Some Silicon Valley Tech Workers Get Home Loans with No Money Down
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Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#2We looked at financing through some of those new 'hip' lenders. My wife works for Google and SoFi had some of the highest rates (even with 'Google discount' and 10/20% down). They may get your pre-approval within a day, but in reality most lenders get that done quickly. In the end, they have to play the game everyone else is playing and it means long turnaround times to actually close. This is the part that is fundamentally broken and really in need of 'disruption'.
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#3the more money you've got, the cheaper it is to get more. money follows economies of scale.
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#4One reason: Almost half of their compensation packages are in Apple shares. So their lender, Opes Advisors, assigned the couple a financial adviser who used a software program to factor in debts and future income, including the stock, and the costs of education over the years for two young children.
They don't go into much detail, but this part scares me.
I'm assuming the "model" estimates some sort of future value for the stock. "You only make $150K, but don't worry, our model says that once your stock starts to vest, you'll be making $250K per year thereafter".
Of course that assumes their "model" of the stock price is correct.
However, California is a no-resource [edit:non-recourse] state, so if the owners get to the point where they can't afford payments, then it's the lender that is on the hook for the loss.
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#5How does it make sense to tie up $1M+ at 1%? Are they turning around and selling the note to Fannie or Ginnie Mae? Unless we are Japan (and that's a slight possibility, but not likely IMO) this will be a total loser - not as bad as buying Spanish/French/Italian debt at negative rates, but pretty bad.
Who else has friends going through all sorts of ridiculous acrobatics to buy houses in the bay right now? Where they are "lucky" to get their 10-20% over the list price offer accepted? Yeah, this will end well.
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#6the more money you've got, the cheaper it is to get more. money follows economies of scale.
and having no money is expensive..
see Louis CK :) https://youtu.be/rMG1MOn49Ts
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#7One reason: Almost half of their compensation packages are in Apple shares. So their lender, Opes Advisors, assigned the couple a financial adviser who used a software program to factor in debts and future income, including the stock, and the costs of education over the years for two young children. They don't go into much detail, but this part scares me. I'm assuming the "model" estimates some sort of future value f…
Not sure what you are scared about. The stock market only goes up.
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#8Why does someone like Zuck need a mortgage? Is it economically advantageous to him in a significant way?
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#9I have little interest in tying myself down by buying a house, but the part that's most appealing to me is the mortgage structure. You get to borrow money at a ~3.5% interest rate, in order to invest in something that produces 5-7% yearly returns. On average, this is going to make a ton of money in the long term.
Is there any way to do something similar with stocks, without paying an insane amount of money in interest rates or fees?
Edit: I know returns aren't guaranteed, I'm referring to expected returns. I'm perfectly willing to take on risk, in order to make positive-EV bets. I tossed out the 5-7% number as a very rough approximation - assuming that you buy a house with a buy-rent ratio of < 20, in which case the returns that you make by not having to pay rent, will be 5% or more.
Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down
#10We looked at financing through some of those new 'hip' lenders. My wife works for Google and SoFi had some of the highest rates (even with 'Google discount' and 10/20% down). They may get your pre-approval within a day, but in reality most lenders get that done quickly. In the end, they have to play the game everyone else is playing and it means long turnaround times to actually close. This is the part that is fundam…
Just bought my first house a couple months ago. Despite picking a lender that seemed to have their ducks in a row, I wound up 'at the table' from 9AM to 6:45PM. Everybody involved was surprised it actually got done. Fundamentally broken is an understatement.