Wealth Finance

Currently, the facility of availing the option of zero percent down payments on home formally does not exist anymore or virtually has shown a very sharp decline. This has raised the cost of purchasing home tremendously. In this regard, a research report has unearthed the fact that in the nine main cities of U.S, on average the banks have enhanced the down payment of the house by twenty two percent in the year 2010.

The Down Payment is Significantly Higher than the Past

The amount of down payment for home is significantly higher now than that of the amount charged few years back. In fact, there has been an increase of around four times in down payment in comparison to same couple of years ago.

Statement by Stan Humphries

It has been stated by an Economist; Mr. Stan Humphries of Zillow (Real Estate Company) in his interview to the Wall Street Journal, “The middle ground buyer is the one having to fight to get a conventional mortgage”. It does mean that now the option of mortgage has not been in the range of people who belong to middle income strata. So far, Zillow has not offered any comments on the statement of Stan Humphries.

There is no doubt about the fact that currently with the considerable increase in down payment has made it pretty difficult for people to purchase a home. This has also posed threat to people who would like to sell their homes.

Increase in Down Payment Reduce the Number of Buyers

Banks are escalating the cash amounts in terms of down payment. In fact, this has caused threat to homeowners who like to sell their homes, because the number of consumers has also reduced considerably. Now the buyers of home are not that much interested in having their own home, as the value of homes are diminishing.

This is large turn from the boom period for homes when banks literally persuaded the home buyers to either give trivial or zero down payment; so that they could enhance their earning by paying less charges for loan.

Situation in 2006

According to a report, on an average the down payment was lowest in the last quarter of 2006. It was at the amount of four percent on average. In few of the markets that comprise of Stockton, Calif and San Diego, by and large the average rates of down payments have been 0% for many years. Now it has risen at an average of more than twenty percent.

Highest Down Payment

The largest down payments were recorded in Los Angeles. Banks were charging 24% down payment on average over there.

In current month, the Obama government is devising new regulations which will eventually increase the down payments by 10% minimum on those loans that are purchased or safeguarded by the renowned home lenders Freddie Mac or Fannie Mae.

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