Is it realistic to ask people to put down 10%+ for a mortgage?

I was listening to CNN and some of the commentators were talking about they remember when people had to put down 10-20% for a home loan. The average house about 1200 sq ft in my area is like 140K. The average person does not have 14K laying around, but they can pay rent, which usually equal someone else's mortgage payment plus some. I agree you should have to put down something (3-5%), but is it a realistic to require people to put down 10%+ for a home loan? If banks start requiring, a bigger percentage down, is that going to slow down moving those post foreclosure houses off the market?

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  • Anonymous
    1 decade ago
    Best Answer

    You are asking 2 questions.

    Should you put 10% down. I don't think so, as long as the total mortgage payment doesn't cost you more then 25% of your gross monthly income.

    In regards to having 14k "laying" around. WHYNOT have this in savings? There is NO!!! reason someone shouldn't have a savings account and investments.

    Everyone!!! should be saving at least 10% of their gross monthly income. It comes down to spending less then you earn.

  • 1 decade ago

    I think it is very realistic and a good idea for the following reasons:

    When down payments are higher, buyers feel more ownership of the home and are not as likely to default. Why should the lender provide all the capital for the biggest purchase of your life?

    When down payments are higher, it shows the buyers have a good, steady stream of income, that they plan ahead, and that they can manage their finances.

    Living within ones means is the only way to avoid financial difficulty.

    Buying something bigger or fancier than you can really afford will only get you in trouble. Potential buyers need to save money by renting a less expensive place, spending less money on non essentials. You can save enough for a down payment in a few years. I did not own my own home until I was 29 years old. Until that time, I rented nice, safe but not expensive apartments, and saved all I could. I then was able to put 20% on a home (so I put $36K down). I got a better interest rate than someone with only 5% down and my monthly payments were about $100 less because I did not have to pay private mortgage insurance premiums.

  • 1 decade ago

    Back in the day (70s) it was common to put 20% down. The loosening of the requirements for home ownership are a big part of the problem for over inflating the housing market. Saving and being able to put more down, can really help the new home owner as the monthly payments are lower, equity is built faster, and the need for "mortgage insurance" is lessened.

    Besides if buyers are truly invested in the house, they will be much less likely to walk away from the property if they lose some equity.

  • Anonymous
    1 decade ago

    If you can't afford to put down 10 - 20% of what the price is then what happens when your roof all of a sudden needs to be replaced and you don't have the money to do that. Your going to quit making those mortgage payments because now you have bought a piece of crap house. Putting down that much money lets the bank know your serious about your purchase.

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  • Anonymous
    1 decade ago

    A larger down payment will slow down the sales a little, but not a lot. People going to the auction usually have cash to buy with or already have a loan arranged.

    A larger down payment will reduce foreclosures overall, because the buyer has more equity going in. Also, you can get an FHA loan with as little as 3% down as long as you qualify.

  • Anonymous
    1 decade ago

    In the old days, 5 years ago, the disipline to save up a down payment was one part of the creditworthiness to become a home owner. The change to everyone should get everything now has caused the mess we're in.

  • Mike M
    Lv 5
    1 decade ago

    I consider 10 percent pretty low actually. Average prices around here are a lot higher than 140K, and I still am in favor of 15-20 percent minimum.

  • 4 years ago

    well it depends on how much you want that house! House prices are a guide but if its really what you want then go higher.. I would put a more realistic offer in around the region of 395,000 you are still saving....

  • 1 decade ago

    it's not only realistic, but it's the laxing of this standard that got our country into this mess. everyone shouldn't have a home, and not everyone can afford one. the belief that everyone should have everything basically caused this mess from the ground up.

  • Anonymous
    1 decade ago

    Yes, it is realistic. The problem is that people don't want to save up first. They want instant gratification - "buy it now."

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