No Money Down Real Estate Loans

Before the economic crisis hit, the majority of home buyers wholeheartedly supported no money down home loans. However, it seems that following the economic crisis no money down home loans have been taking metaphorical beatings from all angles. Frankly, the condemnation of the no money down home loan is uncalled for. The problem is that many people fail to build their own opinions on the matter off of personal observation and would rather rely on the opinion of a “financial guru.”

The financial guru worshipper flicks on the television and overhears Rachel Maddow and Suze Orman expressing their disapproval on the matter and claiming that home buyers who opt for no money down home loans will lead a foreclosure ridden homeownership, immediately they assume that the gurus are in the right. What most people fail to understand is that these are not factual statements. These statements are not based on extensive studies or scientific analysis. These statements are mere opinions, based off of personal observation and theories.

Admittedly, there is merit to their claims. Home buyers who cannot afford to keep up with monthly mortgage payments should not squeeze their way into premature homeownership with a no money down home loan. That is why so many people with no money down are facing foreclosure; premature homeownership. However, classifying all who opt for a no money down home loan into a foreclosure ridden home ownership is an inaccurate overgeneralization.

Recently married young couples who are fresh out of college with promising careers are ideal candidates for no money down home loans. First time home buyers who fit the above description have the funds to keep up with their monthly mortgage repayments, but they simply do not have the capital to pay for a traditional 20% down payment. Would you peg this young professional couple as “foreclosure ridden?” More often than not the answer would be no.

Those who are foreclosure ridden are heading in that path due to personal lack of money; it has nothing to do with the amount of money they coughed up for a down payment. Granted, the number of foreclosures would likely drastically decrease if unqualified home buyers weren’t given the opportunity to default on their loans, but the ones responsible are the lenders. If lenders would tighten up their lending strings, our economy would most likely be in a much healthier state than it is in now.

Why do I blame the lenders? I blame the lenders because of sheer irresponsibility. Handing out home loans to people who can not afford it to keep up with payments is like selling alcohol to a 15 year old boy; nothing good can come from it because he is not equipped to handle alcohol.