don't have their fingers in enough pies to bounce back easily after a crash. They're also very likely to overestimate their prediction skill and to make margin calls or to speculate withouth aving a lot of cash reserves.
I squeak softly, but carry a big schtick.

Kimera757

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Re: 1% Down Mortgages
« Reply #29 on: March 11, 2017, 06:44:10 PM »
In Canada there's also the "houses always go up" thoughtstream. House prices in Toronto literally went up over 20% last year, and that's not all that unusual for the past few years. However, there's a few problems with that story:

1. Toronto and the surrounding area are the only place where that's happening now. (It used to happen in Vancouver, our third-largest city, as well.) That's 2.6 million people in a country with about 33 million people. A lot, but not that many.

2. Ordinary houses don't normally see such gains, only the really big fancy houses see gains like that, and more!

3. The real estate industry "massages" the statistics in order to make housing look healthier than it really is. A common tactic might be to fail to report houses that didn't sell, or if someone tried to sell a house on three separate occasions, each time lowering the price, they might only report the last sale. The media regularly reports on "shacks" selling at high prices, mainly due to sales manipulations. (Blind auctions, for instance, which might not be legal. Since you don't know what other people are bidding, you bid high because you want a house and not an apartment building.)

4. Incomes are not going up 20% per year. They're going up less than 2%, and a whole generation are being priced out of the market.

But Canadians have heard that "housing always goes up" for so long after the US housing crash that many people swear up and down that it's the best investment ever. Since housing has been going up for possibly 17 years (since the dotcom bubble burst) it's all a lot of people remember. (We didn't have a real estate crash when the US did.) Even people who could invest wisely swallow the hype and "invest" in their house instead. Housing and renovation is the biggest sector of the Canadian economy right now, outperforming oil. If and when there's a crash, it's going to be ugly. Sadly, that will pull down my diversified portfolio at least a bit.

farfromfire

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Re: 1% Down Mortgages
« Reply #30 on: March 12, 2017, 05:47:03 PM »
Crazy stuff. In Israel, the minimum down payment is 25%.