First Time Home Buyers Face Strict Regulations

Today, plenty of first time home buyers are having to resort to unusual tactics to be able to qualify for a loan and afford the American dream. Many are having to go to extremes just to be able to scrape together the money for a down payment on a house. More and more first time buyers are making sacrifices that are life-changing-for example, moving back in with parents, raiding an emergency savings or retirement account, and taking on a second jobs so that they are able to afford the down payment for a house which will help them qualify for a loan. While it is a buyer’s market right now, first time buyers are having more and more trouble as the market is trickier now than it has been since the early 90’s. Lenders are now insisting that buyers make bigger down payments, have more savings in the bank, better credit scores and less debt…all of which first time buyers typically don’t have. Buyers in high priced states such as California, Florida, and New York are especially struggling to fill lenders requirements. In 2006, almost half of first time buyers put no down payment on the house, and the ones that did make a down payment put down an average of 2% of the price of the house. Many lenders who put just about anybody in a loan last year are struggling to put anyone into a loan now because the big lending agencies are dropping the special programs they had because so many of their customers are in foreclosure. Lenders are now turning away an average of 50% of first time home buyers, because they can’t qualify for a loan. It seems that the lending industry has finally come to its senses, and started practicing responsible lending, as they had learned from the consequences of their actions-16% of borrowers who had subprime loans were in default and facing foreclosure in the first quarter of 2007. However, the more responsible lending practices, and tighter regulations are also making it harder for first time buyers to get a loan.  

Foreclosures are a great way for first time buyers to be able to afford their first house. Because foreclosures are usually sold at less than market value, the amount for the loan will be less than an equal home at a higher price, making it easier to get a loan for a foreclosure home than a home that was not a foreclosure.