NY Times - Near Poor

[baseballguy2001]

In an article about the Census Bureau measuring the number of low income folks, a woman and her husband after three years of saving put down 3K to buy a $230K house with a combined income of just $51K. Now I'm no economic guru, but my wife and I bought our $130K house and our combined income is around $90k. I know there is no way we could afford that much house mentioned in the article, so how in the world can they? Is this the kind of arrangement that contributed to the housing bust?

[eilen]

1. Prior to the bubble, my husband and I had to have nearly

$5,000 for a house that listed $82,000. It was an FHA mortgage. This was in 1998. Granted our property taxes are higher here than in most places but still. The house had less than 1500 sq. feet. I doubt I could sell it for more than $119,000 today.

[baseballguy2001]

2. So, that's a yes?

Hey Eilen -- I know what you mean. In 2004 we put down 13K on our house and our bank just barely gave us the loan. Our 130K house is now underwater, according to our county tax assessor, the tax value is now only 109K. Where are the less than 3% down for $230K home loans?

[eilen]

3. I don't know, Florida?

About 5 years ago, we considered moving and put our house up for sale. We were looking for a home in the Nashville area and the homes were much more expensive than where we live with a much smaller annual property tax bill. Anyway, I was making about $55-65G a year and dh had about $50G or more in annual pay (it varies depending on overtime/layoffs). We looked at a house priced at $180,000. Every loan officer I talked to wanted me to take two loans. One for the home and I think the other for the insurance... at any rate, I wasn't biting. Ultimately we decided not to sell, not to relocate for a bunch of reasons, one of which was that we were not getting any offers. Two years later the mortgage business crashed and burned.