A little less than six months ago, you could finance a home with no money down with few restrictions.
Even if you had a low credit score, no assets, and a relatively soft/short employment history, you could still get a mortgage without coming out of pocket.
But times have quickly changed. These days you’ll need to spend a lot of time shopping for 100% financing even if your the most well-qualified borrower out there. You may even fail to find a single bank or lender willing to offer you financing without a down payment.
The reason is because many of the banks and mortgage lenders offering 100% financing were losing money when homeowner after homeowner failed to make even the first payment, leaving the bank with the keys and a vacant property.
It appears many homeowners were willing to buy properties with zero down in the hopes of turning a quick profit, but as home prices slid, borrowers simply walked away with little more than a credit ding.
While it may not be as easy to qualify as its predecessor, the loan program should stick around a bit longer with protections in place for the banks and lenders offering it.
Just don’t be surprised if the lending environment you were used to just last season is a lot less familiar.
It seems the gig is up for loose lending, and borrowers will be expected to show a lot more to lenders in order to qualify. Personally, I think that’s a good thing if we want to avoid a complete meltdown.