Many believe down payments for homes are out of reach

It's a great time to buy a home - if you don't have to first sell a home. And you have good credit. And money for a down payment. Though mortgage experts say that loans requiring less than 20% for a down payment are available, don't expect much if you don't have some money saved. Wait, it's a great time to buy a home, but for whom?

According to the National Foundation for Credit Counseling’s (NFCC) May online survey, the dream of home ownership is out of reach for many. The NFCC asked consumers about their ability to meet current down-payment requirements for buying a home in today’s market. Of the more than 2,000 respondents, 49% admitted that they’d never be able to save enough money for a down-payment on a home.

That's nearly half! This is discouraging news for Realtors, lenders, potential home buyers, even existing home owners.

Historically, finding the money for a down-payment was only a problem for first-time home-buyers.  After buying the first home, between the equity growing due to making monthly house payments and the value of the house appreciating, buyers could satisfy the down-payment requirement on the new home from the proceeds of the sale of the former house.  This is often no longer the case.

Due to today’s turbulent housing market, the problem has now spread to those who currently own a home.  Many mortgages are underwater.  Thus, even if the homeowner is able to sell their current house, there may be no profit available to satisfy the down-payment on the next home.  Exacerbating the problem is that as home prices have decreased, many lenders have increased the down-payment amount required to obtain a mortgage loan.

The rest of the survey results show that 20% of the respondents said their mortgage would require a lower down payment, 18% said they would have to borrow the down-payment no matter how much it was, with just 12% saying they could easily procure a 20% downpayment for their home.

There is hope. There are communities and organizations that offer help for first time home buyers. Some of them offer grants or forgiveable loans to help buyers accumulate a down payment. Check out the Minnesota First Time Home Buyer website to read about many of them.

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