SHELLY said:
WiLe,
The way that it works is that you take out a home equity line of credit on your primary residence for any cash portion of the down payment over and above your "letter of credit".....THEN when the developer comes knocking for the MORTGAGE on the finished unit, you go and get the ZERO down optional ARM. Got it? ;-)
I know that. However, the link that you posted had an "owner occupied" requirement and borrowing limits. To take advantage of what they have to offer, you really can't already be in debt up to your ears. I know that there are always going to be those who get in over their heads and end up overextended and in trouble... I just don't see that happening here on anything approaching serious. Its not that easy for most people to get in a half million $ PRIMARY residence. Its a lot harder than that to get in a half million $ secondary or investment property. Those than CAN do that are not GENERALLY the same people who will easily walk away from a hefty down payment and ruin their credit.
From my observations, I don't see people buying who aren't aware of the risks and don't have Plan B's and C's. I invest in property. I've been doing it since I first bought in 93. I've made lost a little, broke even and made money. I'd have never lost on anything, if I had have been patient. There are always cycles - and most of them can't be predicted. I sold a beach home (actually a lagoon home, across from the beach) for $235,000 in 1998. That home's worth a million right now. It might go down to $900,000 next year - but 10 years from now I'll bet you it'll be closer to $2 million than it will be to a million. Between here and there, it will get scary. But end the end, prime property always wins. It always has and there is no reason to think that it will be any different in the future. PCB might look like a mess now with all the building. There might be too much on the market too soon. Prices might drop. Long term it won't matter. People who bought today will look like real estate genuises in 10 years. That will even be more so the case in Mexico Beach, because its cheap now.
Where would be a better place to put your money anyway? Cash pays nothing. I sold my businesses in 1994 and put most of my money in the stock market. Between 2000 and 2003, I lost 40% of it. Through some good moves, I got it up to where it was in 1994 - trouble is though I ran it through an "adjusted for inflation" analysis and found that my money was worth only 70% of what it was in 1994... Now contrast that to some of the real estate that I've owned (and some of it I sold):
Pelican Point (Beach condo) $169.9 to High 7's in 12 years
Beach House $200 - $1 million in 8 years
Back Bay Condo (Perdido Grande) $250,000 to Low 6's in 6 years
Present Home - $169.9 to mid 3's - 3 years
Romar Lakes Lakes (wood condo across from beach) $115,000 to $500,000 - and this is going to be demolished and I'l get a preconstruction priced $930,000 condo)
We'll cycle down for sure. Long term its UP.
A couple summers without hurricanes would be the best thing that could happen to us. Katrina was the worst thing that could happen to us. Much worse than the increase in interest rates.