Just what does POPPYLOAN stand for? It's easy, it stands for: Proud Ownership Purchase Program for You.
What is the interest rate on a PoppyLoan? How does one go about getting a PoppyLoan to buy a house or property? Let's see if we can answer these questions below:
A Poppyloan is a zero down jumbo loan that a credit union in San Francisco is offering select customers. With real estate prices sky high in San Francisco, even those making a good combined income can't afford to save enough for a down payment, that's where the PoppyLoan idea came in.
Two high incomes just doesn't enable them to buy a home in a city like San Francisco. However, those high incomes also go towards a very high rent that could be going towards a home if only they didn't have to put money down to buy. You have to wonder though if this will only make real estate prices go higher.
But what people are now wondering is does this PoppyLoan loan offer signal the top in the real estate market.
Just six or seven years ago we had the Great Recession, caused in large part by a housing market that went out of control. Where people thought that the price of a house would never go down. Where people with no job or income where getting mortgages on large homes. Where Wall Street bought up all those mortgages and gave them sterling ratings.
So it's with that in mind that people are thinking that this loan, the no money down and no mortgage insurance loan otherwise known as the POPPYLOAN, is a bad sign for the real estate market.
What exactly is a PoppyLoan? Well, it's a 0% interest rate for San Francisco workers from a San Francisco federal credit union bank for a home worth 2 million - plus, again there's no mortgage insurance. It's such a great deal it seems like it's hard to pass up until the market crashes and you lose your job and can't make the mortgage payments...
Is this a sign of the housing bubble top....? Many think it's a sign of trouble for the housing market, especially in San Francisco.
So while the POPPYLOAN stands for Proud Ownership Purchase Program for You, it might also stand for the top in the real estate market.
Rebecca Reynolds Lytle, senior vice president and chief lending officer for San Francisco Federal Credit Union, said that the POPPYLOAN program was created to address the stark realties of San Francisco’s housing situation.
“We see POPPYLOAN as a game-changer for the San Francisco real estate market," Reynolds Lytle said.
"Too many of our members have given up hope of buying a home because of escalating home prices and the required down payment,” she continued.
“However, these same families are paying more than a mortgage payment for monthly rent,” Reynolds Lytle said. “Paying $3,600 for a one-bedroom apartment is about the same as making a monthly payment on an $800,000 mortgage. We created POPPYLOAN to help middle class families realize their dream of buying a home without having to move out of the Bay Area."
What also stands out in this POPPYLOAN is you can't refinance and it does adjust but every five years:
According to San Francisco Federal, interest rates and monthly payments are fixed for the first five years and every five years thereafter, with no more than a 2% increase every five years and no more than a 6% increase over the life of the loan.
San Francisco Federal said that POPPYLOAN is not available to refinance an existing mortgage.
Read more over at HousingWire.com