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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

#71

Post by dasil003 »

whack wrote: post #9

I 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 interes…

I'd be super careful with this. When I make 4x the median American income and have almost zero hope of ever being able to afford a home (until I get my FU money that is), that ought to tell you something about the sustainability of the current market.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#72

Post by jazzyk »

mywittyname wrote: post #40
artursapek wrote: post #8

Why does someone like Zuck need a mortgage? Is it economically advantageous to him in a significant way?

He doesn't need a mortgage, it's just financially savvy to have one. He avoids paying taxes on the sale of stocks to finance the home. Mortgage interest is tax deductible. His stocks will almost certainly yield more than the interest rate on the mortgage. He's getting a sweetheart deal from the bank. For him, selling stock is a PITA because he has special class of stock that grant him voting rights far beyond what a…

With the net worth equal to the GDP of a sizable country, does he need to worry about saving a few thousand here or there?

Also, free country and all, taking advantage of that special rate is still rather unsettling.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#74

Post by eropple »

ebiester wrote: post #68
zanny wrote: post #65

Earlier quoted context omitted.

> Tech workers are the American elites. I don't have any congressmen on speeddial to get whatever I want passed through the next pork barrel bill in Congress, what am I doing wrong?

You're not giving the max ($2700 for primary, $2700 for general) each election and gathering up a dozen people who give $1,000+ donations. This would likely be enough to get one congresscritter to look your way, at least.

Yup. $2700 for a primary, $2700 for a general election. Now consider how much of the country could conceivably throw $5400 at something like that without significant sacrifice, and "elite" starts to make a lot more sense.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#75

Post by jpmattia »

tsunamifury wrote: post #60
jpmattia wrote: post #51

Earlier quoted context omitted.

For the case where stock is not being pledged: I would be amazed if the lenders were taking on 100% of the risk of default. Usually there's some assumption of asset recovery. That probably means the no-money-down loan is being structured so that there is some additional liability on the part of the borrower. (The mortgage itself would be "nonconforming", so it wouldn't be backed by FNM/FRE.) Or maybe we're just back…

I actually looked into it. You are required to put 4 months of payments in escrow. This is far less than a downpayment, but still shows your ability to pay.

> but still shows your ability to pay.

I wasn't being clear: It doesn't matter that you can pay, it matters that you will pay. (Four months is nothing to the mortgage principal.)

Look, the Fed is going to raise rates RSN. Which way does the high end of real estate go when interest rates come off zero %? So suddenly the homeowner is down 10% on the value of their $2M home. Is it worth it for them to mail in the keys to the bank for $200K and tell the collectors to pound sand? For a lot of people, yes. So the bank (or more accurately, the loan service) has to figure out how to send over two guys named Rocko with the power to get their money back.

In the bubble, the solution was to lay off all the Rockos because, you know, housing never goes down. Maybe we're back to that state, which would be amazing, but I'd guess the banks are somehow covering for their liability on zero-down loans this time around.

Edit for tcoppi's comment: s/FedIncrease/BlackSwan/ because home prices do decline for a variety of reasons.

BTW: Implied probability of a Fed rate increase in Sept is back to where it was before Brexit. http://www.ft.com/fastft/2016/07/25/odds-of-16-fed-rate-rise...

Edit for dragonwriter's comment (hn doesn't let replies go this deep?): Fed has been trying to normalize rates, and employment/gdp/cpi has been stabilizing. See the link above for implied prob from Fed Futures for how people are betting on Sept.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#76

Post by markvdb »

ryandrake wrote: post #34
tcoppi wrote: post #23

Earlier quoted context omitted.

We bought a house last year with a credit union, and everyone during closing was quite surprised that we actually closed within two hours of starting. Apparently it is not unheard of for mortgage lenders to be doing final approval up to the day of closing, and keeping people on hold/not answering phones while you and the seller are sitting there twiddling your thumbs.

This is one of the reasons why a seller would accept an all-cash offer significantly lower than a competing offer where the buyer requires financing. No seller wants to wait around for a lender to figure out how to do the one thing they're being asked to do.

Hah. Only days?

In Belgium, it takes three to four months. Plus about 15% of the purchase price in taxes, sky high monopoly notary fees and more.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#77

Post by dimino »

lisper wrote: post #67
zanny wrote: post #65

Earlier quoted context omitted.

> Tech workers are the American elites. I don't have any congressmen on speeddial to get whatever I want passed through the next pork barrel bill in Congress, what am I doing wrong?

You aren't writing checks. Send a Congressman $1000 (that's really all it takes to get their attention) and you'll be amazed how responsive they will come. Senators are a little more expensive, but still reasonably priced at $2-5k. Presidential candidates are in the low five digits.

Tech workers probably want to put that $1,000 into their homes, or into their kid's savings, or pay down some of that student loan debt.

I'm a tech worker and I don't honestly see a near-term future where I would throw $2,000 at a senator to talk to them about, say, net neutrality. I've got all kinds of things I'm saving for! My boat isn't going to drain me of my earnings by itself!

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#78

Post by jazzyk »

CPLX wrote: post #56
ryandrake wrote: post #50

I'm confused. The title says "Silicon Valley Elites" but the article says "tech workers", then goes on to list Mark Zuckerberg and some Apple guy who's salary is apparently 50%(!) stock, as examples. So who are these banks "courting" again? Elites or tech workers? Or just these two guys? It's hard to tell. Interesting news would be "Banks giving kickbacks to CEOs and VCs who throw them corporate business." This artic…

I find it hilarious that the answer to this isn't obvious. This is 2016. Tech workers are the American elites. Did you think elites were still guys with a monacle sitting in a drawing room that overlooks a coal mine or something?

>Tech workers are the American elites

Apparently I did not get the memo.

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#79

Post by dragonwriter »

CPLX wrote: post #56
ryandrake wrote: post #50

I'm confused. The title says "Silicon Valley Elites" but the article says "tech workers", then goes on to list Mark Zuckerberg and some Apple guy who's salary is apparently 50%(!) stock, as examples. So who are these banks "courting" again? Elites or tech workers? Or just these two guys? It's hard to tell. Interesting news would be "Banks giving kickbacks to CEOs and VCs who throw them corporate business." This artic…

I find it hilarious that the answer to this isn't obvious. This is 2016. Tech workers are the American elites. Did you think elites were still guys with a monacle sitting in a drawing room that overlooks a coal mine or something?

> This is 2016. Tech workers are the American elites.

No, they aren't. The American elites aren't workers, they are capitalists. Tech workers are among the class of elite workers that have enough income that they can afford to make significant investments and tend to be in the petit bourgeoisie -- that is, in traditional terms of analysis of capitalist economic strata, the narrow middle class -- but "elite workers" are only elite among workers.

The actual American elites (as is true of all capitalist and most modern mixed economies) are the haut bourgeoisie, the capitalist class; those who derive the overwhelming majority of their support from capital which generates returns largely passively for the capitalist (usually, through the application of other people's rented labor.)

> Did you think elites were still guys with a monacle sitting in a drawing room that overlooks a coal mine or something?

No, but the elites are still the guys that have the same relationship to tech (and other) workers that those guys with monocles had to coal miners (and other workers.)

Re: Some Silicon Valley Tech Workers Get Home Loans with No Money Down

#80

Post by dragonwriter »

lisper wrote: post #67
zanny wrote: post #65

Earlier quoted context omitted.

> Tech workers are the American elites. I don't have any congressmen on speeddial to get whatever I want passed through the next pork barrel bill in Congress, what am I doing wrong?

You aren't writing checks. Send a Congressman $1000 (that's really all it takes to get their attention) and you'll be amazed how responsive they will come. Senators are a little more expensive, but still reasonably priced at $2-5k. Presidential candidates are in the low five digits.

> You aren't writing checks. Send a Congressman $1000 (that's really all it takes to get their attention) and you'll be amazed how responsive they will come. Senators are a little more expensive, but still reasonably priced at $2-5k. Presidential candidates are in the low five digits.

Except for the first, all of those numbers are (or state a range that includes) amounts that exceed the limit for a single donors campaign donations for a single election cycle to a single candidate.

Having to return your donation because accepting it will exceed the legal limit may get a candidate to notice you, but perhaps more as someone who they need to be careful around to avoid scandal than anything else.

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