I just received the most disturbing email from a lender. He was advertising 100% financing!
I could not believe my eyes. Isn’t this one of the reasons we find ourselves in the worst economic crisis in history.
The housing market has always been a major factor that drives the world economy. When 100’s of the 1,000’s of home owners found themselves in dire financial trouble from job loss, divorce and medical crisis they turned to their largest financial drain and their largest financial asset, to get them out of trouble…their home.
Imagine their surprise and dismay when they discovered their home was not worth what they paid for it and to make matters worse their lender talked them into 100% financing so now they have no equity in the home.
Would you lose your down payment? Yes, but you would be able to sell your home to cover your indebtedness or refinance to a lower interest rate thereby lowering your payment allowing you to possibly remain in your home, yes.
There are many loan programs available allowing minimal down payment. FHA requires 3.5% down. I do not think it is asking too much for a borrower to be required to put even a nominal amount of money toward their housing purchase. It would be a first sign that they will have the financial discipline to have saved their money toward a home purchase.
Lender, banks, mortgage companies…please do not repeat the same mistake by loaning people more than they can comfortably afford!
Written by Mary Beth Harrison, www.dallastexasrealestateblog.com
