Will a 20% Down Payment Requirement Affect Your Pay Check?

As a new decade dawns, and the future of mortgage lending still appears to be up in the air, regulators continue to chatter about increasing minimum down payment requirements for potential home buyers. Pretty counterintuitive, wouldn't you say? These same potential homebuyers have been forced to file for unemployment at alarming rates, and they are burning through savings. Because home values have drastically dropped, equity from the sale of an existing home is being squeezed out. When people are re-hired or re-employed, from what sources will funds be available?

Credit requirements are growing ever more stringent - even for government-backed mortgages. Down payment, or lack thereof, was not the reason for the downfall of the mortgage industry; a general lack of ethics was. Appraisers lenders and REALTORS have all been affected by the industry reform. Additionally, with more than 9.4 million people receiving some sort of federal unemployment benefits, having a 20% down payment does not insure that mortgages will be paid.

Let's flip this coin for a moment, though. Say that the 20% down payment law goes into effect?? Would it really be so bad? I say NO. Don't get mad....read on..... Looking at the situation from a different angle, higher conventional down payment requirements would shift buyer focus to the flooded foreclosure market. Both HUD and FannieMae allow home buyers to obtain mortgage financing with as little as $100 down, on the former and with as little as three percent down on the latter. When the foreclosure market is cleaned up, the likely bonus is that values will begin to rise and traditional home sales will make their return.

Agents, please know that you will always be able to earn a living selling real estate! You may have to change the process by which you do it along the way, but if you continue to work smart and to work diligently, the business is out there for you!

Personally, this veteran mortgage lender believes that the fear mongers will neither kill our livelihood nor our industry. The idea of a 20% down payment requirement is preposterous.

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