Banks Want Larger Down Payments

Boca Raton Real Estate & Financing

If you are financing your Boca Raton real estate purchase, expect your bank to ask you for a larger down payment even if you have a high credit score. After the record number of foreclosures and defaults on home mortgages, banks want to make sure that buyers are qualified and less likely to default. Statistics show that buyers who put down a larger down payment offer banks less risk. The President has called for increasing down payments on Fannie Mae and Freddie Mac over time to a minimum 10% down payment. Many banks require a 20% to 30% down payment depending on the borrower’s credit score and credit history and the type of property they are buying. According to data released by the government, the median down payment in nine of the major U.S. cities rose to 22% during the last quarter of 2010. For buyers who cannot afford a higher down payment, alternative financing such as private financing, seller financing or obtaining a VA loan or FHA loan may be the best option to purchase your dream Boca Raton home. FHA only requires a 3.5% down payment. Eligible veterans can obtain a VA loan with zero down payment. Cash is recommended to purchase short sales because the lenders want the transaction to close quickly once they approve the sale.
 
There are a number of good bargains in the Boca Raton and surrounding areas right now with opportunities in REO’s, foreclosure auctions, short sales and resale homes at affordable prices. Even though interest rates rose to an average of 5.05% last week, they are still low. Interest rates are expected to continue to rise this year. Sellers have priced their homes to sell and many are offering incentives to buyers such as seller financing.  If you are in the market for a Boca Raton home, now is the right time to buy.