Lower down payment requirements may make it easier for potential new homeowners to qualify for a mortgage.

Growing concerns over what appears to be a nationwide decline in home sales, both for existing and new homes, has lending companies and banks scrambling to find ways, such as lower down payment requirements, to lure potential buyers into a mortgage. If mortgage companies and banks can entice new business, there will be a boom of home sales that will benefit everyone.

Current Mortgage Rates

With current mortgage rates for St. Louis homeowners still hovering below 4.5 percent, now is still a great time to get locked into a mortgage. The Federal Reserve has already announced its intention to slow down its acquisition of mortgage bonds, meaning it is very unlikely that we will see mortgage rates fall any lower than that. Talk with Sean Z and his team of lending professionals to get your approval for the TBD mortgage program now, before those rates begin their expected ride upwards.

The low mortgage rates currently being offered by lenders should be enough to encourage new home ownership, but St. Louis residents are still dragging their feet. Housing is affordable right now; the lenders just need to figure out how to sell more mortgages.

Lower Down Payment Requirements

The acceptable amount for a down payment on a 30 year fixed rate mortgage is generally supposed to be 20 percent. The trend now has lenders accepting as little as 15 percent as an incentive to encourage St. Louis residents to buy homes. With the current low mortgage rate, and this new low down payment plan, lenders are hoping more potential buyers will be encouraged to start looking for a new home.

The downside to this is that it has the potential to suck the economy right back down, if not monitored carefully. Lenders and borrowers both should be concerned about the homebuyer’s ability to make payments on the loan before they close on a new house. That’s the beauty of a program like the Sean Z TBD mortgage plan. The fatal flaw that brought the housing industry to its knees, was the lending companies concern over the value of the house over the borrower’s means to make payments.

The TBD Mortgage Program

The TBD mortgage program shifts the focus away from the home and onto the borrower where it belongs. It does not really matter what the home is worth, if the new home owner cannot make the monthly payments. If the current trend of lower down payments continues and is coupled with approvals based on the borrower, disaster can be averted and more St. Louis residents can benefit from home ownership.

The trend for lower down payments is nationwide, with some states reporting banks asking for less than 13 percent of a home’s value as a down payment. So long as the buyers are also being qualified, the housing industry should continue to see growth.

Call SeanZMortgage at (314) 361-9979.

Photo credit: Diana Parkhouse via Flickr