75 is the new 80(Freddie to 25% down now)

Requiring a minimum 25% down payment is one way to force the country to deleverage and another reason why most Americans don't benefit from lower interest rates. This surely takes some housing demand off the table for the foreseeable future(Except in Manhattan where most buyers were already putting down more than 25%)

http://1.bp.blogspot.com/_nSTO-vZpSgc/TOzTPXb1Z_I/AAAAAAAAJ0k/BAB9unskXJA/s1600/mortgage%2Bmarket.png

what is the down payment required in other countries? should it be a minimum of 30% to 40% down? Such down payment if introduced in incremental way make mortgage back securities less risky> slow the GDP but prevents shocks to the RE based economy? just wondering why we are not more conservative than the 25% with managing our own finance. I vote for an increase of .5% per year from 25% to 35%

Interesting how people argue for lower down payments when prices have risen, and higher down payments after prices have fallen. I believe 75% is a prudent number, but amazed at how much standards are influenced by how home prices have performed and recent default experience instead of looking at periods of stress and long term running averages(in other words true underwriting of risk). In the last twenty years, it seems we've allowed S&P, Moody's & Fitch to underwrite mortgages, which even now is ironic considering they only downgraded Ireland yesterday.

RS, how much did you put down when you bought your place?

This is going to make refinancing or buying with super low mortgage rates incrementally harder. Might we see a day when more mortgages are non-conforming? At the moment we seem to be moving in the other direction--with virtually all mortgage being FNMA, Freddie Mac, or FHA conforming. But if the agencies get conservative enough, private lenders may step up or be more attractive alternatives.

Inonada.
First time 20% Second time 45%

Correction 55% the second time.

That's called double down. It's when you take the 300% return on the asset with 20% down and roll it into a 'new' home. Had nothing to do with your SS checks increasing or you achieving more, just banking bubble returns, no wonder you spew so much shit. You think somehow you were the only one to make 3000% return during the bubble. Flmaoz

What made you do such a high number the second time around? Just moving profits from the first place into a second place while keeping the mortgage amount the same, or something else?

Desire for low mortgage payment , low returns offered by zero risk or close to zero risk investments. Desire to be debt free and join the Dave Ramsey club.

What kind of mortgage were / are you in? ARM or fixed?

Inonada,
We're playing 20 questions, Why don't you tell me what you would've done.

I'm not asking to judge, just trying to see what choice you made and why.

Say you paid down an extra 35% of your mortgage, it was always fixed, and all the 4.5% interest rate is tax deductible. Relative to other choices and your prior position, it sounds like putting your money in a long-term debt instrument with a fixed after-tax yield of 3%. I.e., you bought long-term mortgage debt with that money (your own) relative to where you were before. Supposing that all was the case, I'd be curious as to why you'd do that given your views on inflation.

I looked at fixed rate after tax and compared to muni yields. The muni yields came in less. This isn't perfect I learned afterwards, because one year, I wasn't able to deduct 100% of my mortgage interest, but it served as a useful bench-mark. Also unknown at the time was how long the mortgage would be outstanding.

OK. But if you think we have / are headed towards high inflation, then why put money in a long-term debt instrument with a fixed 3% yield?

Different environment.... And yes optionality is a desirable,

I'm also anti-debt.

What do you mean "different environment" -- that it was a different environment when you paid down the debt? You can simply take the debt out now at 3%, right?

I hear you an "anti-debt", but there should be a limit, no? Suppose someone were willing to lend to you at 0%, and you knew inflation was going to be 10%. Would you still be anti-debt?

I hear you. If you are willing to extend me a zero interest loan I'll be sure to take you up on that. Otherwise, Please have a great Thanksgiving!!

Just like people are willing to pay a premium for the feeling of being an owner, some will also "pay" for the feeling of being debt free. I'm one of those people.

RS, Treasuries vs. TIPS indicate long-term inflation expectations of 2.5%. For a guy who thinks CPI & expectations are understated, it's sure strange to put money in a long-term asset that yield 3%.

FYI, you can't get 0%, but you can get close to 0.5% margin from some brokerages. Used to be that you could get as low as 0.25%. Close enough to 0%: I doubt that last 0.5% really makes or breaks any decision. What are you going to do with it?

Fannie already has a .75 price add-on for condo buyers putting down less than 25%. Not surprised to see Freddie follow. Lending certainly isnt getting any easier very soon. sunny.hong@bankofamerica.com

The 25% down payment actually codifies what's been done behind the scenes for some time. In NY I've been hearing from brokers that 30% or more down is not uncommon.