Anonymous asked in Business & FinanceRenting & Real Estate · 1 decade ago

What ever happened to 20% down payment to buy a house?

I think the reason we are in such a financial mess in terms of housing crises is the fact that we got away from the 20% down payment for a house.

If we require people to pay 20% down on house they want to buy, we would eliminate those people who can't afford the house they are going to buy.

We need to bring back the "old fashioned" but sound ideas of our fathers and mothers.

10 Answers

  • Anonymous
    1 decade ago
    Best Answer

    I don't know what happened to it but they should put that back into effect. We got into this mess because so many americans bought homes they couldn't afford. If you don't have 20% to put down on a house then what makes you think you can afford the mortgage?

    The problem with society today is we are all to materialistic. We want what we can't have (afford). Whereas our fathers and mothers went without modern day conveniences to make ends meet not to have to rely on credit therefore having money in the bank to put down on a house

    I totally agree with you.

  • Mary
    Lv 4
    4 years ago

    What you need to do is sit down, calculate the money that you have spent in repairs/upgrades to the house. If you have receipts to back this up that would be ideal. Also, I don't know if you have a recent appraisal of the house but that would be good too. You can go to the tax assessor or you can pay to have your own done for a small fee. Also, consider the market in your area. The housing market is in a huge slump right now, so values are dropping. NEVER, EVER sign over any profits to your house to the previous owner. Doing so is greatly against your own interest. If you insist on buying a house from these people, have a lawyer advise you. Family or not, do not mess with these people without a real estate attorney. They are bad news and they are trying to screw you over. Make up your own contract with an attorney, and your own offer based on fair market value and what you have already put into the property via repairs, etc. Offer them only that. If they take it, sign it quick and be done. If not, move the heck out and get something else. You could probably get a better deal in these times anyway. Separate from business, tell your family exactly what you told Answers. They treat you like dirt and you don't appreciate it. Never mingle business and family. And don't be afraid to stand up for your financial interests!

  • 1 decade ago

    While it's true that bringing back this old-fashioned way of approving someone a loan, it also deprives other people who are willing to work hard to be able to afford their loans. The Federal Housing Administration offers loans that only require a 3 percent down payment. But it doesn't mean that these people would not be able to afford their payments. Despite the low down payment amount, the borrowers' ability to pay the mortgage and financial resources are considered first. I think what needs to be done is not bring back the 20& down. The government must get rid of down payment assistance schemes were sellers provide the partial, or even full amount of the downpayment. This contributed a lot to the crisis we have today because loans acquired through this are more likely to become risky mortgages.

  • I disagree with you. Maybe because you have the $ to put down 20% doesn't mean the whole world does. Stop being selfish in thinking that this is the reason we are in a real estate crisis. The truth is we are in a crisis because of our dear President who is pushing us to the next Great Depression with his stupidity and warlord mentality. Over the past 8 years we have seen financial institutions go bankrupt, jobs outsourcing to Middle East, healthcare costs through the roof...etc. Making it 20% down to buy a home is ridiculous. Not all of us have this kind of $ for a house. If we did, we wouldn't be borrowing $ from banks and paying high interests. ---Better yet, why don't YOU give us the 15% downpayment extra we need to buy our homes. You are all concerned with the foreclosure rates, then DO SOMETHING ABOUT IT!

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  • Anonymous
    1 decade ago

    I think that this idea is largely unachieveble for many people these days.

    I am quite a good little saver. I don't treat myself often and over the past two years I have been putting money away towards a deposit.

    I am under 25. I went to university, had to have a loan while living away and I am now earning just enough to start paying this back. So, the last two years have been the only chance, since uni, that I have been in a sound financial situation to save hard and regularly.

    As it stands, I am still shy of a 10% deposit on a 60K terraced (and lets face it - it will need work doing on it). The majoirty of mortgage lenders require this now and won't let you put 5% down. So, once I have reached 10%, I then need a couple of thousand for fees and then I may be able to move in (and live out a cardboard boxes for a while). Bascially, it'll be a few years or more before I have enough money on my own to be able to move out.

    I think that 20% would pretty much be unachieveable for me. I'd be living with my mum and dad for a good while until I could afford the deposit, the fees, and the furniture. I could keep up with the mortgage payments and yes I would have less money to myself but after having a conversation with the advisor - I could afford it - and we over budgeted on costs of things to be sure.

    I do not agree with the comment, if you can't afford a deposit how can you afford a mortgage?! A deposit is a lump sum that some of us do not have the luxury of just being able to conjure up straight away. Where do you think that this comes from? Thin air?? It takes time! And when you earn little compared to other people and don't get help from other people, havent' any inheritance, etc, you are saving for yourself for a good while! You can afford a deposit by saving! Your mortgage is based on what you earn and your monthly outgoings, bills, etc, are budgeted for to give you an overall realistic overview of what you can/can't afford. Your mortgage is a monthly payment and so long as the lender is not lending irresponsibly to the person and the person is honest about there outgoings (100% mortgage on an Interest only mortgage - with no payment vehicle - to someone who is just scraping by is irresponsible lending).

    Your 20% comment obviously sways towards a) couples who can both afford 10% each b) people who earn enough money to do so. As I am trying to build myself a nest egg so that I can afford a house on my own and it isn't as easy as you might think.

    I for one will encourage and save for my little one before they get a house and from when they are 18. Hopefully, by the time they are 21 they will have saved a little. With an aim to moving out at 25, they should have enough there to afford a deposit.

    I do understand where you are coming from in some respects but if you are lending to a responsible person and the mortgage lender does not lend more than they should (as I know some have done) then I don't see that there would be a problem.

    The buy now pay later credit culture can benefit some and not others. Some people's lending habits need to be addressed and I think that they need to realise what trouble they can get themselves into when they carry on flashing the plastic. There needs to be further credit checks. I believe that lenders also need to be more responsible. Credit cards and mortgages are pretty much handed to you on a plate at the bank/building society on the frontline this needs to be addressed also.

    It is a good debate but comments like these do infuriate me when I know I am trying so hard to save, work and do not receive any benefits / help from others - do not tar everyone with the same brush and remember others are more financially secure.

    At a guess, you are probably somebody who has a house and has not struggled. You are probably pretty financially secure right now too. You might want to consider people from all walks of life when you make a comment like this.

  • MLE
    Lv 7
    1 decade ago

    It is old fashioned but not a bad idea.

    Unfortunately if we put your idea into use no one in America would ever buy a house because the American people don't know how to save their money so they would never save up enough to buy a house.

  • Anonymous
    1 decade ago

    Interesting point. In Italy for example you cannot get a morgage for more than 80% of the value of the house (unless you are rich which probably means you wouldn't be asking for a morgage anyway) and the situation seems much better than in yhe US.

  • 1 decade ago

    it is considered racist and elitist. Since many poor people (and since there is a larger percentage of poor that are minorities) cannot afford it.

  • Anonymous
    1 decade ago

    It's coming back!!!

  • Anonymous
    1 decade ago

    This isn't a question

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