Among the many reasons for the slowdown in home sales in the US is lender requirements for a bigger downpayment in order to qualify for a mortgage, in our view. Under "normal" circumstances it is difficult to come up with a downpayment for a home. Given the current economic situation, it becomes even more difficult.
As of the fourth quarter 2010, conventional mortgages required a median downpayment of 22% in nine major US cities, according to the Wall Street Journal and Zillow. These sources state this is the highest it has been since records were kept since 1997 and is up from 20% in 2001. In 2001, banks and lenders began a crawl downward on the downpayment requirement and there was little or no money down payments during the "housing bubble."
With more invest initially, banks and lenders believe their risk is minimized should prices continue to fall. In addition, the increase in downpayment means they have more invested, and thus, less likely to default on the loan.
Borrowers who are having a hard time qualifying for the downpayment are turning to loans for veterans or those backed by the Federal Housing Administration (FHA) that requires a 3.5% downpayment.
Being pre-approved for a mortgage will go a long way in bidding on a home. If you are looking to buy or sell a home, please feel free to contact me.
Michael Friedman
Realtor, Certified Distressed Property Expert (CDPE)
Lang Realty
561-247-3550
http://michaelfriedman.rmlsfl.mlxchange.com/?Page=7395217 <--property search link to cut and paste into your Web browser
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