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| 9858 Clint Moore Road, Boca Raton, FL 33496 | Caesar: (561) 715-8630 or Eileen: (561) 271-1311 |
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Whatever happened to the 20-percent-down mortgage?
Where did first-time buyers obtain even the relatively modest down payments they made? Seventy-three percent of the survey respondents said at least part of it came from savings accounts, and 22 percent said relatives or friends chipped in as well. One out of 10 said their down payment came from liquidations of stocks or bonds. The biggest down payment resources for repeat buyers were the profits they made from their prior sales. Sixty-two percent of repeat buyers depended on those resources. But 40 percent also took money from savings accounts to help swing the deal, and 6 percent sold stocks or bonds. Just 3 percent got help from relatives or friends. Besides high prices, a key reason for the relatively high levels of leverage being used by both first-time and repeat buyers has been the explosion of low-down-payment options by mortgage lenders and insurers in recent years. Prior to the mid-1980s, the plain-vanilla, 20 percent down mortgage was virtually the only game in town. Now, 100 percent financing -- often using a ''piggyback'' first mortgage of 80 percent or 90 percent of the home value combined with a second mortgage or credit line for 20 percent or 10 percent -- is commonplace. So are 5 percent and 10 percent down payment conventional loans with private mortgage insurance, and 3 percent down payment Federal Housing Administration (FHA) loans. Although all these minimal-down plans have been highly successful in pushing the homeownership rate in the United States to record heights -- currently just under 69 percent -- they've achieved this in an atmosphere of steadily appreciating home prices and values. The possibility of low or no appreciation hasn't been a concern for buyers using minimal down payments in most parts of the country since the mid-1990s. Real estate agent Caesar Parisi stands ready with effective advice on buying or selling a Royal Palm Yacht Club single family home. Visiting the Boca Raton FL community? Contact Realtor® Caesar Parisi for information on buying or selling an The Oaks in Boca Ratonal Estate. click here for article |
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