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Originally Posted by NBRider88
An article you linked earlier. That's a helluva jump, don't you think that was contributed to the whole market crash? People lost jobs, got hours taken away etc...they were unable to pay their bills.
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That's exactly why people shouldn't be buying more house than they can afford. Subprime, Alt-A, and Prime were invented for a reason. If you lose a job, or have to go part time, your housing cost shouldn't cripple your entire life. Spending 43% of your net income on debt is one way to get there.
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It obviously is enough for them and they are raking in the money from it...
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All basic knowledge. The banks have no skin in the game. If a person defaults on a FHA loan, they aren't on the hook, FHA is. Sure they rake money in from fees, but ultimately FHA is on the hook for the loan if it goes into default.
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If the borrower shows significant ability to repay the loan, why is that not solid enough for you?
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"People lost jobs, got hours taken away etc...they were unable to pay their bills." - NBRider88
Just because someone can pay this month, doesn't guarentee they can next month. Long history of employment and good credit history is a good indicator of someone's staying power.
If someone only has 3.5% to put down, it shows that they either don't have a very long employment history, or they aren't saving much of their money. Either way, 3.5% isn't much better than the Zero down loans from the subprime mortgage crisis.
20% down should be the minimum for anyone to purchase a house. Anything else is just risky, creative, financing.