Was Anyone Else As Stupid As Us (and probably 1/2 of my neighbors)

[bcwife76]

But you can get 30 year fixed mortgages too. Just a slightly higher rate. And you are gambling that rates won't plunge. Of course you can also refinance if that happens.

Another stipulation with a 30 year mortgage in Canada is that, along with higher interest rates, you also have to provide a hefty 20% down payment in order to qualify for that 30 yr mortgage. With a house price of $1million or more...that's a huge down payment

 

[tvguy]

Another stipulation with a 30 year mortgage in Canada is that, along with higher interest rates, you also have to provide a hefty 20% down payment in order to qualify for that 30 yr mortgage. With a house price of $1million or more...that's a huge down payment

20% down is not uncommon here. Less than that usually means you qualified for a low assistance program. My daughter got into her house in 2019 for 10% down under a special program. But her house was only $249,000

 

[bcwife76]

20% down is not uncommon here. Less than that usually means you qualified for a low assistance program. My daughter got into her house in 2019 for 10% down under a special program. But her house was only $249,000

Not sure where you could buy in Canada for $249k Guessing the maritimes perhaps? I'm in the metro Vancouver area, 45 minutes from downtown. A townhouse starts just a smidge under a million, and a detached house will start around $1.3million. We bought our current detached house at the end of 2011 and the value has tripled since then. We certainly could not get into the market here at the current prices. We also happen to be mortgage free now too so we are very lucky in that aspect.

 

[tvguy]

Not sure where you could buy in Canada for $249k Guessing the maritimes perhaps? I'm in the metro Vancouver area, 45 minutes from downtown. A townhouse starts just a smidge under a million, and a detached house will start around $1.3million. We bought our current detached house at the end of 2011 and the value has tripled since then. We certainly could not get into the market here at the current prices. We also happen to be mortgage free now too so we are very lucky in that aspect.

There are a few residences for sale for that price point. But since the Canadian dollar is worth 25% less than the US. dollar, a comparable price would be closer to $310,000 in Canada. Clearly the prices are affordable based on income because people are buying houses. Although I am not up to speed on your homeless situation. I haven't been in Vancouver in 3 1/2 years. A quick search shows Vancouver has 4 times the population of Sacramento with 3,600 estimated to be homeless. We have over 9,000 homeless here.

https://rennie.com/listings?gad=1&gclid=CjwKCAjw5MOlBhBTEiwAAJ8e1vlhdIGJvpPjkeyMXw2jS1aQBBKTtK0lJcmpmSFqecBdnI-BE9nCcRoCtsMQAvD_BwE&showTable=&page=1&zoom=12&c=49.241843397747395,-123.33342361495461&priceMin=0&priceMax=250000
https://www.realtor.ca/map#view=list&Sort=6-D&GeoIds=g30_c2b2nw3h&GeoName=Vancouver, BC&PropertyTypeGroupID=1&TransactionTypeId=2&PropertySearchTypeId=1&PriceMax=325000&Currency=CAD

 

[bcwife76]

The homeless situation is quite bad here unfortunately though I don't know the true numbers. Let's not forget the downtown Eastside is Canadas poorest neighborhood and it's quite the eye opener driving through there. We hardly ever get downtown. I have zero desire to go downtown. My husband works out near the airport and for myself, I rarely travel out of my area

 

[DLgal]

Another stipulation with a 30 year mortgage in Canada is that, along with higher interest rates, you also have to provide a hefty 20% down payment in order to qualify for that 30 yr mortgage. With a house price of $1million or more...that's a huge down payment

20% down is required for 30 year mortgages in the US also. You CAN put less than that down, but that subjects you to Private Mortgage Insurance (PMI) which costs several hundred dollars per month. You have to pay PMI until you have at least 20% equity in your home.

There are programs where you can put as little as 3% down, but they are all income restricted.

There is a VA loan program that allows 0% down, but there is a cap on the amount of the loan. If the loan is over the loan limit, the buyer has to put down 25% of the difference between the loan limit and the loan amount. The effective loan limit is around $750k, and up to about $1M in high COL counties.

 

[DCLMP]

Another stipulation with a 30 year mortgage in Canada is that, along with higher interest rates, you also have to provide a hefty 20% down payment in order to qualify for that 30 yr mortgage. With a house price of $1million or more...that's a huge down payment

20% is the norm here. You really shouldn’t buy a house that’s so expensive you can’t afford to put down 20%.

 

[bcwife76]

20% is the norm here. You really shouldn’t buy a house that’s so expensive you can’t afford to put down 20%.

Completely agree. We are lucky to get in the housing market when we did. Vancouver and the surrounding communities are some of the most expensive areas in North America.

 

[DLgal]

20% is the norm here. You really shouldn’t buy a house that’s so expensive you can’t afford to put down 20%.

A lot of these guidelines are extremely outdated and no longer relevant to today's housing market. I'm surprised they haven't updated these recommendations. In today's market, 5-10% down is far more realistic.

"They" also recommend a housing payment that is only 25-30% of your gross income. Good luck with that! 25-30% of net is more realistic, but the truth is that MOST Americans spend 50% of their net income on housing. And mortgage lenders will routinely approve DTIs in excess of 40%.

 

[DCLMP]

A lot of these guidelines are extremely outdated and no longer relevant to today's housing market. I'm surprised they haven't updated these recommendations. In today's market, 5-10% down is far more realistic.

"They" also recommend a housing payment that is only 25-30% of your gross income. Good luck with that! 25-30% of net is more realistic, but the truth is that MOST Americans spend 50% of their net income on housing. And mortgage lenders will routinely approve DTIs in excess of 40%.

A lot of us live in places that are realistic I'm sorry you don't. If you want to live in one of the most expensive cities in the US then embrace it, but don't make excuses. Our mortgage is 5% of our income and we don't make half what you make.

 

[StacyStrong]

20% down is required for 30 year mortgages in the US also. You CAN put less than that down, but that subjects you to Private Mortgage Insurance (PMI) which costs several hundred dollars per month. You have to pay PMI until you have at least 20% equity in your home.

There are programs where you can put as little as 3% down, but they are all income restricted.

There is a VA loan program that allows 0% down, but there is a cap on the amount of the loan. If the loan is over the loan limit, the buyer has to put down 25% of the difference between the loan limit and the loan amount. The effective loan limit is around $750k, and up to about $1M in high COL counties.

My PMI is less than $50 a month. I just double checked. It’s 29.08! Thank the stars!

 

[StacyStrong]

Also, just an FYI to anyone looking, you CAN get a 3% down conventional loan as long as one person on the loan is a first time home buyer and it is not income restricted. “First time” is also pretty loosely defined.

Homeownership is certainly hard to get into, but there are a lot of available routes for people to take.

Personally, I don’t subscribe to that 20% nonsense.

 

[StacyStrong]

A lot of us live in places that are realistic I'm sorry you don't. If you want to live in one of the most expensive cities in the US then embrace it, but don't make excuses. Our mortgage is 5% of our income and we don't make half what you make.

The good ol, “if you don’t like it, just move!” argument. Hate to see it.

 

[amylevan]

A lot of these guidelines are extremely outdated and no longer relevant to today's housing market. I'm surprised they haven't updated these recommendations. In today's market, 5-10% down is far more realistic.

"They" also recommend a housing payment that is only 25-30% of your gross income. Good luck with that! 25-30% of net is more realistic, but the truth is that MOST Americans spend 50% of their net income on housing. And mortgage lenders will routinely approve DTIs in excess of 40%.

And not true. MOST Americans do not spend 50% of their net on housing. As per this article, about 28% of the US spend more than 30% on housing. While that is approaching a 1/3 of Americans, it’s not most. https://finance.yahoo.com/news/17-hours-day-afford-housing-140000411.html

There are ways to not be house poor, as more than 2/3 of Americans are not.

 

[pigletto]

There are a few residences for sale for that price point. But since the Canadian dollar is worth 25% less than the US. dollar, a comparable price would be closer to $310,000 in Canada. Clearly the prices are affordable based on income because people are buying houses. Although I am not up to speed on your homeless situation. I haven't been in Vancouver in 3 1/2 years. A quick search shows Vancouver has 4 times the population of Sacramento with 3,600 estimated to be homeless. We have over 9,000 homeless here.

https://rennie.com/listings?gad=1&gclid=CjwKCAjw5MOlBhBTEiwAAJ8e1vlhdIGJvpPjkeyMXw2jS1aQBBKTtK0lJcmpmSFqecBdnI-BE9nCcRoCtsMQAvD_BwE&showTable=&page=1&zoom=12&c=49.241843397747395,-123.33342361495461&priceMin=0&priceMax=250000
https://www.realtor.ca/map#view=list&Sort=6-D&GeoIds=g30_c2b2nw3h&GeoName=Vancouver, BC&PropertyTypeGroupID=1&TransactionTypeId=2&PropertySearchTypeId=1&PriceMax=325000&Currency=CAD

I think that’s a massive oversimplification of our current housing markets in Canada. Yes SOME people are buying houses in Canada but to say we are in an affordability crisis doesn’t even touch what’s happening.
Google if you’re interested in understanding what’s happening here. Our prices are outrageous.

One example . I bought in 2019 for 335,000. The house had been purchased by the previous owners in 2014 for 139,900. I could sell today for $550,000.
My house is 100 years old, and 1200 square feet . Nothing fancy in the least. I also live in a town of less than 20,000 people.

I want you to look at that jump in 10 years. And I consider myself LUCKY because I couldn’t have bought into the market even a year later. So alllll those people who bought in during the record high prices of the pandemic are set to renew at 6 percent or more. If they want a new mortgage with another lender they have to requalify with a stress test of 8% .

 

[shh]

i know home prices have changed but so have incomes and from what i read it's still advised that 5x one's annual household income is the top range to be safe.

Yikes - is the standard really 5x HHI now? I couldn't sleep at night buying anything at 5x HH income, but I'm very conservative. I don't have a safety net to absorb financial risks.

When I bought my townhome in late '80s, all the experts cautioned not to exceed 2.5x HHI on rent or monthly ownership. I ended up underbuying. I chose a very plain, low cost small place at 9% mortgage rates, which was the avg then. Honestly, looking back now, I should have reached higher and chose a nicer house and bigger loan.

I could have had a better neighborhood and school district. The value would have risen much higher. Plus, I'd have enjoyed something close to my dream house instead of compromising so much. I just never thought I'd be there long. (I'm still in that "starter" home lol.)

And for the record, I had 2 friends with ARMS when I did fixed - both made out better than me at the end of the day.

So all the above is to say OP - don't be too hard on yourself. Hindsight is 20-20 vision. Many people are quick to pat themselves on the back for their smarts when luck/timing is a big factor - and things could have gone a diff way for them.

 

[shh]

deleted - my question was already answered in a later post - and I missed it the first time.

 

[DCLMP]

The good ol, “if you don’t like it, just move!” argument. Hate to see it.

Didn't say that, but prices across the US are only going to vary. If neither one you work and you make shy of 300k. You choose to live in a ridiculously expensive city you really can't complain. I'd love to have that problem.

 

[StacyStrong]

Didn't say that, but prices across the US are only going to vary. If neither one you work and you make shy of 300k. You choose to live in a ridiculously expensive city you really can't complain. I'd love to have that problem.

You literally are saying that by saying that they can’t complain because they choose to live somewhere.

As if abandoning your entire life, family, and friends should be the reasonable alternative to simply complaining about ****ty socioeconomics.

 

[Miffy]

A lot of these guidelines are extremely outdated and no longer relevant to today's housing market. I'm surprised they haven't updated these recommendations. In today's market, 5-10% down is far more realistic.

"They" also recommend a housing payment that is only 25-30% of your gross income. Good luck with that! 25-30% of net is more realistic, but the truth is that MOST Americans spend 50% of their net income on housing. And mortgage lenders will routinely approve DTIs in excess of 40%.

We bought our house about 2 years ago (we're in the US), so got lucky and have a low interest rate on a 30-year mortgage.

Our mortgage lender--our credit union--approved us for a mortgage of way more than the house we bought. I have no idea how they thought we could afford so much more house, but they did. Especially in our area, where our property taxes are almost as much as our mortgage payment.

I guess my point is that lenders still are making exaggerated estimates of what their borrowers can (or should) afford.