Many real estate buyers have experienced great difficulty in completing their home purchase over the last few years, due to a lender side issue other than the normal credit and job confirmation issues. Having a reliable job and a great credit score used to be all it took to have the banks throw money at you, but now there is some unexplainable hesitancy on their part. In an attempt to avoid facing any more defaults or at least minimize them, the banks have understandably back off of granting as many loans as they were.
Their Logic
By not making loans, banks are building up a ready pool of buyers who are eager to borrow money to buy homes? By getting money from the government at for nearly nothing, banks can turn right around and loan it out to the safest credit risks, for the lowest rates, ensuring a decent return over time due to the low rates for the best risks. Even though the banks are getting to borrow money at a quarter percent, and loaning at five points plus, they are still trying to make up ground they lost in investor and customer confidence.
Doing their homework and realizing that there will be over 88 million new home buyers hitting the housing market, as reported by the census bureau, banks will be buoyed by the first time home buyers and new investors seeking to retire some day. The banking industry lobbyists in Washington D.C. have been working overtime to get any and all legislation passed that will allow the banks to do whatever they want in the real estate industry.
The Solution To Our Banking Problem
Home owners were originally the lenders, before the era of the big banks and banking corporations. That is right, the home owner simply allowed the buyer to pay them off over time, interest accruing of course, until the debt was paid in full. Acquiring your real estate in this way is the smartest way to buy your property today.
Let us just say you have to purchase a lot and save up the rest of the money to build it, you are way ahead of the game than if you would have borrowed through a bank. When you total up all the added fees and the interest payment banks will collect, and the insurance that you have to buy for them to make the loan, it really seems like you are the one risking instead of them.
The simple solution is for Americans to be patient and not purchase a home until they have at least 20% saved up, then buy land. Owning the land yourself will always make building your home much easier to finance. Getting back to a frugal mindset that values cash more than materialistic possessions will help you appreciate your money a lot more, and help you grow it more than anything.
The author enjoys writing articles about boise home search & homes in boise idaho. Click on the above links to learn more about these topics!
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