America’s gummed-up housing market is a $45 trillion mess — a big old knot of economic forces smashing into a century’s worth of cultural conditioning about the value of homeownership.
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 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.
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.
I understand your concern, but that’s throwing the baby out with the bath water. And then throwing out a baby next door from a crib who wasn’t even taking a bath.
Treating a symptom does not mean you aren’t working on a cure.
In this example, specifically, working with zero down mortgages affords borrowers the ability to make their own choices without stopping me you or anyone else from trying to change the underlying mortgage system.
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?
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.
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.
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.
Is 20% the rule where you live? The article says the down payment is 3%.
Family making 60k, has no business buying 300k house esp with zero down… How do you even budget these numbers lol
Get real
Possibly. It might also deplete their only source of financial flexibility, too.
I understand your concern, but that’s throwing the baby out with the bath water. And then throwing out a baby next door from a crib who wasn’t even taking a bath.
Treating a symptom does not mean you aren’t working on a cure.
In this example, specifically, working with zero down mortgages affords borrowers the ability to make their own choices without stopping me you or anyone else from trying to change the underlying mortgage system.
It’s one more tool
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?