One of the several forces leading to the bursting of the real estate bubble was the availability of “no money down” mortgages.  The lower the amount of investment, or equity, in the home by buyers, the greater the likelihood of mortgage default leading to foreclosure. As property values sank following the peak of the real estate market in 2007-2008, people with no equity or who owed more than their mortgage was worth walked away.

So now we see that “no money down” mortgages are back, but this time with a (hopeful) difference: tougher underwriting standards.  This time the bankers want collateral in the form of quick and easy access to the buyers other assets (stocks, bonds, etc.) This is better, but not perfect as the ‘collateral’ is subject to market changes and may not be easily available when called.

No Money Down Mortgages

This development may help the sale of more expensive home, which I’ll call $1.3 Million and greater for now.

So read the linked article above, be aware of this new flexibility from mortgage providers, and ask yourself if this is a good thing or not.

 

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