Americans struggling to purchase homes as they deal with significant debt problems may soon get some relief from mortgage lending companies.
Under the new home lending guidelines recently set forth by Fannie Mae and Freddie Mac, low-income families and individuals looking to become first-time homebuyers will get much-needed some assistance in the form of lower minimum down payments on houses.
Ever since the economic recession hit and the housing bubble burst in 2008, many people with financial problems have found it difficult to afford the down payments needed to make a home purchase for fear of ultimately ending up in foreclosure. This difficulty with coming up with the necessary cash and equity to buy a house was exacerbated by the fact that the country’s biggest mortgage lenders had set a minimum down payment amount of five percent. That figure will now drop as low as three percent for first-time house buyers in many cases.
The move by Fannie Mae and Freddie Mac isn’t without benefit to the major mortgage lenders, of course. After the most recent recession, the debt difficulties faced by millions of Americans meant that the total number of homes sold on the real estate market has been in decline. This downturn has also affected the economic recovery by slowing economic growth in the U.S.
The hope is that the new down payment guidelines will encourage more middle-class families to consider buying homes. Additionally, although the initial down payment requirements will be minimal, borrowers will still be required to show a sufficient amount of income to cover monthly loan repayments. This should help to discourage the inappropriate lending that went on just prior to the 2008 housing bubble. In fact, Mel Watt, the director of the Federal Housing Finance Agency, issued a statement on the latest underwriting guidelines and said that they “provide a responsible approach to improving access to credit while ensuring safe and sound lending practices.”
For additional information, read the Yahoo.com article, “More Americans to Buy Homes with 3 Percent Down.”