Saving for a Down Payment Will Become Necessary Again

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7/9/2007, 4:37 pm

The last few years have been an odd time for home buyers. Adjustable Rate Mortgages with little or nothing down have been the order of the day. However, ARMs have also hurt a lot of home buyers who can’t keep up with the rising payments as the mortgages adjust.

One thing most experts expect is the return of the down payment. So many risky loans have been made during the recent housing market boom, that lenders have been taking significant hits. As ARMs readjusted and home buyers couldn’t afford to make the larger monthly payments, lenders have been left holding the bag more often than they wish.

And because many mortgage loans made in the recent past required no down payment, lenders are being left holding the entire bag. And in many of these cases, because of the recent decline in appraised values, the bags the lenders have been left holding are larger than the value of the property.

Down payments offer lenders a form of protection when a loan goes into foreclosure. The lender at least has the down payment. Also, history seems to indicate that the more of their own cash a home buyer has in a home, the less likely they are to walk away from it.

The financial hurdle for young home buyers in the future won’t occur on the back side due to rising monthly payments they can’t afford to make. Rather, it will occur on the front side: the hurdle will be saving enough money for the down payment required to purchase a home.

Real Estate Calculator Suite, from Wheatworks Software, has two Down Payment Savings Calculators, that help you discover how long it will take to save a desired amount and how much you must save each month to save a certain amount by a particular deadline.

Learn more about Real Estate Calculator Suite and its Down Payment Savings Calculators at Real Estate Calculator Suite.

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