No More Piggybanks
Our area is unique, whether it’s food, football, golf or more. But when it comes to financing homes, we have one major habit in common with the rest of America – no savings. The actual “personal savings rate” in America, according to the U.S. Commerce Department, is a negative 1%. Simply put, the average American tends to spend all of their income and then some. According to local mortgage lenders, the majority of us in Lee County are no different.
When it comes time to buy a house, no savings means no down payment. No down payment means 100% financing. This is usually accomplished by using a regular mortgage coupled with either seller assistance with some costs, a simultaneous home equity loan or some other type of down payment assistance.
100% Financing in Our Area?
The percentage of home buyers in our area that purchase houses with no down payments seems to range from 40% to 20% of the purchasers. The 40% number was reported by a major national mortgage lender that funds a large percentage of loans in our area. The 20% was reported by a new, local bank. While 20 years ago a 20 percent cash down payment was normal, today it is the exception.
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