I Do Not Understand

In the winter of 2008-2009, we decided to start looking for a house to buy in the West Georgia area. As we were looking through the listings online, we found hundreds of houses like we want: 2 bedroom, 1 bath frame ranch on 2-5 acres, for under $40,000.  But just try to buy one! We have been told that because we live in an RV, we have to buy a house as a second home. REALLY!?  That means, instead of paying $1,000 or so for a down payment and the closing costs, we will be required to pay 20% down. And because we live in the RV, and we would be buying that little house as a second home, we would not be able to take advantage of that tax credit they were offering last year.

Yesterday, we were told by a bank that because we don’t have any income in Georgia, they could not approve a loan for us, even though we qualified for the loan in every other aspect. And then today, I learned that banks won’t finance a property that is priced at under $50,000. A lender even asked me if we were willing to pay more so that we could get financed! I could not believe my ears!

Since we as a nation have just been through foreclosure hell, with lots of people losing their homes because they couldn’t afford to make the payments, doesn’t it just make sense to look for something that will not put pressure on the bank balance to buy?   If we, as the buyers, have decided that we want our payment before taxes and insurance to be $200 or less, why would a lender suggest that we buy something more expensive? Isn’t that what got the housing industry into so much trouble? And yes, we COULD afford a higher payment, but we do not want to be strapped in the not too distant future when we are on a fixed income. It’s called Financial Planning, people.

And yes, I COULD pay 20% for down payment, but I don’t want to. Why should I sink all of my available cash into buying a little house? As much as I would like to have a place to go to in the off season, it just doesn’t make financial sense to me to do that.

So, how are people buying these little houses? How are they getting financed? or are all of them just sitting there empty while would be buyers are closed out of the housing market?