If we don't learn from history we are doomed to repeat it.

By
Real Estate Broker/Owner with Richard Weisser Realty

For some reason I have been deluged with emails, tweets, and FaceBook posts touting ways for purchasers to buy homes with nothing down.

I have never made it a secret that I am not a fan of 100% loans. As a matter of fact I'm not crazy about any loan in which a borrower is required to insure part of the loan for the mortgagee. It a waste of money and it doesn't really help the borrower much in the event of default.

But the real reason I don't like no down-payment or low down-payment loans is that history has taught us that borrowers are all too willing to promulgate a strategic foreclosure if they don't have a lot of skin in the game.

A better strategy is to save a 20% down-payment that can reduce you payment by much more than 20% with the elimination of the mortgage insurance premium.

But it won't happen. Borrowers will continue to borrow 100% of their purchase price, pay ridiculous mortgage insurance, and then blame their loan officers and real estate agents when things go south.

If we don't learn from history we are doomed to repeat it.

 

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Realtors®
"Whacked"!!!
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100 loans
no down payment loans
mortgage indsurance

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Rainmaker
212,325
Stefan Winter
Real Estate in IL & NV | Owner of Real Estate Web Tech | Daily Vlogger - Las Vegas, NV
Owner - Winter Group & Real Estate Web Tech

Could not agree more, but I think most people have a serious problem remember history in the long run. It is always an up and down. The few people that did learn from history stand a great chance at success or profit when other fail to remember though.

Aug 08, 2015 11:14 AM #1
Rainmaker
230,408
Mike Rock
Complete Design - Granite Bay, CA
Granite Bay Luxury New Construction...For Less

100% loans never worked, and never will. its not the money really, its the lack of commitment on the buyers part

Aug 08, 2015 12:40 PM #2
Rainmaker
1,523,577
Sybil Campbell
Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia - Williamsburg, VA
REALTOR® ABR, SFR, SRES Williamsburg, Virginia

Gary Woltal,  I don't like 100% loans either, but in our "instant" society many home buyers are not willing to wait.

Aug 08, 2015 01:51 PM #3
Rainmaker
1,058,012
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Richard, although I'm not a fan of 100% loans,  I have seen qualified buyers with solid jobs and great salaries handle home ownership like pros. In many cases, they were fresh out of college and had no time to save money for a down payment.  The flip side of 100% loans is that not all people are financially prepared for home ownership.  Your are right.  If there is "no skin in the game," there is nothing to lose.

Aug 08, 2015 05:00 PM #4
Ambassador
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TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

 Good Sunday morning Richard. I've been reading much lately about how mankind does not learn from lessons past. Sadly, God's most intelligent creation continues to make the same mistake.

Aug 08, 2015 07:27 PM #5
Rainmaker
3,978,839
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Richard...we have learned NOTHING from the last debacle.

I see many buyers with no skin in the game.

Aug 08, 2015 10:03 PM #6
Rainmaker
335,561
Jenna Dixon
DRA Homes | Cobb County Real Estate - Marietta, GA
Empowers You With a Better Real Estate Experience

I haven't had any lenders contact me about 100% but I have had hundreds of buyers contact me who couldn't buy gum on credit.  Whoever told these people that you could buy a home with no money and credit should be taken to the woodshed!

Aug 09, 2015 01:06 AM #7
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

This is very common in my area with the VA loan. Borrowers even if they have the money are programed not to put it on a house. It isn't smart at all in my opinion.

Aug 09, 2015 11:58 AM #8
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Richard Weisser
Richard Weisser Realty - Newnan, GA
Richard Weisser Retired Real Estate Professional

Stefan Winter ....

Good observation. We can gain an edge!

MIKE ROCK ...

I agree with you. There are exceptions of course, but history offers a compelling narrative.

Aug 10, 2015 06:39 AM #9
Rainer
286,848
Thomas McCombs
Century 21 HomeStar - Akron, OH

It is tough for those of us who have learned lessons from the mistakes of the past, watch others insist on ignoring those lessons.

They throw around words like "negativity" when these kinds of discussions come up, just like they did in 2006.

"Its different this time".

Sep 08, 2015 06:15 AM #10
Rainmaker
2,741,823
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

There are too many opportunities for spam these days to be worth it in my opinion to stress about it too much. Just watch out for some nonsense where it occurs.

Oct 09, 2015 04:06 PM #11
Rainmaker
2,741,823
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

And it does seem obvious that it does mean that history will repeat itself at least 27 more times ...

Oct 09, 2015 04:13 PM #12
Rainmaker
2,741,823
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I've heard this about the VA loan and it is very common even in my area of knowledge and general geographical area.

Oct 09, 2015 04:15 PM #13
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