[mcmama]

Recently I worked with a couple who wanted to buy a home. They came in with a prequalification for a huge amount from a no name lender. They did not have the understanding of just how much a home that cost what they thought they could afford meant in monthly terms.
They wanted no money down, and a seller's concession. This means that they had no money for closing costs. I asked if they had the customary $1000 "good faith" money that could be held in escrow against the closing. No. They had nothing.
I had a competent mortgage broker whom I trust do a thorough pre approval. Not only did he look at their income, he looked at their job history and credit (which barely was eligible for 100% financing). They were astounded to hear what the true monthly costs were, including taxes and insurance, and not including home maintenance.
We targeted several homes that were quite a bit less than what they thought they could afford. There was very little to choose from. Some sellers did nt mind the concession, but they wanted to see money in escrow.
We weren't successful in this very competitive market. We may have some success in the future if the market softens. What surprised me was that the people did not seem to understand that in a seller's market, no money down and a seller's concession with absolutely nothing in reserve is not a great position to be negotiating from. They just kept repeating "we know we can get it for no money down." It was as though they were parrotting a bad infomercial.
Are people buying their primary homes with no money down very much in other areas of the country, or just in hot markets?
I tried to see myself in their position - and I really had difficulty imagining myself going for this. If you do not even have the $1000 to put up front, if you have no money for closing costs, if you have no money at all - how will you afford to move? How can you afford a house in the first place? Can you really meet all the surprises that come your way in home ownership?
In short, WHAT ARE PEOPLE LIKE THIS THINKING?????
Can some one explain this....please???? Any other realtors encountering this?