Is 20 Percent Down Payment to Become Norm Again?
According to MSN Money, it is highly likely that the mortgage market will begin to return to the 20 percent norm again. However, while most borrowers are misguided to believing that they need at least a 20% down payment before beginning the mortgage process, most mortgage insurers stray from writing policies that are equal to or lower than 20%.
There are many policies that accept far less than 20% for down payments. For example, FHA backed mortgages agree on 3.5% down payment while veterans can have 0%.
If 20% seems too daunting when beginning to think about purchasing a home, view the 20% as a savings target. The more money you put down on upfront, the lower your interest rate will be resulting in a cheaper loan.
All-in-all, the decision about whether the mortgage market will begin leaning towards a 20% down payment norm again depends on the lobbyists on Capitol Hill as well as the trouble state of private mortgage insurance markets. As politics fight over the state of Freddie Mac and Fannie Mae, expect mortgage lenders to become more conservative about lending out money.
But always keep in mind, no matter what happens in the future, if you’re looking for a low down payment option, an FHA mortgage is always an accessible alternative.