EXIT Realty Fireside Connie Mangler
4555 Cheyenne Ave Davenport IA 52806
In June of this year, 40% of new mortgages had a down payment of less than 10% of the final home buying price. That is a seven-year high, with over 1.5 million home buyers obtaining a low down payment mortgage in 2016.
After four consecutive years of seeing higher down payments, some people see the all-time high as a positive sign of economic recovery. Others, however, fear that low down payment trends can indicate that people didn’t learn their lesson from the last housing crisis.
But there are other possible reasons behind the lower down payments.
Mortgages increase overall
There has been an increase of purchase lending in general. This means that while there are more low down payment mortgages, it isn’t generally high when compared to all of the purchase loans written in the last year.
Increase in 5%-9% down payments
Most of the growth in lower down payments has been in the 5%-9% range.
Growth in Freddie and Fannie Loans
Loans that are in the 3% down payment area have been from mortgage assistance and GSE variety loans.
Better Quality Loans
The financial shape of borrowers who are approved for low down payment mortgages is also improved from ten years ago. On average, the credit scores of these borrowers is 50 points higher than their predecessors. In addition, the delinquency rate of high LTV mortgages is 90% lower now than the LTVs that originated over a decade ago.
If you are looking at taking advantage of this new trend as you search for real estate in the Quad Cities, visit my web page by clicking on the link below:
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Low Down Payment Mortgage Trends Good or Bad?