Zero down mortgages don’t seem like a bad thing as long as the asessments of the borrowers and their mortgages are genuine.
This article keeps equivocating the subprime mortgage crisis with this zero down mortgage tool, but the subprime mortgage crisis was caused by literal fraud, not the existence of a particular mortgage process.
Zero down mortgages can be structured as schemes to fool people, but that’s not what caused the mortgage crisis, the mortgage crisis was caused by creditors falsely assessing variable mortgage values and knowingly selling them to people who couldn’t afford them for a short-term profit.
Zero down no interest mortgages on the other hand, can be a great tool for people looking for a home.
Read what the contract says, do your due diligence before you buy and make sure you have enough to keep up with your mortgage, like with any mortgage.
The risks the article talks about are the same risks you’re going to get with any type of mortgage, not just zero down mortgages.
I disagree. If borrowers are unable to afford a down payment, that almost certainly means they have very little financial flexibility, which is necessary when owning a home. Now, I’m not trying to blame borrowers for this scenario. They are living through an affordability crisis and are almost certainly affected by the housing crisis if they are renting (as opposed to living rent-free/light with family). By allowing zero down mortgages, it’s treating a symptom, but letting the underlying causes fester.
I disagree. If borrowers are unable to afford a down payment, that almost certainly means they have very little financial flexibility, which is necessary when owning a home.
I think you’re looking at this one particular point in a vacuum. On the surface it would appear that someone that can’t produce $20k-$40k cash to put down on a house doesn’t have the financial wherewithal to produce $20k in cash that may be needed to replace a roof or HVAC system on a house.
However, zoom out a bit and you’ll see these non-homeowners have been financially savvy to successfully navigating rental rates outpacing inflation by 40%! source. Once they have a fixed rate mortgage, their ability to plan an save for home repairs becomes much more attainable.
Ask yourself this: How would your personal finances look right now if your house payment had been rising every year for the last decade and is now 40% higher that when you signed your mortgage paperwork?
Zero down may be the only way a family can afford to buy a home. In a time where older starter homes are north of 300k, we’re asking families to save 60k cash to get to 20% down. That’s about the median household income.
If you’re able to save 10% of your paycheck (after taxes), you’re going to spend about 10 years saving for today’s price. Which will likely be much lower than next years price.
Family making 60k, has no business buying 300k house esp with zero down… How do you even budget these numbers lol
Get real
Sure but if people have been able to consistently pay rent higher than their mortgage I think they’ll be fine.
I know that’s the case in some markets, but I think it’s pretty close in most places. Especially when you consider the other expenses of ownership like maintenance, property tax, insurance, etc. I know in my situation, we have a few hundred dollars a month more flexibility by owning instead of renting.
Solution is more housing and lower prices… Not paper voodoo
